Headlines: U.S. economy could see ‘moderate recession’ next year

The headlines that the global financial media paid attention to last night and this morning mainly include:

1. IMF lowered its forecast for global economic growth this year to 3.6%, high inflation will last longer

2. Fannie Mae: U.S. economy could see ‘moderate recession’ next year

3. JPMorgan: If the EU immediately embargoes Russia’s crude oil prices, oil prices may hit $185

4. IMF: War makes Fed’s rate hike more urgent and necessary

5. Chicago Fed President Evans expects rates to rise above neutral

6. Musk is willing to pay $10 billion to $15 billion for Twitter

IMF cuts global economic growth forecast to 3.6% this year, high inflation will last longer

The International Monetary Fund (IMF) released its latest quarterly global economic outlook on Tuesday. Affected by the situation in Russia and Ukraine, the IMF lowered its global economic growth outlook and raised its inflation forecast.

The IMF lowered its forecast for global economic growth in 2022 from 4.4% to 3.6%, and lowered its forecast for global economic growth in 2023 from 3.8% to 3.6%.

The IMF’s downgrade reflects the direct impact of the Russia-Ukraine conflict on Russia and Ukraine as well as global spillovers, arguing that rising inflation “will last longer.” Supply shortages related to the Russian-Ukrainian conflict will amplify existing inflationary pressures, leading to dirty prices for food, energy and metals; supply shortages are expected to persist into 2023.

The IMF expects economic growth and inflation forecasts to be “highly uncertain” and that supply and demand imbalances could lead to a sustained rise in inflation and slowing economic growth. There is a growing risk of runaway inflation expectations, prompting more aggressive tightening by central banks. The medium-term outlook was downgraded for all economies except commodity exports, which benefited from soaring energy and food prices.

Fannie Mae: U.S. economy could see ‘moderate recession’ next year

Fannie Mae believes that a rate hike by the Federal Reserve will lead to a further deceleration of the U.S. economy, already weighed down by high inflation and the Russia-Ukraine conflict, with a “moderate contraction” likely in the second half of 2023.

“We continue to see multiple drivers of economic growth throughout 2022, but the need to contain inflation, coupled with other economic indicators such as the recent inversion of the U.S. Treasury yield curve, has led us to significantly lower our growth forecast for 2023, ” $FEDERAL NATIONAL MORTGAGE ASSOC (FNMA.US)$ Chief Economist Doug Duncan said in the announcement.

The new forecast includes a “modest recession, but we don’t expect it to be as large or as long as the 2008 recession,” Duncan said.

In its April Economic and Real Estate Outlook report, Fannie Mae said it now expects residential sales to fall 7.4% this year and 9.7% in 2023. House price growth will slow from 20% in the first quarter of this year to 3.2% in the fourth quarter of 2023.

JPMorgan: Oil could hit $185 if EU immediately embargoes Russian crude

If the EU is serious about stopping imports of Russian oil, it may have to pay a price.

JPMorgan warned that an immediate and complete embargo on Russian oil could create a supply shortfall of more than 4 million barrels per day, pushing Brent crude prices up about 65% to $185 a barrel. Analyst Natasha Kaneva said there was also not enough demand or time to redirect those crudes to India.

However, Kaneva added that phasing out Russian oil in about four months, similar to what was done for Russian coal supplies, could be successful without significantly affecting prices.

The bank’s main scenario is much more conservative, estimating that Russia’s supply to Europe will be cut by only half, to around 2.1 million bpd by the end of the year.

In fact, the process of abandoning Russian oil has been slower than initially expected. The bank expects Russia’s crude oil exports to fall by 1.5 million barrels per day this month, 25% less than initially forecast. Getting out of agreements with Russian companies – usually long-term contracts – takes time.

IMF: War makes Fed’s rate hike more urgent and necessary

Pierre-Olivier Gournchas, chief economist at the International Monetary Fund, said, “The Fed had already started to bring forward its monetary policy tightening even before February 24 — and now the war adds another layer to these inflationary pressures and makes the Fed The announced rate hike cycle is more urgent and necessary.”

“There is a need to curb the cycle of rising prices leading to higher wages and higher expected inflation,” he told an online news conference. “So we think the Fed’s response was appropriate.”

“Inflation was a clear and present danger in many countries even before the war,” he said.

While Gourinchas sees “very significant downside risks” to the euro zone due to the Russia-Ukrainian war, Petya Koeva Brooks, deputy director of research at the IMF, said there is no recession in the IMF’s baseline forecast for the EU (two consecutive quarters of contraction).

Chicago Fed President Evans expects rates to rise above neutral

Chicago Fed President Charles Evans said rates could rise above levels that neither dampen nor accelerate the economy, and how much higher will depend on whether inflation cools as expected.

“Maybe we’re going to go beyond the neutral rate, that’s my expectation,” Evans said at a discussion hosted by the Economic Club of New York on Tuesday.

Fed officials estimate the neutral rate at around 2.4%. Like other Fed officials, Evans also expressed support for raising the target range for the main policy rate from 0.25%-0.5% to around 2.25%-2.5% by the end of the year. Fed officials, who will meet on May 3-4, have said a 0.5 percentage point rate hike will be among the topics for discussion.

The Fed expects the shrinking of its balance sheet and interest rate hikes to start to ease price pressures, currently at their highest level in four decades.

Musk is willing to pay $10 billion to $15 billion for Twitter

The media quoted two people familiar with the matter as saying that Elon Musk is willing to invest 10 billion to 15 billion US dollars in cash for the acquisition of Twitter, and plans to launch a tender offer in about 10 days.

The combined investors will have more shares than Musk, but Musk will be the largest single shareholder, one of the people said.

It appears that Musk has had a harder time finding supporters than expected, the report said. Musk may also consider borrowing from his 9.1% stake, which could raise billions of dollars in additional capital.

In addition, Musk hired Morgan Stanley to use $Twitter (TWTR.US)$ to raise another $10 billion, similar to a traditional leveraged buyout.

Earlier, some analysts said that Musk did not seem to be able to get help from private equity firms in the acquisition of Twitter.

edit/isaac

This article is reprinted from: https://news.futunn.com/post/14669994?src=3&report_type=market&report_id=203457&futusource=news_headline_list
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