Eddie Ghabour, managing partner at Key Advisors Wealth Management, said his firm has sold roughly 70% of its stock holdings in recent months, taking a defensive stance as volatility rises.

“We don’t think the market is properly assessing the risks,” he said, pointing to growing concerns about a potential stagflation environment.

Defensive Mode: Cash Over Stocks

The firm has significantly reduced exposure to equities, especially in sensitive sectors like: Technology, Software

Instead, it is holding:

• Higher levels of cash
• Limited exposure to gold and fixed income

Ghabour believes current conditions are very different from past market dips, where quick recoveries followed shocks.

“This is a much different scenario,” he said.

What Needs to Happen Before Buying

Despite the cautious stance, the firm is not bearish long term. It is simply waiting. Ghabour said two key signals must stabilize before re-entering the market:

• 10-year Treasury yields
• Oil prices

Right now, both are moving too aggressively, creating uncertainty for investors and businesses. Until energy prices fall and bond markets calm down, the firm is avoiding new long positions.

Dip Buying… But Not Yet

While many investors are eager to “buy the dip,” Ghabour believes it is still too early. He expects markets could fall further, meaning better opportunities may come later.

“If you’re fully invested, you’ve got nothing to buy the dip with,” he said, highlighting the importance of holding cash during uncertain periods.

Big Tech Still the Target

When the firm does return to the market, the focus will likely be on Big Tech.

Ghabour specifically mentioned: Nvidia, Apple, Applied Materials

He believes these companies will benefit once conditions stabilize and sees the current volatility as setting up future opportunities. The strategy reflects a growing divide among investors. Some are buying the dip. Others, like Ghabour, are stepping back and waiting for clearer signals.

For now, his message is simple: The opportunity will come but the timing is not here yet.

Related: Investors Turn to New Strategy as Stocks and Bonds Fall Together

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

The post A $1 billion Fund Manager Cuts 70% of Stocks, Waits for These Buying Opportunities first appeared on Finblog.

New economic data released this week shows that inflation remained elevated while economic growth slowed, a combination that has long worried economists and policymakers.

The Federal Reserve’s preferred inflation measure showed prices rising 0.3% in January, bringing the annual inflation rate to 2.8%. Core inflation, which excludes food and energy, rose 0.4% for the month and 3.1% year over year, suggesting price pressures remain persistent.

These numbers were already troubling for markets. But they reflect conditions before the outbreak of the war between the US, Israel, and Iran, meaning the latest surge in oil prices has not yet been reflected in the data.

Oil Shock Could Push Inflation Higher

Economists warn that the conflict could create a global energy supply shock, driving inflation higher while weakening economic growth.

Unlike demand-driven inflation seen after the pandemic, the current situation is more closely linked to disruptions in energy supply.

Rick Rieder, chief investment officer at BlackRock, said the difference is important for the broader economy.

“This conflict represents a supply shock, not demand-driven inflation,” he said. “A supply shock will reduce demand, consumption, and consequently growth.”

Economic Growth Already Slowing

At the same time, the US economy was already losing momentum.

New data showed that US gross domestic product grew just 0.7% in the fourth quarter, sharply revised down from an earlier estimate of 1.4% growth.

The combination of slowing growth and persistent inflation has revived fears of stagflation, a difficult economic environment where prices remain high even as economic activity weakens.

For now, economists say the full impact of the Iran war is still unknown.

But with energy prices rising and growth already softening, the economy may have entered the conflict in a far more fragile position than previously believed.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Related: Oil Surges as Iran War Threatens Global Energy Supply

The post Stagflation Risks Were Rising Even Before the Iran War first appeared on Finblog.

“The odds of soft landing are diminishing a little bit,” Dimon told Bloomberg in an exclusive conversation.
“I think it’s a mistake to declare victory… the Fed is right to wait.”

What’s Driving His Concern?

Dimon pointed to a confluence of factors:

• Stubborn inflation, especially in services and wages
• Slowing economic growth, visible in recent data
• Rising geopolitical risk and global instability
• Ballooning U.S. deficits, worsened by recent fiscal policy decisions

He called it a “dangerous time” for policymakers and urged caution — especially as markets begin to price in multiple rate cuts later this year.

“I still think inflation will be stickier than people expect,” Dimon said, adding that “stagflation is not the worst case, but it’s a plausible one.”

Why It Matters: The Stagflation Ghost

Stagflation — a mix of high inflation, low growth, and rising unemployment — is one of the worst combinations for markets. It challenges central banks, hurts earnings, and erodes consumer confidence.

Dimon isn’t alone in raising the alarm. Earlier this week, the European Central Bank also warned that President Trump’s shifting tariff policies could destabilize the global economy, adding to market volatility and inflationary pressures.

Debt, Spending, and the Political Backdrop

Dimon’s comments came just as Trump’s “big, beautiful bill” — a massive tax and spending plan — passed a key hurdle in the House. The bill, which would extend the 2017 tax cuts and increase military and immigration enforcement funding, is projected by the CBO to add $3.8 trillion to U.S. debt over the next decade.

While markets initially welcomed the bill as stimulative, Dimon isn’t convinced.

