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☆ There's no reason why the Fed should cut rates right now, JPMorgan market strategist says
▼ + stars: | 2024-03-26 | by ( Aruni Soni | ) www.businessinsider.com time to read: +2 min

There's no reason why the Fed should cut rates right now, a JPMorgan market strategist says. The economy seems to be holding up fine, and growth projections for 2024 have only gone up. AdvertisementInvestors have been holding their breath for rate cuts from the Federal Reserve, but there's no reason the central banks needs to do anything at all right now. According to JPMorgan strategist Oksana Aronov, there's not a compelling reason the central bank would lower rates in the current environment. In fact, growth projections for 2024 have only increased, Aronov noted.

Persons: —, Oksana Aronov, there's, Jerome Powell, Aronov, Apollo's Torsten Sløk Organizations: JPMorgan, Service, Federal Reserve, CNBC, Fed

☆ These charts show how much traffic has plunged in the Suez and Panama canals — and the potential impact on inflation
▼ + stars: | 2024-01-22 | by ( Aruni Soni | ) www.businessinsider.com time to read: +3 min

Read previewThe number of vessels passing through the Suez Canal and Panama Canal have dropped 50% from normal levels, according to Apollo Management's top economist. AdvertisementSuez Canal slowdownAbout 12% of global trade passes through the Suez Canal, according to an estimate from the US Naval Institute. Related stories"Normally, 200 ships travel through the Suez Canal from south to north over a week, but that number has recently declined to 100," Sløk wrote. Suez Canal traffic is down 50% APThe trouble in the Suez Canal has been ratcheting up as Yemen-based Houthi rebels have been launching attacks against ships in the Red Sea, forcing some ships to take longer — and costlier — detours. And although goods inflation has been tumbling, higher shipping costs could send that back up again if they continue to follow recent trends.

Persons: —, Torsten Sløk, Sløk, Thierry Wizman Organizations: Service, Business, US Naval Institute, Apollo, Container, Shipping, Apollo Management, Macquarie Locations: Suez, Panama, Yemen, Red, Shanghai, Rotterdam, Drewry

☆ This is not a soft landing, and reaccelerating growth will bring back a more hawkish Fed, economist says
▼ + stars: | 2024-01-11 | by ( Aruni Soni | ) www.businessinsider.com time to read: +2 min

download the appSign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. AdvertisementSo what's turning up the heat in the economy that could herald a hawkish return? "Non-cyclical components have continued to see strong growth in particular with strong post-Covid tailwinds to restaurants, hotels, and airlines," the economist explained. That pent-up demand that gushed over the economy after the pandemic wore off is still stoking consumer spending today, according to Sløk. Cyclical components of GDP growth rebounding Apollo ManagementMeanwhile, financial conditions have been easing since Silicon Valley Bank collapse in March last year.

Persons: —, Apollo, Torsten Sløk, Sløk Organizations: Service, Federal, Business, Fed

☆ A default cycle has started amid the Fed's high interest rates, economists say. These 4 charts explain how severe it is.
▼ + stars: | 2023-11-27 | by ( Aruni Soni | ) www.businessinsider.com time to read: +3 min

A default cycle has started, spurred by high rates and debt costs, economists at Apollo Management said. Data on default rates and bankruptcy filings show just how severe the situation is. Advertisement"A default cycle has started with bankruptcy filings rising, and default rates will continue to rise over the coming quarters, impacting in particular middle market companies," they added. US Speculative grade default rates Apollo Management"The ongoing rise in default rates is not just a 'normalization.' AdvertisementUS bankruptcy filings Apollo ManagementWeekly bankruptcy filings for companies with at least $50 million in liabilities Apollo ManagementSløk has previously said that the Fed's rate hikes were to blame for higher bankruptcies.

Persons: —, Torsten Sløk, Sløk, Apollo Management Sløk, Nicholas Colas, Moody's Organizations: Apollo Management, Service, HY, Apollo, DataTrek, Management Locations: Moody's, Europe

☆ Ray Dalio says US is reaching an 'inflection point' as debt starts rapidly accelerating
▼ + stars: | 2023-11-20 | by ( Aruni Soni | ) www.businessinsider.com time to read: +3 min

The US is nearing an "inflection point" as the debt pile accelerates, Ray Dalio told CNBC. AdvertisementThe US's fiscal situation is heading for an "inflection point" as government debt grows faster than income, according to billionaire investor Ray Dalio. With the government borrowing more money to just pay for debt service while spending continues unabated, the hole gets deeper and deeper, he said on a CNBC interview on Friday. AdvertisementSuch issues have also impacted foreign demand, Dalio warned, noting that 40% of US debt is sold to foreigners. We are near that inflection point."

