Top economist Steve Hanke is predicting that the Fed will start cutting rates by the end of this year, leading to a severe recession that will impact stock prices. “The Fed has given us the biggest whiplash we’ve ever had in history… An explosion of the money supply, the huge inflation, and now all of a sudden the brakes have been slammed on and we’re going to have a recession,” he warned. Hanke, a former economic adviser to President Ronald Reagan, went on to criticize the Fed’s misled focus on interest rates and lack of focus on the money supply. “It’s going to be a tug of war… Interest rates softening up a little bit is good for the market, but certainly, a recession and earnings coming down is not good for the market.” In other news, a recent Gallup poll reported that 50% of Americans consider themselves “financially worse off” now than they were a year ago, its highest report since 2009.

Markets Insider/Theron Mohamed
The US economy will sink into a recession – and stocks will feel the squeeze, top economist Steve Hanke says

The US economy will slump into recession, putting stocks under pressure, Steve Hanke has warned.

The professor of applied economics at Johns Hopkins University also said inflation is fading fast, paving the way for the Federal Reserve to cut interest rates later this year. He shared the mixed outlook during a recent interview.

Hanke slammed the Fed for overstimulating the economy during the first two years of the pandemic, then tightening its monetary policy too aggressively since March. The US central bank cut rates and ramped up its bond-buying to shore up growth in 2020. Since last spring, in response to surging inflation, it has hiked rates from nearly zero to almost 5% and started shrinking its balance sheet.

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Mish Talk/Mike “Mish” Shedlock
Fifty Percent Say They Are Worse Off Than a Year Ago

Reflecting on their personal financial situations, 35% of Americans say they are better off now than they were a year ago, while 50% are worse off. Since Gallup first asked this question in 1976, it has been rare for half or more of Americans to say they are worse off. The only other times this occurred was during the Great Recession era in 2008 and 2009.

The latest results are based on a Jan. 2-22 Gallup poll. They follow a year of persistent high inflation, with the highest inflation rates since 1982. Stock market values declined and interest rates rose in 2022, but, on average, personal wages increased substantially.

You can read the full article, here.

CNN Business/Chris Isidore
Disney plans to cut 7,000 jobs and reward shareholders

Disney said it would cut 7,000 jobs from its global workforce, part of a multibillion-dollar cost-cutting initiative aimed at streamlining the company’s operations in a period of media industry turmoil.

Disney had about 220,000 workers as of October 1, of which approximately 166,000 were employed in the United States. A cut of 7,000 jobs represents about 3% of its global workforce.

“While this is necessary to address the challenges we’re facing today, I do not make this decision lightly,” said CEO Bob Iger, who returned to lead the company in November when the board fired Bob Chapek as the company’s leader. “I have enormous respect and appreciation for the talent and dedication of our employees worldwide, and I’m mindful of the personal impact of these changes.”

You can read the full article, here.

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