Bob Michele, Managing Director and Chief Investment Officer at JPMorgan’s Global Fixed Income, Currency & Commodities (GFICC) group, has warned that the stock market’s current resurgence after interest rate hikes and bank failures may not be a good sign, comparing it to a deceptive lull during the 2008 financial crisis. Michele noted that during both events, investors were concerned about the stability of US banks, and JPMorgan swooped in to acquire troubled competitors, calming frayed nerves. However, Michele believes that the current period is merely a calm before the storm. He believes the US economy will likely fall into recession by the end of this year due to the Fed’s most aggressive series of rate increases in four decades, along with tightening credit and other factors. The pain is likely to be greatest for regional banks, commercial real estate, and junk-rated corporate borrowers, according to Michele. He stressed that he is conservative with his investments, which include investment grade corporate credit and securitized mortgages, unlike some of his competitors.
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