### Summary
Investor Jeremy Grantham warns that the U.S. will experience a recession next year due to the Federal Reserve's interest rate hikes and unsustainable asset prices.
### Facts
- Grantham believes the Fed's previous predictions and actions have been wrong, and it has failed to predict recessions in the past.
- He argues that the economy is still feeling the impact of the Fed's interest rate hikes, which are increasing borrowing costs and depressing real estate prices.
- Grantham criticizes the Fed for stimulating asset price bubbles with low interest rates and aggressive purchases of securities.
- He predicts that the unsustainable growth in asset prices and a lack of investment in key raw materials will lead to a recession.
- Economist David Rosenberg shares Grantham's bearish outlook and warns of headwinds to the U.S. economy, including China's economic issues and the end of the U.S. student debt relief program.
- Both Grantham and Rosenberg have had to push back their recession predictions but remain convinced that rising interest rates will eventually lead to an economic downturn.
The U.S. economy is forecasted to be growing rapidly, which is causing concern for the Federal Reserve and those hoping for low interest rates.
Despite recent market gains, investors are concerned that the current rally may be the last hurrah before an economic contraction, especially after the Federal Reserve indicated that it could hike interest rates twice more this year.
Investors will have a lot to consider this week as they analyze economic indicators such as US nonfarm payrolls, wage growth, and inflation, as well as Eurozone inflation numbers and central bank commentary, all of which could impact policy decisions and market sentiment.
The Federal Reserve meeting in September may hold the key to the end of the tightening cycle, as markets anticipate a rate hike in November, aligning with the Fed's thinking on its peak rate. However, disagreement among Fed policymakers regarding the strength of the economy and inflation raises questions about the clarity and certainty of the Fed's guidance. Market skeptics remain uncertain about the possibility of a "soft landing," with sustained economic expansion following a period of tightening.
Federal Reserve officials are closely monitoring employment numbers to assess if the economy's momentum is slowing, which will influence their decision on whether to increase interest rates further.
Stock investors have been reacting positively to "bad economic news" as it may imply a slowdown in the economy and a potential halt to interest rate hikes by the Federal Reserve, however, for this trend to change, economic data would have to be much worse than it is currently.
U.S. stock investors are closely watching next week's inflation data, as it could determine the future of the current equity rally, which has been fluctuating recently due to concerns over the Federal Reserve's interest rate hikes and inflationary pressures.
Bond traders are anticipating that the Federal Reserve will continue with interest-rate hikes, and next week's consumer-price index report will provide further insight on how much more tightening may be required to control inflation.
This week's economic reports, including the Consumer Price Index, Retail Sales, and Consumer Sentiment Index, will provide crucial information for investors and may influence the Federal Reserve's interest rate decision.
Stronger-than-expected U.S. economic data, including a rise in producer prices and retail sales, has sparked concerns about sticky inflation and has reinforced the belief that the Federal Reserve will keep interest rates higher for longer.
The latest economic forecasts from Federal Reserve regional banks show varying estimates of the economy, with one indicating it is red-hot and another suggesting a recession.
Investors should focus on the Federal Reserve's decision on interest rate hikes and the market's biggest themes during the coming week, according to CNBC's Jim Cramer.
Goldman Sachs strategists predict that the Federal Reserve is unlikely to raise interest rates at its upcoming meeting, but expect the central bank to increase its economic growth projections and make slight adjustments to its interest rate projections.
The Federal Reserve is expected to keep interest rates unchanged at its upcoming meeting, but market participants will be closely watching for any hints regarding future rate cuts.
Investors are becoming increasingly cautious about the US stock market and the economy as 2023 draws to a close, leading to a more defensive investment approach by Wall Street banks and experts warning of potential pain ahead.
The Federal Reserve is expected to keep interest rates steady and signal that it is done raising rates for this economic cycle, as the bond market indicates that inflation trends are moving in the right direction.
The Federal Reserve's upcoming meeting will focus on the central bank's expectations for key indicators such as interest rates, GDP, inflation, and unemployment, while many economists believe that the Fed may signal a pause in its rate-hiking cycle but maintain the possibility of future rate increases.
The Federal Reserve's interest-rate decision will impact stock and bond investors, with a hawkish stance being unfavorable and a dovish stance being favorable.
Investors are more focused on the release of new forecasts from the Federal Reserve, which will reveal their views on the prospect of an economic "soft landing" and the rate environment that will accompany it.
The Federal Reserve's poor forecasting record, evident in its inaccurate projections for interest rate increases and inflation, suggests that investors should not base their investment decisions on the Fed's predictions or any other forecasts.
The Federal Reserve has revised its interest rate forecast, planning for fewer rate cuts next year than previously anticipated, which may not be favorable for borrowers.
The Federal Reserve's plans for prolonged elevated interest rates may continue to put pressure on stocks and bonds, although some investors doubt that the central bank will follow through with its projections.
The Federal Reserve is paying attention to "real" interest rates, which measures rates adjusted for inflation, and is using this to inform its decisions regarding future rate hikes and inflation.
