A “Sold” sign outside a home in the Toll Brothers Regency Ranch at Folsom housing community in Folsom, California, US, on Tuesday, May 16, 2023.
David Paul Morris | Bloomberg | Getty Images
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What you need to know today
Recession warning
According to HSBC Asset Management, the U.S. will slip into recession in the fourth quarter this year and continue to languish in it throughout 2024. The euro zone will also see its economy contract next year. However, the forecast predicts a quick fall in inflation and expects the Federal Reserve to cut rates by the end of this year.
Higher rates for longer
European Central Bank President Christine Lagarde expressed concern over the high inflation in the euro zone, stating that it is likely to remain high for a significant duration. She suggested that the ECB is unlikely to pause or cut rates in the near future.
Unity’s A.I. marketplace
Unity, a game engine development company, experienced a surge in shares following the launch of its marketplace for artificial intelligence software. The marketplace allows users to access software from other companies to generate AI graphics, text, voice, and more.
[PRO] Seth Klarman on markets
In an exclusive interview with CNBC, Seth Klarman, a legendary investor at Baupost Group, discussed common mistakes made by regular investors when buying index funds and highlighted a potential “hunting ground” for investment opportunities.
The bottom line
The calls for a recession are growing louder, but despite the predictions, the U.S. economy continues to show resilience.
Recent economic data indicates strength in the U.S. consumer. Consumer confidence reached its highest level since January 2022, and the proportion of respondents expecting a recession declined. The housing market also demonstrated surprising strength, with new home sales in May exceeding expectations and home prices increasing. Additionally, demand for durable goods accelerated in May.
If experts like Wolfe Research’s Chief Investment Strategist Chris Senyek are correct in predicting that the U.S. consumer will be the primary driver of the economic outlook, the U.S. economy may be able to withstand a recession despite numerous forecasts.
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