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Recession Odds Spike To 37%, JPM Calculates, Highest Yet For This Cycle

While not as dire as the recent analysis by Deutsche Bank, overnight JPM released its latest recession probability analysis, and - somewhat unexpectedly following the last two stellar job reports and a full court political press that the recovery has rarely been stronger going into the election - now sees a 37% chance of a recession in the next 12 months. This is the highest recession probability calculated by Jamie Dimon's bank during the current economic cycle, and matches the odds first laid out in early July.

Bad Data, Broader Alarms, And Business Cycles

The economy is pointing downward with alarms ringing in a wider and broader variety of important economic accounts. From this view, it is no wonder the FOMC overreacted to the May payroll report; that’s all that is left as it is more and more isolated.

Global Stocks Rise, US Futures Near All Time Highs As Flood Into Emerging Markets Continues

European shares advanced, with gains in automakers  helping Germany’s benchmark DAX Index turn positive for the year for the first time. Stocks rose around the world, led by emerging-markets, as oil climbed further after its best week since April and traders pushed back bets on higher U.S. interest rates. S&P futures advance and Asian stocks little changed as rising oil prices bolstered investor sentiment.

Preview Of Key Events In The Coming Week

The coming week brings multiple macro data releases for July, including inflation, trade data, retail sales, IP, credit and money supply. A relatively light US data calendar next week with retail sales the main release on Friday but also import and producer prices and Michigan sentiment coming up. Retail sales will be closely watched to assess consumer spending growth for 3Q.

6 Regional Feds Voted To Hike The Discount Rate In Early June, Up From 4 In April

Back in April, when the world was still reeling from the China devaluation inflicted market slump, the Fed's discount rate minutes for the months of March/April showed that 4 regional Feds wanted a 25 bps rate hike, up from just two  - the Richmond Fed and Kansas City - in the Feb/March meeting. Moments ago the Fed released its latest May/June Discount Rate Minutes which revealed that both the (Jim Bullard's) St. Louis and Boston Feds joined four other regional Feds, Cleveland, Richmond, Kansas City and San Francisco, in seeking a quarter point increase in Fed discount rate to 1.25 percent prior to the June 14-15 FOMC meeting.

Saudi Strategy Working: OPEC Captures Largest Market Share Since 1975

OPEC has captured its largest share of the oil market since 1975, which could be seen as a vindication of the cartel’s strategy over the past two years. But it also creates vulnerabilities for the U.S. and others, who are once again increasingly dependent on the Middle East for oil.

JPMorgan Says Recession Odds Rise To New Cycle Highs

After edging down to 34% on June 16, JPM's preferred macroeconomic indicator of the probability that a recession begins within 12 months has moved back up and now sits at 37%, the highest it has been in the current economic cycle.

US Futures Rebound After Volatile Session, All Eyes On June Payrolls

In a session where bleary-eyed traders followed the all-night tragic developments out of Dallas and initially sold off risk assets, it is good to see that some normalcy prevailed with the traditional post Europe-open futures ramp, which was further assisted by the successful resolution of the Dallas standoff, which has pushed futures modestly higher ahead of today's main event for markets, the June payrolls report due in under two hours.

"Our Monetary Humpty-Dumpty Is Heading For A Great Fall" - Teetering On The Eccles Building Wall

So for the third time this century, a business cycle contraction will come without warning from the Fed. Once again the Kool-Aid drinking perma-bulls, day traders and robo-machines will be bloodied as they stampede for the exit ramps. But it is the main street homegamers, who have been lured back into the casino for the third time this century, that will suffer devastating losses yet another time. Indeed, if there were even a modicum of honesty left in the Eccles Building it would be warning about the weakening trends in the US economy, not cheerleading about fleeting and superficial signs of improvement.