Bloomberg Daybreak: Asia Edition Dimon's Recession Warning; XPeng Earnings Preview
May 16, 2025
Michael Green, Chief Strategist at Simplify Asset Management, discusses the precarious state of the U.S. economy and the potential for recession amidst tariff impacts. He highlights how Asian currencies are poised to benefit from lower U.S. Treasury yields. Linda Liu, China Autos Reporter for Bloomberg News, dives into the competitive landscape of the Chinese EV market, previewing XPeng's upcoming earnings and discussing the boost from government incentives for electric vehicles. Together, they provide a keen analysis of current economic pressures and innovations in the auto industry.
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US Consumers Under Financial Stress
- The lower 50% of US consumers face rising financial stress due to student loan debt and credit delinquencies.
- This economic pressure limits spending, potentially leading to slower growth or a recession as per Jamie Dimon's caution.
Shift in Inflation Dynamics
- Goods deflation has dominated inflation trends for two years but is now under pressure from tariffs and costs.
- Inflation may rise slightly but will not reach the highs seen in 2020 and 2021, says Michael Green.
Tariff Inflation Restricts Economy
- Inflation from tariffs acts like a tax increase, which restricts the economy rather than reflecting excess demand.
- The Federal Reserve is hesitant to cut rates due to inflation scars, despite market data suggesting low inflation risk.