Your Evening Briefing: Wall Street Can’t Agree on Fed’s Direction

Data due this week could show the US economy contracted for a second straight quarter. While that’s one way to define a recession, the Biden administration argues it’s a technical distinction that misses the bigger picture: The US added more than a million jobs in the second quarter. Oil prices meanwhile have dropped significantly since last month (though they were up Monday). On Wall Street, strategists disagreed over the impact weaker economic data will have on the Federal Reserve’s inflation fighting strategy. Morgan Stanley says it’s too early to expect the central bank to stop tightening, which suggests stocks have further to fall. JPMorgan says bets that inflation has peaked foretell a Fed pivot, and a better picture for equities in the second half. As for Nouriel Roubini—the economist of doom himself—he warns that those predicting anything other than a deep downturn are “delusional.”

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