Bank Of America Thinks '2024 Is Starting To Look Like 2015 But In Reverse' While Jamie Dimon Warns 2024 Looks Like The 1970s

Bank of America Corp. BAC analysts recently released a note predicting that the Federal Reserve will only cut rates once this year, compared with their previous prediction of four cuts. 

"2024 is starting to look like 2015 but in reverse. Then the Fed signaled hikes it could not deliver; now the Fed may be signaling cuts that the inflation data do not justify," Bank of America economist Michael Gapen said in the note. "The acceleration of inflation this year makes a cut prior to December challenging in our view."

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In 2015, the Fed increased interest rates and reduced support for the American economy, despite a minimal increase in inflation rates of 0.12%. 

March saw a 3.5% rise in the consumer price index greater than the 3.2% jump for the 12 months ending in February, driven mainly by significant increases in food and beverage costs, according to the U.S. Bureau of Labor Statistics. Juice and drink prices soared by 27.5%, while egg prices climbed by 4.6%.

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While 2015 could be viewed as a great buying opportunity for U.S. stocks, with the SPDR S&P 500 ETF Trust SPY up about 142% from the start of that year to today, others aren't so sure it's the right parallel.

For example, JPMorgan Chase & Co. CEO Jamie Dimon sees a different, and perhaps more ominous, setup ahead for markets given how much spending is needed to tackle today's pressing issues.

Specifically, he shares his view that "$2 trillion of fiscal deficit, the infrastructure and IRA act, the green economy, the remilitarization of the world, the restructuring of trade are all inflationary,” with that looking “like the 1970s to me." 

Reflecting on whether investors are ready for higher-than-expected inflation, Dimon ominously said he's "not sure."

Meanwhile, the Fed seems to be delaying any interest rate cuts until inflation is more manageable. 

In an interview with Bloomberg on April 15, Federal Reserve Bank of New York President and CEO John Williams said, "We will need to start a process at some point to bring interest rates back to more normal levels, and my own view is that process will likely start this year." 

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