Could Elon Musk And Jamie Dimon Cause A June Swoon?

Posted by Ryan Detrick, CMT, Chief Market Strategist

Wednesday, June 8, 2022

The worries are mounting with Elon Musk and Jamie Dimon both adding to the fears over the economy. Last week, Jamie Dimon, JPMorgan Chase CEO, said to “brace yourself” for an economic hurricane, while Elon Musk had a “super bad feeling” about the economy and said that Tesla needed to cut 10% of its workforce.

Here’s where things get interesting. Musk pulled a quick 180, saying that Tesla will now increase headcount over the next year, while Dimon’s comments were quite different from his take on the economy just a few weeks prior. Additionally, the same day of Dimon’s hurricane comments, a JPMorgan quantitative analyst was out saying the S&P 500 Index could make back all of its losses by the end of the year.

“We aren’t ignoring the cautious comments we’ve heard from some high profile business leaders, but you have to wonder how serious they are when they quickly change their tune a day or two later,” opined LPL Financial Chief Market Strategist Ryan Detrick. “The economy is indeed slowing, but it isn’t headed for a recession any time soon in our view. Think about this, this would be the first recession ever to have record earnings and a booming jobs market.”

As shown in the LPL Chart of the Day, June is historically a weak month as we discussed here, but the majority of the trouble tends to come later in the month. High profile names making big calls get the headlines, but investors need to know that the calendar in June (particularly late June) could still be troublesome.

View enlarged chart.

China is opening back up, S&P 500 2023 earnings estimates are up 2.5% this year, supply chains are improving, semiconductor prices are peaking, and shipping rates and fertilizer prices have all begun to turn lower. Things aren’t perfect, but we are finally starting to see some improvement that could suggest peak inflation is here, just what is needed for a more sustainable stock market rally.

Lastly, be aware that the weak month of June has actually be quite strong lately. Up six years in a row and up eight years over the past decade, suggests June doesn’t always have to be weak.

View enlarged chart.

For more on Elon Musk and Jamie Dimon, the economy, and a June swoon, be sure to watch our latest LPL Market Signals podcast below, with Ryan Detrick and Jeff Buchbinder.


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