Why you should carefully consider what Jamie Dimon, Elon Musk, and American Express just told the investing world
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The heavyweights in business continue to wax poetic on the economy and interest rates, and as I wrote last week in these pages, it would be wise to listen to them.
My esteemed colleague Julie Hyman offered up a contrarian take on my view that you should carefully consider JPMorgan Chase CEO Jamie Dimon's comments about this being a crazy dangerous time. I appreciate the perspective from the other side of the coin. Really, I do.
But I respectfully disagree, and here's why.
These powerful people continue to throw caution flags at a time of increasing geopolitical strain 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 $75 pairs of shoes.
These power brokers are taking this real-time information and conveying it to their employees, shareholders, and then us common folks on the outside looking in. I just happen to be of the mindset that influencers with the status of Dimon or Tesla CEO Elon Musk take what they say seriously and understand the gravity of what they are communicating. (OK, maybe not so much for Musk...)
The fact that this new information is coming to us at such a precarious time for markets, the economy, and the world shouldn't be ignored.
To that end, some new comments:
Elon Musk (recent earnings call)
"I am worried about the high interest rate environment that we're in. I just can't emphasize this enough — that [for] the vast majority of people buying a car, [it] is about the monthly payment. And as interest rates rise, the proportion of that monthly payment that is interest increases naturally. So if interest rates remain high, or if they go even higher, it's that much harder for people to buy the car. They simply can't afford it."
American Express CEO Stephen Squeri (to me on the phone 30 minutes after earnings hit on Friday)
"I think 2024 will be more of the same. You know, more uncertainty, but ... a relatively steady state macro environment."
Do comments such as these suggest the stock market is headed for another Black Monday? Well, no. But it does point to heightened volatility for markets going into year-end. And with good reason.
I couldn't buy a home right now for anything under an 8% mortgage despite my awesome credit rating. That 476-horsepower Cadillac Blackwing I want? About a 7% interest rate to finance that splurge. My friends are back to paying student loans and cutting back on discretionary purchases. People can't afford a box of cereal, even with a still-robust job market.
Listen carefully to the likes of Musk, Dimon, and Squeri — and the other big names about to speak on earnings calls as they will probably echo their peers.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.
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