The economic heavyweights continue to rave about the economy and interest rates, and much like I wrote in these pages last week, it would be wise to listen to them.
My esteemed colleague Julie Hyman expressed a contrary opinion to my view that you should carefully consider JP Morgan Chase CEO Jamie Dimon’s comments that this is an incredibly dangerous time. I appreciate the perspective from the other side of the coin. I really do.
But I respectfully disagree.
And here’s why.
These powerful people continue to raise caution at a time of rising geopolitical tensions and runaway interest rates. They have the best information in the room – real-time access to demand for $100,000 cars, $30 meals on credit cards, and a $75 pair of shoes.
These power brokers take this real-time information and transmit it to their employees, shareholders and then to us ordinary people on the outside looking in. I happen to be of the same mindset as Dimon status influencers or Tesla CEO Elon Musk. What they say is serious and understand the seriousness of what they are communicating (OK, maybe not so much for Musk…).
The fact that this new information comes to us at such a precarious time for markets, the economy and the world should not be ignored.
To this end, some new comments:
Elon Musk (current earnings call)
“I am concerned about the high interest rate environment we find ourselves in. I can’t stress it enough that for the vast majority of people who buy a car, it’s about the monthly payment, and as interest rates go up, of course the interest portion of that monthly payment goes up too. So if interest rates stay high or even rise further, it will be even more difficult for people to buy a car. They just can’t afford it.
Stephen Squeri, CEO of American Express (on the phone to me, 30 minutes after Friday’s earnings announcement)
“I think it will be 2024 more of the sameyou know, more uncertainty, but pretty, a relatively stable macroeconomic state.”
The story goes on
Do comments like this suggest the stock market is headed for another Black Monday? Well, no. However, it does suggest increased volatility in markets towards the end of the year. And for a good reason.
Despite my excellent credit, I couldn’t buy a house for less than an 8% mortgage right now. The 476 horsepower Cadillac Blackwing I want? About 7% interest rate to finance this waste of money. My friends are paying back student loans and limiting their discretionary purchases. People can’t afford a box of cereal even if the job market is still robust.
Listen carefully to people like Musk, Dimon, and Squeri — and the other big names who will be speaking on earnings calls, as they will likely be doing the same thing as their peers.
Brian Sozzi is Editor-in-Chief of Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email [email protected].
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