The Federal Reserve left interest rates unchanged while revising its forecasts for economic growth, unemployment, and inflation, indicating a "higher for longer" stance on interest rates and potentially only one more rate hike this year. The Fed aims to achieve a soft landing for the economy and believes it can withstand higher rates, but external complications such as rising oil prices and an auto strike could influence future decisions.
Investors are focusing on the release of economic reports on GDP and inflation as they evaluate the Federal Reserve's stance on interest rates and its efforts to cool down inflation. Metal prices have slipped due to concerns over global demand and the economy, and the risk of a government shutdown is also adding to the bearish sentiment. Earnings reports from various companies and core PCE inflation data are expected in the week ahead.
The Federal Reserve's interest-rate forecast is more hawkish than anticipated, with policymakers expecting to hold their key rate a half-percent higher through 2024 and cutting the federal funds rate by just one quarter-point over the next 15 months due to the economy's recent unexpected strength, despite doubts from Wall Street and rising Treasury yields.
The Federal Reserve has upgraded its economic outlook, indicating stronger growth and lower unemployment, but also plans to raise interest rates and keep borrowing costs elevated, causing disappointment in the markets and potential challenges for borrowers.
Michael Santoli, senior markets commentator at CNBC, discusses the outlook for the fixed income market, the state of the economy, and the stock market. He notes that the bond market is starting to register the Federal Reserve's plans to keep rates higher for longer, and that real yields are increasing due to higher inflation expectations and concerns over the size of current federal deficits and Treasury issuance. Santoli also suggests that it is still too early to fully understand the impact of artificial intelligence on productivity gains, and that the recent uptick in headline inflation is not expected to change the Federal Reserve's stance. He also notes that the stock market has been range-bound and indecisive, with some pockets of weakness in consumer cyclicals, but that the market is still pricing in somewhat benign economic conditions. Santoli highlights the concentration of the market in a few mega-cap growth stocks and the undervaluation of small-cap stocks, and discusses the outlook for the 60/40 portfolio in light of higher bond yields.
The Federal Reserve's recent hawkish stance and the sharp tightening of financial conditions have triggered jolts in bonds and stocks, raising questions about investor positioning going into the final quarter of 2023.
Economists are accurate at predicting recessions in the near future but become less precise as the prediction timeline extends, according to a study by an economist at the Federal Reserve Bank of St. Louis.
Investors are becoming increasingly concerned about sustained high interest rates, with the bond and foreign-exchange markets already showing signs of adjusting, and if stock markets do not follow suit, the coming months could be particularly challenging.
Investors will be keeping a close eye on the latest data on the U.S. labor market this week, which will have implications for consumer spending and the Federal Reserve.
Investors will be closely watching market reactions to a late deal to avert a government shutdown, as well as key data on the labor market this week, while concerns about higher interest rates and the impact on the economy weigh on stock futures.
Investors and experts differ on the timing, but many believe a recession is inevitable in the near future due to falling consumer confidence and a slowing economy, prompting discussions about the Federal Reserve's interest rate moves.
Billionaire investor Bill Ackman predicts that the Federal Reserve is likely done raising interest rates as the economy slows down, but warns of continuing spillover effects and expects bond yields to rise further.
Investors are awaiting the jobs report to determine the Federal Reserve's next move on interest rates, with wage growth and revisions to previous monthly totals being key factors to watch, amidst indications that the economy is less sensitive to rising interest rates due to lower household and corporate debt levels.
The Federal Reserve is facing a tough decision on interest rates as some officials believe further rate increases are necessary to combat inflation, while others argue that the current rate tightening will continue to ease rising prices; however, the recent sell-off in government bonds could have a cooling effect on the economy, which may influence the Fed's decision.
Investors are closely monitoring the bond market and September CPI data to determine the Fed's stance on interest rates, with Seema Shah of Principal Asset Management highlighting the circular nature of market reactions to yield spikes and their subsequent declines. She suggests that while there are concerns about upward momentum, the equity market will find comfort in a continued drop in yields and could remain range-bound for the rest of the year. Diversification is recommended as the market narrative remains unclear, and investors may consider waiting until early 2024 for greater clarity on the economy and the Fed's actions.
Investors are betting that the Federal Reserve may not raise interest rates again due to recent market moves that are expected to cool economic growth.
Venture capital investors are closely monitoring the Federal Reserve's interest rate expectations, with CFRA Chief Investment Strategist Sam Stovall predicting lower rates and inflation for the final months of 2023.
The Federal Reserve officials are uncertain about the U.S. economy's outlook and plan to proceed cautiously in deciding whether to raise interest rates, with some acknowledging the risks of raising rates too high or not enough to curb inflation.
The Federal Reserve will continue with its 'higher-for-longer' interest rate narrative unless there are signs of a slowdown in the consumer sector.
Federal Reserve officials are expected to pause on raising interest rates at their next meeting due to recent increases in bond yields, but they are not ruling out future rate increases as economic data continues to show a strong economy and potential inflation risks. The Fed is cautious about signaling an end to further tightening and is focused on balancing the risk of overshooting inflation targets with the need to avoid a recession. The recent surge in bond yields may provide some restraint on the economy, but policymakers are closely monitoring financial conditions and inflation expectations.