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● Hard Landing Fears Grip Fund Managers

Today’s Global Economic Outlook – Focus on Powell’s Remarks and Stagflation Concerns

1. Powell’s Remarks and Their Evolution

Today, Chairman Powell expressed concerns about stagflation due to the effects of Trump’s tariffs.
Unlike his previous remarks at the March FMC, where he said, “Inflation due to tariffs is temporary,” he now suggested sustainability.
The market was disappointed that Powell took a conservative stance instead of a dovish one.
Fed Governor Christopher Waller emphasized that tariff inflation is temporary, but this contradicted Chairman Powell’s view, causing confusion.

2. Market Reaction and Changes in Fund Manager Sentiment

Immediately after Powell’s remarks, the market plummeted, recording intraday lows.
Investors were visibly anxious about the prospect that the impact of tariff inflation would last longer than expected.
According to a Bank of America fund manager survey,
ㆍFunds for U.S. stocks fell 53% in two months, resulting in a record outflow of funds.
ㆍThe underweight proportion of technology stocks (tech stocks) has increased significantly, leading to a contraction in investment sentiment.
ㆍOn the other hand, the investment proportion in defensive and utility stocks recorded the highest level since the global financial crisis.
Investors are weighing gold, cash, and government bonds as safe assets, and
Gold is emerging as a candidate for the best investment asset this year.

3. Global Economic Outlook and Inflation Concerns

According to the results of a survey of fund managers,
ㆍ42% expect a global recession in the future, the fourth highest figure in the last 20 years.
ㆍ57% of respondents expect global CPI to rise within 12 months, increasing inflation concerns.
In just one month, the global economic outlook has shifted rapidly from soft landing to hard landing.
Unlike Waller’s statement that “tariff inflation is temporary,” Chairman Powell emphasized the long-term sustainability of tariff inflation.
ㆍThe Fed is also taking a cautious stance on whether to cut interest rates.
As a result, concerns about stagflation (a situation in which economic growth slows but prices rise) are growing even further.

4. Overall Market Atmosphere and Investment Strategy

Investors recognize that the market is functioning, but volatility is increasing.
Amid uncertainty following Powell’s remarks,
ㆍIn the financial market, interest is focused on key SEO keywords such as ‘global economy’, ‘interest rates’, ‘inflation’, ‘Fed’, and ‘investment’.
ㆍInvestor sentiment is unstable, but preference for safe assets such as gold and treasury bonds, and cash positions is increasing.
In the end, the market could not avoid a decline on the day due to Powell’s conservative remarks and a surge in concerns about a recession.
Investors should pay closer attention to future policy changes and global economic conditions.

Summary

Today, Chairman Powell suggested that tariff inflation could continue, raising concerns about stagflation.
Amid conflicting views with his previous remarks, Fed Governor Waller’s “temporary” remarks conflicted, causing market anxiety.
Investors showed a record outflow of funds from U.S. stocks and a decrease in technology stock investment, while defensive and utility stocks increased.
Survey results showed that concerns about a global recession and inflation have increased significantly, highlighting the possibility of a hard landing in the future.
As a result, preference for safe assets such as gold, cash, and treasury bonds is spreading, and market volatility is greatly expanding.

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*YouTube Source: [Maeil Business Newspaper]

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