The following is an amended version of the Dec. 8 Daily Contrarian. This briefing and accompanying podcast are released to premium subscribers each market day. Subscribe at Substack or Supercast.

Wall Street continues to be concerned about a recession and interest rate hikes. Two major bank CEOs, Goldman Sachs’s David Solomon and JPMorgan’s Jamie Dimon, among others, have been voicing this narrative. The former spoke at a conference about a slowing economy last week and the latter went on CNBC to talk about how inflation would erode consumer confidence next year. Dimon also expressed concerns about geopolitical issues.

Dimon is certainly worth listening to. As the CEO of the country’s largest lender, he’s knows the issues consumers are dealing with.

Some context is necessary here as Dimon hedged his comments (watch the video).

Inflation Nation

It’s impossible to deny that inflationary pressures are real. Hard to believe that just last year smart people were saying inflation was transitory. It now looks like the Fed has a real fight on its hands. In fairness, this is what they’ve been telling us the last four months or however long it’s been since Jay Powell’s Jackson Hole speech.

The CPI may not be running as hot as it was earlier this year, but the CEOs from Goldman and JPMorgan say they’re still worried about inflation.

Recession

Will this all lead us into recession in 2023? The possibility is being attributed to the sell-off we had in stocks earlier last week. But the selling has since fizzled out, leading one to conclude that the concerns can’t be all that serious. That makes sense in light of the fact that it is hardly a new development. We’ve known that we will likely have a recession next year. We’ve also known that the Fed is serious about fighting inflation. Some of us might have been in denial but these circumstances are not new. 

Stocks have been going higher, overall, during the last two months. But investors many need more reasons to continue bidding up risk assets. We’re probably in a holding pattern until we get the CPI (Tuesday) and the Fed interest rate (Wednesday).

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