Citi say US Fed going to cut Rate 4x for next few mth de woh...Heng Ong Huat lah

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The U.S. economy is headed for a hard landing, and Fed rate cuts won’t be enough to rescue it, Citi says​

Jason Ma
Mon, 6 May 2024 at 6:21 am SGT3-min read

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Last year's consensus was that the U.S. economy was headed for a recession, but that didn't happen. This year's consensus is that we'll have a soft landing, where the economy slows but won't tip into a recession. That could be wrong too.

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Doubling down on his contrarian view, Citi chief U.S. economist Andrew Hollenhorst told Bloomberg TV on Thursday that he sees a hard landing. In fact, inflation and the labor market will weaken enough that the Federal Reserve will cut benchmark rates four times this year—far more than the one or two cuts Wall Street expects.


His warning proved prescient as the Labor Department's payroll report the following day showed that the economy added 175,000 jobs in April, down sharply from the blockbuster increase of 315,000 in March and well below the 233,000 gain that economists had predicted.

 

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On Thursday, Hollenhorst said other data have been signaling weakness in the labor market, including surveys of consumers and businesses that say jobs are getting harder to find, companies are less eager to hire, and employees are feeling more worried about keeping their jobs.

To be sure, data in recent weeks have offered mixed signals on the economy. The latest employment cost index rose more than expected, suggesting a strong job market. Meanwhile, the first-quarter GDP report showed growth cooled more sharply than anticipated. But that was due largely to a wider trade deficit and slower inventory restocking, while consumer demand remained robust.

But Hollenhorst is convinced there won't be a soft landing, and said financial markets are starting to move away from that hope as well.

"The reason I think the Fed's going to see enough to cut is because we're more toward the hard landing end of the spectrum," he told Bloomberg TV.

https://sg.yahoo.com/finance/news/u-economy-headed-hard-landing-222148023.html

 

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https://www.marketwatch.com/livecov...pr4XfIZ3mPqS?mod=home-page?mod=bnbh_mwarticle



A soft landing, of course, sounds preferable to a hard landing. A no-landing scenario can be good or bad, depending on whether it leads to a hard landing later on. Got it?

If confused, Deutsche Bank macro strategist Alan Ruskin concisely broke down four scenarios in a Tuesday note. See below (emphasis ours):

• i) A hard landing with at least a couple of quarters of negative growth and a significant (1%+) rise in the unemployment rate;
• ii) A soft landing that fits with sub-trend growth that hovers above what is usually considered a recession, and includes a moderate rise in unemployment, that is enough to pull inflation back to target;
• iii) A no landing that includes growth at/above trend. In this scenario, inflation stops declining towards 2% once the reversal in negative supply side shocks ends, and policy tightening, or at least market-led financial conditions tightening, is needed. This kind of no landing can be seen as synonymous with additional overheating, generating more extensive/extended market/policy tightening, and an eventual hard landing. By this token, a no landing in the short-term results in a hard landing in the long-term.
• iv) The ultimate immaculate disinflation scenario. A "no landing" that sees solid trend or above-trend growth with inflation still edging to a 2% target possibly because of stronger productivity gains, and higher natural rates of growth, including a possible still lower natural rate of unemployment.

 

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