Driving the news: Next week is slated to be a data heavy week, with more economic data reports on the way. Meanwhile global economic powerhouses continue to grapple with the aftermath of the economic slowdown, triggered by the war in Ukraine and soaring inflation. The US economy remains relatively stable compared to its counterparts in Europe and China, despite talks of a potential recession on the horizon.
JP Morgan, Morgan Stanley earnings surprise on the downside. “JPMorgan investment banking revenue was $1.4 billion, down 61% on the year-ago-quarter, largely driven by a 54% drop in fees across all products, while the bank also took markdowns on some loans in its investment banking businesses of approximately $250 million in revenue.”
Morgan Stanley reported a 55% fall in investment banking revenues to $1.1 billion with the bank’s advisory business taking a 10% hit. Equity and fixed income underwriting revenue also plunged 86% and 49%, respectively.
Recession fears seem to be materializing. Commodities have been falling, and it’s not just lower oil prices that are pointing to a recession. Here’s why a drop in copper prices may historically be a signal of economic slowdown.
…But equity prices may actually recover in a recession. According to Forbes, “the S&P 500 surprisingly rose an average of 1% during all recession periods since 1945. That’s because markets usually top out before the start of recessions and bottom out before their conclusion.”
Next week’s data dump. June housing data is going to be published at scattered intervals next week – building permits, housing starts on Tuesday, existing home sales on Wednesday. The housing market has started cooling down as interest rate hikes pushed mortgage rates up and affordability decreased due to a long price increase trajectory. However, the rental market continues to be crowded by new home buyers priced out of the market.
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It’s risky here. It’s riskier elsewhere. Despite the growth slowdown and potential recession on the horizon, the United States economy remains relatively stable amidst a slowdown in global growth, and namely in other powerhouses such as Europe and China.
Yieldstreet continues to offer private market investment opportunities amidst elevated market volatility. An additional income note offering was launched earlier in the week, with the potential to at least partially offset inflation while keeping a level of downside protection.
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