“We keep on spending like drunken sailors,” he previously said during JPMorgan’s annual shareholder letter. “Eventually that has consequences.”

The Fed’s Tightrope

Dimon gave a rare nod of approval to the Federal Reserve’s current stance:

“They should wait and see. Why rush?”
“You have geopolitical uncertainty, you have war, you have fiscal spending and deficits which are growing and just enormous.”

His message was clear: this isn’t the time for optimism — it’s time for caution, realism, and watching the data.

Jamie Dimon has long been a bellwether voice on Wall Street, and when he says stagflation is a possibility, investors listen. As the Fed debates its next move, and Congress passes budget measures that could reshape the debt outlook, the risks ahead are no longer abstract — they’re arriving.

“This is not just about rate cuts,” Dimon said. “This is about how we maintain economic stability in a world that’s shifting fast.”

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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The post US at risk of stagflation, Fed right to hold: Jamie Dimon first appeared on Finblog.

“We now expect real GDP to contract under the weight of the tariffs,” Feroli wrote in a note Friday night.

The Numbers

• Q3 2025 GDP forecast: -1%
• Q4 2025 GDP forecast: -0.5%
• 2025 full-year GDP: -0.3%
• Unemployment forecast: 5.3% (currently 4.2%)
• Core PCE inflation forecast (end of 2025): 4.4% (up from 2.8% in Feb)

JPMorgan’s outlook paints a stagflationary picture—rising inflation paired with slowing growth—a double threat that could force the Fed into a policy bind.

Stagflation Risks

The Trump administration’s reciprocal tariff policy, which includes:

• A baseline 10% duty on nearly all imports
• Targeted 30–54% tariffs on top U.S. trade partners

…has already triggered inflation alarms across the board.

“The pinch from higher prices that we expect in coming months may hit harder than the post-pandemic spike,” Feroli warned.

What Will the Fed Do?

Despite market hopes for rate cuts, JPMorgan is cautious. Feroli sees a 25-basis point rate cut in June, followed by consistent cuts through early 2026, bringing the benchmark rate down to 3%. But he warns the Fed may hesitate:

“Our stagflationary forecast would present a dilemma to Fed policymakers.”

Fed Chair Jerome Powell said Friday it’s still “too soon” to adjust policy and that the Fed is watching for price-wage spirals and signs of persistent inflation. (Powell Warns Trump Tariffs Risk Sparking Higher Inflation)

Outlook

Wall Street had hoped Trump’s policies would remain business-friendly. But the scale and speed of his tariff rollout have blindsided investors and economists alike. JPMorgan’s official recession call may be the first on Wall Street—but it’s unlikely to be the last.

“Never have we seen a self-inflicted debacle of epic proportions like this tariff slate,” Dan Ives of Wedbush wrote.

A storm is brewing—and recession alarms are now ringing.

Related: Trump Announces Tiered Tariffs on China, EU, India, Others — “This Is Just the Start”

‘No Winner In A Trade War’: China, EU And Others React To Trump’s Reciprocal Tariffs

This Is the Largest Tax Shock in Nearly 60 Years

Here’s What Will Cost More After Trump’s Tariffs: Coffee, Cars, More

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Where’s gold? Germany’s conservatives sound alarm over reserves in US

The post JPMorgan now sees a US recession this year first appeared on Finblog.

Economists are sounding alarms across the board, warning that new levies on global imports could tip the already fragile U.S. economy from soft landing to stagflation spiral.

“There’s an unmistakable whiff of stagflation in the air,” wrote the Financial Times, citing tightening credit, sticky inflation, and faltering demand as early signs.

What’s Happening?

• Average U.S. tariff rate has jumped to ~8% as of March 2025
• Under Trump’s reciprocal plan, that could spike above 35% — levels not seen since the 1800s
• Consumer inflation expectations just hit 5%, per University of Michigan
• March jobs data expected to show hiring slowdown, with unemployment stuck at 4.1%

“This is a stagflation setup,” warned one Morgan Stanley economist on WSJ’s Take on the Week podcast.

What’s Fueling the Fear?

• Trump’s tariffs will raise costs for autos, industrial inputs, and consumer goods
• Wages aren’t keeping up
• Growth projections are sliding — even as prices remain elevated
• Investor sentiment is fracturing

Why It Matters

In normal recessions, the Fed can cut rates. But stagflation ties policymakers’ hands: inflation’s still too high, even as the economy slows.

“It’s the worst-case policy trap,” Axios noted.

What’s Next?

Markets are watching two key data points:

1. March jobs report (Friday) — key for labor sentiment
2. CPI data mid-April — will show how fast tariffs ripple through prices

As tariffs surge and economic signals flash yellow, the U.S. may be entering its most dangerous economic phase since the 1970s — one where neither Wall Street nor Washington has a clear playbook.

Sources:

• Financial Times – “Whiff of Stagflation”
• Axios – Stagflation vs. Recession
• Fortune – Smell of Stagflation
• WSJ – Take on the Week

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The post Stagflation Fears Surge on Eve of Trump’s Tariff Shock first appeared on Finblog.