EC A Goldilocks Moment?

A Goldilocks Moment? image

The State of the Market

Jamie Dimon attracted a lot of attention last week with his summary of the current economic/market environment. In his highly anticipated annual shareholder letter, the JPMorgan Chase (JPM) CEO wrote that we are looking at a "Goldilocks moment" and that "the U.S. economy will likely boom". Talk about cutting to the chase!

Dimon feels the current environment could lead to sustained economic growth accompanied by slow inflation and gradually rising interest rates. "We don't know what the future holds, and it is possible that we will have a Goldilocks moment — fast and sustained growth, inflation that moves up gently (but not too much), and interest rates that rise (but not too much)." Goldilocks indeed.

Expanding a bit, Dimon also wrote, "I have little doubt that with excess savings, new stimulus, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom," and that "this "boom could easily run into 2023."

I don't know about you, but this sounds pretty positive to me. And since Mr. Dimon was instrumental in turning things around in March 2008 by reminding us that banks in the U.S. were actually making money (the change to the mark-to-market accounting rules didn't hurt either), the bottom line is I have been listening intently to JPM's CEO ever since.

Then there is the recent batch of eye-opening economic stats from the Institute for Supply Management, which makes it hard not to be optimistic regarding the outlook for the economy. March's ISM Manufacturing Index came in at a 37-year high, which confirms that the manufacturing sector is en fuego. And the Non-Manufacturing index, which is a measure of the services sector of the economy (which, of course, accounts for the vast majority of economic activity in the U.S.), was reported at the highest level - ever. As such, the ISM Composite Index also came in at the highest reading on record - besting the old mark by some 7.5%. Impressive.

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The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should ...

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