During a recent interview on CNBC, Ellen Zentner, the chief U.S. economist for Morgan Stanley, and a very important name on Wall Street said that, “We will have a hard landing at some point. I guarantee you that,” which is a rather stark prediction for the economic future of the country. I mean, that’s probably not shocking news to you if you’ve been paying attention to the massive damage being done to the economy on a daily basis thanks to the policies of the current administration, however, I don’t think the depth of how rough this “landing” is going to be is in anyway being overstated.
Zenter also said that “the tightening impacts from monetary policy” is also going to have massive consequences for our economy in the upcoming months.
“We will have a hard landing at some point. I guarantee you that. We’re all wondering: When does that come?” she told CNBC. “The point that Dimon makes is that there are these cumulative impacts that build over time, and we are in the camp that we haven’t yet seen all of the tightening impacts from monetary policy,” she added, referring to the impact of Fed rate hikes.
Some folks will look at this and think it’s nothing more than doom and gloom. Things are tight, a little on the hard side, but it’s not that bad. Well, maybe not yet, though I’d beg to differ. However, when interest rates hike occur, it takes time to really feel the effects.
Just take a gander at prices for food at the local grocery store. Have you noticed your favorite foods are pricier than they used to be? That is one of the effects of inflation. And if policies aren’t enacted that restore purchasing power to the dollar, the spike is going to get even worse.
The bad news for us is that it doesn’t look like the Federal Reserve is going to take action to reduce interest rates any time soon:
Inflation increased by the largest amount in almost a year, according to the Fed’s preferred measure – confirming expectations interest rates will not be cut until around June.
The so-called core personal consumption expenditures (PCE) index – which excludes volatile food and energy prices – increased 0.4 percent between December and January.
Chief Strategist for JPMorgan Chase, Marko Kolanovic, thinks our economy could be headed down a path toward “something like 1970s stagflation:”
In an analyst note to clients, the bank’s chief market strategist Marko Kolanovic warned that the economy may turn away from a “Goldilocks” scenario – in which it is not expanding or contracting by too much – and enter a period of stagflation similar to that experienced in the 1970s.
“Going back to the question of market macro regime, we believe that there is a risk of the narrative turning back from Goldilocks towards something like 1970s stagflation, with significant implications for asset allocation,” Kolanovic wrote.
It sort of seems like we’re already there, doesn’t it? Inflation has been soaring far too high for far too long. Jobs are not being created, nor is anything being done to encourage growth.
Thus far, 2024 has only seemingly offered more bad news. A good example is the fact that the Canadian pension fund sold a stake in a Manhattan office tower for a single dollar:
Canadian pension funds have been among the world’s most prolific buyers of real estate, starting a revolution that inspired retirement plans around the globe to emulate them. Now the largest of them is taking steps to limit its exposure to the most-beleaguered property type — office buildings.
Canada Pension Plan Investment Board has done three deals at discounted prices, selling its interests in a pair of Vancouver towers, a business park in Southern California and a redevelopment project in Manhattan, with the New York stake offloaded for the eyebrow-raising price of just $1. The worry is those deals may set an example for other major investors seeking a way out of the turmoil too.
The Canadian Pension Plan Investment Board owned a 29 percent stake in the building located in Manhattan at 360 Park Avenue South. They were originally going to pour time and financial resources into redeveloping the property. However, the overall outlook for office building is looking so poor, they decided to get out of the project as fast as possible. Thus, the sold the whole 29 percent stake for a dollar.
Big corporations in other industries are also taking some major hits, like video game producer Electronic Arts, which just laid off a whopping 700 employees:
Another day, another round of mass layoffs in the games industry. Electronic Arts (EA) has announced it will cut around five percent of its employees, putting almost 700 people out of a job. It’s also cancelling games and shutting down at least one development studio.
EA CEO Andrew Wilson announced the layoffs in an email to employees, which was subsequently posted to the company’s blog on Wednesday.
Citigroup is also laying off workers:
Citigroup is cutting nearly 300 workers in New York as it continues its massive layoff spree in an effort to rein in expenses, according to filings with the State Labor Department.
About 239 workers in the primary banking subsidiary, 44 from its broker-dealer unit and three from its technology arm are getting cut, according to Worker Adjustment and Retraining Notification (WARN) notices filed this week.
In early January, the company announced that it was cutting 20,000 roles “over the medium-term,” as part of a reorganization effort. The cuts are slated to save the company between $2 billion and 2.5 billion.
This is the kind of stuff we witnessed back during the recession that happened in 2008 and 2009. What a horrific time that was.
Global banks attempted to push back the negative impact by a little while by dumping a ton of money into the system. However, they were only delaying the inevitable. This course of action led to obscene spikes in inflation and due to that, a terrifying economic crisis is brewing on the horizon.
Get prepared, folks. This is going to be a very, very bumpy landing.