Persons: Ray Dalio, —, it's, Torsten Sløk Organizations: CNBC, Service, Bridgewater Associates, Apollo Management

☆ CHART OF THE DAY: What recession? A record number of US consumers plan to vacation in a foreign country in the next 6 months
▼ + stars: | 2023-11-17 | by ( Matthew Fox | ) www.businessinsider.com time to read: +2 min

The share of US consumers who plan to visit a foreign country in the next six months is at a record high. "The bottom line is that rates will stay higher for longer because the Fed is still trying to get non-housing service sector inflation under control." download the app Email address Sign up By clicking “Sign Up”, you accept our Terms of Service and Privacy Policy . AdvertisementThat suggests the Fed is likely to keep interest rates higher for longer even though markets are starting to warm up to the idea of interest rate cuts in 2024. Advertisement"The bottom line is that rates will stay higher for longer because the Fed is still trying to get non-housing service sector inflation under control," Sløk said.

Persons: Apollo, —, Torsten Sløk, Sløk Organizations: Service, Conference, Federal

☆ The stock market is riskier and more volatile than it was in past decades. Here's why.
▼ + stars: | 2023-10-26 | by ( Aruni Soni | ) www.businessinsider.com time to read: +4 min

The S&P 500 has become more volatile in recent years, according to research firm DataTrek. The bigger factor is the massive growth of big tech stocks that make up more and more of the S&P 500. "The S&P 500 has become noticeably more volatile over the last +60 years, but returns have not increased commensurately," DataTrek said in a note published Thursday. AdvertisementAdvertisementHere's why the research firm sees higher risk in the stock market today than in past eras. Unexpected developments hit harderAnother explanation is that the market in recent years has had an outsized reaction to unanticipated developments relative to past eras.

Persons: —, DataTrek, Apollo, Torsten Sløk Organizations: Service, Apple, Microsoft, Nvidia, Tesla, Big Tech, Data, GameStop

☆ The US is headed for recession, but a key difference from past downturns could make it milder, Apollo chief economist says
▼ + stars: | 2023-10-25 | by ( Aruni Soni | ) www.businessinsider.com time to read: +2 min

The US economy is headed for a recession, but it's likely to be milder than prior slumps, Apollo's chief economist said. That's because any potential slowdown this time around would be "engineered" by the Fed, Torsten Sløk told CNBC. When recession arrives, the Fed can undo the measures it took that initially slowed the economy, he added. Another recession is coming, but this time around the culprit is also the savior, making it a lot less harmful, according to Apollo Management's chief economist, Torsten Sløk. "Here today, this is all engineered by the Fed, the slowdown," Sløk said.

Persons: Torsten Sløk, —, Apollo, Sløk Organizations: CNBC, Service, Fed Locations: It's

☆ The stock market's volatility indicator is signaling a trough in the S&P 500
▼ + stars: | 2023-10-20 | by ( Aruni Soni | ) www.businessinsider.com time to read: +2 min

The stock market's volatility gauge is signaling a trough in the S&P 500. Futures for the CBOE Volatility Index indicated more uncertainty about the near term than longer term. Futures contracts tied to the volatility index, also known as the VIX, track the expected amount of market volatility down the line. It speaks to more anxiety about where the stock market is headed amid recession angst, the bond market rout, and mushrooming geopolitical risk. In September, the volatility index was trading at post-pandemic lows, signalling a strong bull market and fizzling recession fears.

Persons: —, Torsten Sløk Organizations: Service, Bloomberg, Apollo Locations: Israel

☆ Bankruptcies are surging - and Fed rate hikes are to blame, economist says
▼ + stars: | 2023-10-13 | by ( Aruni Soni | ) www.businessinsider.com time to read: +2 min

Rising US corporate bankruptcies are due to Fed rate hikes, Apollo chief economist said. "The September data for bankruptcy filings are out, and more and more companies are going bankrupt because of Fed hikes," said Apollo chief economist Torsten Sløk in a note on Friday. "Bankruptcies are hitting companies with high levels of debt and low earnings in the Consumer discretionary, Healthcare, and Industrials sectors," Sløk added. AdvertisementAdvertisementSome of the other headline bankruptcies this year have included the collapse of Yellow, Bed Bath & Beyond, and Silicon Valley Bank. According to experts, a rising wave of bankruptcies and debt defaults could risk rocking the economy towards a recession.

