Dimon: “The worst outcome is stagflation”

Earn While You Learn! ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, Dimon: “The worst outcome is stagflation” The market wasn’t ready to initiate a new direction ahead of this week’s inflation readings, even though some of Wall Street’s biggest banks issued cautious outlooks. Brent oil also fell below $70 due to slowing demand. Let’s start with JPMorgan Chase. The big bank fell ~5% yesterday after its President Daniel Pinto said Wall Street was being too optimistic for next year’s expenses and net interest income (NII). Why? Upcoming interest rate cuts will eat into NII, so the actual figure “will be lower,” said Pinto. CEO Jamie Dimon was pessimistic, as usual. He said yesterday that he sees a possibility of stagflation. In other words, a recession with higher inflation. - “I would say the worst outcome is stagflation — recession, higher inflation,” Dimon said. - “And by the way, I wouldn’t take it off the table.” Jamie Dimon (Photo: Mike Segar | Reuters) The comment came just as investors are starting to forget about inflation. Price gains are approaching the Fed’s 2% target. However, Dimon is worried about recent signs of weakening in employment and manufacturing. So, an economic slowdown might be looming. As for inflation, Dimon pointed to several inflationary forces — higher deficits and increased infrastructure spending. - “They’re all inflationary, basically in the short run, the next couple of years,” Dimon said. “So, it’s hard to look at [it] and say, ‘Well, no, we’re out of the woods.’ I don’t think so.” Dimon, of course, had been warning about a recession for years. It is his job to think about risks all the time since JPMorgan Chase is systematically important to the global economy. Nobody wants a Wall Street bank to feel too confident. Goldman Sachs CEO David Solomon also warned on Monday that the bank’s third-quarter trading revenue could fall 10%. We will get two inflation readings this week — the CPI (today) and the PPI (tomorrow). It will be tough to gauge these reports. First, a hotter-than-expected reading might force the Fed to go with a 25 basis-point cut even if the economy’s growth slows. (Hence what Jamie Dimon warned.) On the other hand, a cooler-than-expected reading would give the Fed a wiggle room to cut rates but also might indicate that the economy is slowing rapidly. (When the demand cools, businesses cut prices to entice demand.) - “Given the market’s aggressive expectations for Fed rate cuts, a hotter reading should lead to downside volatility,” said Sameer Samana at Wells Fargo Investment Institute. - “A cooler print has more two-way risk as it creates more room for the Fed to cut, but may also indicate the economy is slowing faster than anticipated.” Sameer Samana at Wells Fargo Investment Institute (Photo: Yahoo Finance) Don’t Want to Pay Premium Prices for Data Center Companies? Check Out This Company Today’s Stock Pick: IES Holdings, Inc (IESC) IES Holdings used to be known Integrated Electrical Services, where it designs and installs integrated electrical and technology systems. It also provides infrastructure products and services to several end markets. OK, enough with jargons. I am going to share one keyword that might get your heart beating faster… IES provides products and services for… DATA CENTERS. Yep, that’s right. IES is a key supplier for companies who build and run data centers. You’ve heard all about the boom of data centers. The company is positioned to grow with the industry. The company said U.S. data center’s construction spending is poised to grow 10% CAGR through FY27. In the graphic below, you can see how IES has a various of offerings for data centers: (Source: IES Holdings) Want another buzzword? You asked for it. And you got it. The company also has offerings for e-commerce distribution. The industry is poised to grow 14% CAGR through FY27. The offerings include warehouse management system, automated packing, sensors, LED lighting, and so on. (Source: IES Holdings) And it also provides products and services to residential housing, and commercial and industrial facilities (Source: IES Holdings) Let’s talk numbers. The company has one of the best operating leverages. Its revenue grew 22% CAGR from FY18 through FY23. Not bad. Its operating income did even better with a 44% CAGR in the same period. So, IES grew revenue without increasing expenses. An operating leverage like this tends to do wonders for earnings growth. (Source: IES Holdings) One of IES’s growth secrets was acquiring companies. It looked to acquire companies to (1) expand its locations and (2) add products and services. Just look at multiple companies IES acquired since FY16: (Source: IES Holdings) Bottom line: The company has a solid growth formula. It plays in fast-growing segments of data centers and e-commerce. The residential segment might take off if mortgage rates fall. And the earnings growth is also poised to be boosted by future acquisitions. This is a solid company. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](