Banks are bracing for a recession because persistent and elevated inflation has pushed the Federal Reserve to raise interest rates at the fastest since the 1980s. This is threatening to curb consumer and business spending by moving higher borrowing costs.
Policymakers approved seven straight rate increases in 2022, raising the federal funds rate to a range of 4.25 percent to 4.5 percent — the highest level since 2007 – and forecasting a peak rate of about 5 percent. Bank of America Vice Chairman Keith Banks predicted Q4 earnings would come in lower than expected, marking the start of a slowing economy.
“We think as the economy slows, revenue is going to slow, and as a result, you’re going to start to have some margin pressure and negative operating leverage, none of which is good for earnings,” Banks said.
According to the market expert, margin trading will first get squeezed and cause operating leverage “to flip over.”
Click here to read
Newt’s Latest Features:
- Ellis the Elephant Fun Fact: Who was the first President of the United States to reside in the White House?
- American Despotism – The Historic Roots Part Two
- Congress Must Protect America’s Capital
- Evidence About Biden Criminality and Dishonesty Keeps Growing
- Ellis the Elephant Fun Fact: What acts did the British Parliament pass to impose a tax on tea in the American colonies in 1767?