Persons: —, Torsten Sløk, Sløk Organizations: Service, P, Healthcare, SmileDirectClub Inc, Silicon Valley Locations: Silicon

☆ Is China really dumping Treasury bonds and sending yields higher? A former US official explains the mystery
▼ + stars: | 2023-10-06 | by ( Filip De Mott | ) www.businessinsider.com time to read: +4 min

China is not actually dumping its stockpile of US bonds, former Treasury official Brad Setser wrote. A large part of China's holdings are not accounted for in official US data, he said. While it has sold some Treasurys, Beijing has also bought up US debt in the form of agency bonds. Agency bonds are issued by government-sponsored enterprises, and some of the top issuers are US-backed firms like Fannie Mae and Freddie Mac. During 2022 and the first six months of 2023, China purchased over $100 billion agency debt and sold just $40 billion in Treasurys, he estimated.

Persons: Brad Setser, —, Torsten Sløk, Setser, Belgium's, China's, Fannie Mae, Freddie Mac Organizations: Treasury, Service, Council, Foreign Relations, Apollo, Treasury International Capital, Foreign, Administration of Foreign Exchange, Agency Locations: China, Beijing, Treasurys

☆ The top economist at EY thinks the US economy faces a 'trifecta' of threats that could make Americans stop shopping and cause a slowdown
▼ + stars: | 2023-09-25 | by ( Madison Hoff | ) www.businessinsider.com time to read: +4 min

EY chief economist Gregory Daco thinks "consumers are becoming more conservative with their spending." Coming up is another headwind: the restart of federal student-loan payments. The different economic threats means consumer spending growth may not be so hot next year, as consumers are already reducing their spending. Other economists have pointed out how the upcoming student-loan payment restart will have an impact on the economy. Have you changed your spending habits or are you spending less on certain items given the restart of student-loan payments, fewer savings, and other factors?

Persons: Gregory Daco, Taylor Swift, it's, Daco, Torsten Sløk, NYU Stern, David Kelly Organizations: Service, Consumer, Bureau of Labor Statistics, BLS, NYU, Morgan Asset Management, AAA, CNBC Locations: Wall, Silicon, American, —, mhoff@insider.com

☆ 10 signs the US economy may struggle in the next year
▼ + stars: | 2023-09-14 | by ( Madison Hoff | Noah Sheidlower | ) www.businessinsider.com time to read: +10 min

By raising interest rates, the Fed "wants us to buy fewer cars. There are signs that a drop in savings could be making it harder for Americans' to keep up with paying off debt. Long-term interest rates rising for non-economic reasonsLong-term interest rates are on the rise, even though economic data on the whole is improving. Higher-interest payments for the US governmentSløk also noted higher interest payments for the US government as another downside risk to the outlook. Projections published by the Congressional Budget Office show increasing estimates for the upcoming decades for federal interest payments as a share of GDP.

Persons: Torsten Sløk, Sløk, Paul Krugman, Persis Yu, Jan Hatzius, Goldman Sachs, Hatzius, it's, , you've, Andy Kiersz, That's, Brent Organizations: Service, Apollo Global Management, NYU Stern School of Business, Federal Reserve, San, San Francisco Fed, Student, Protection, CNBC, New York Fed, Banking, West Texas, Labor Statistics, US, Fitch, Congressional Locations: Wall, Silicon, San Francisco, China, Japan, Europe, Germany

☆ $7.6 trillion of US government debt will mature in the next year, adding pressure on rates
▼ + stars: | 2023-09-08 | by ( Filip De Mott | ) www.businessinsider.com time to read: +2 min

A whopping $7.6 trillion in interest-bearing US public debt will mature within a year, Apollo's chief economist said. That represents 31% of all outstanding US government debt, adding upward pressure on rates. In terms of dollar amount, that's $7.6 trillion, a high not seen since early 2021. In addition, public debt maturing in the near term accounts for more than a quarter of US GDP. Still, Sløk said the $7.6 trillion coming due is one source of upward pressure on US rates.

Persons: Torsten Sløk, Sløk, Louis Organizations: Service, Treasury Department, Federal Reserve, Treasury, Louis Fed Locations: Wall, Silicon

☆ Silicon Valley Bank's collapse has made the Fed's job way harder, top economist says
▼ + stars: | 2023-03-17 | by ( George Glover | ) www.businessinsider.com time to read: +3 min

The Federal Reserve will struggle to achieve a "no landing" scenario now that Silicon Valley Bank has collapsed, according to Apollo Global Management's chief economist. Torsten Sløk said he's expecting the regional banking crisis to lead to a fall in lending levels. "The slowdown that was already underway because of the Fed raising rates might come faster," he told Bloomberg. Its stock then cratered 87% in two days before it was taken over by regulators – and the share prices of other regional banks like First Republic and Western Alliance have also plunged since its collapse. The banking crisis has led to some of Wall Street's top names raising alarm bells about the Fed – which is still upping borrowing costs in a bid to tame inflation.

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