Citi CEO sees recession more likely in Europe than U.S. & More News Here

June 3 (Reuters) – Citigroup Inc (C.N) Chief Executive Jane Fraser mentioned on Friday that Europe was more likely than the United States to slide right into a recession, as she joined different international financial institution CEOs this week to warn in regards to the well being of the worldwide financial system.

Fraser, head of the third-largest and most globally centered U.S. financial institution, just lately returned from a world tour with stops in Asia, Europe and the Middle East, the place she mentioned her conversations centered on “the three Rs.”

“It’s rates, it’s Russia and it’s recession,” Fraser mentioned, talking at an investor convention in New York.

But Fraser mentioned in Europe, “the energy side was really having an impact on a number of companies in certain industries that are not even competitive right now.”

“Because of the cost of electricity and the cost of energy, some of them are shutting down operations. So Europe definitely felt more likely to be heading into a recession than you see in the U.S.,” Fraser added.

Fraser mentioned in the United States, the query is more about rates of interest than recession.

“It’s certainly not our base case that it will be, but it’s not easy to avoid either,” Fraser added.

On Wednesday, JPMorgan & Chase Co’s (JPM.N) Chairman and Chief Executive Jamie Dimon described the challenges going through the U.S. financial system as akin to a “hurricane,” whereas Goldman Sachs (GS.N) President and Chief Operating Officer John Waldron mentioned on Thursday the present financial turmoil is without doubt one of the most difficult he has ever confronted. learn more

Tesla Inc (TSLA.O) CEO Elon Musk added to the downbeat sentiment, saying he has a “super bad feeling” in regards to the financial system and desires to chop about 10% of jobs on the electrical carmaker, in a message despatched on Thursday titled “pause all hiring worldwide.” learn more

However, Cleveland Federal Reserve Bank President Loretta Mester informed CNBC on Friday that she does not see a “hurricane” forward, however “we have to realize that the risks of recession have gone up.” learn more

Major central banks, already plotting rate of interest hikes in a battle towards inflation, are additionally making ready a typical pullback from key monetary markets in a first-ever spherical of worldwide quantitative tightening anticipated to limit credit score and add stress to an already-slowing world financial system.

“It feels like the ECB is a few months behind where the Fed has been in getting its arms around inflation and without quite the same flexibility that U.S. has,” Fraser mentioned, referring to the European Central Bank.

The U.S. job market stayed robust in May, information on Friday confirmed, with employers hiring more employees than anticipated and sustaining a reasonably robust tempo of wage will increase. U.S. inventory indexes fell on Friday because the strong jobs report supported the view that the Federal Reserve would proceed on its aggressive coverage tightening path to chill decades-high inflation. learn more

“When we look at what the clients are talking to us about from a macro perspective, I think the confidence is still pretty good amongst the CEOs and the CFOs,” Fraser added.

Fraser mentioned she additionally expects U.S. fairness markets to enter a interval of much less volatility and for the Chinese authorities to launch a recent spherical of fiscal stimulus in the approaching months, as that nation begins to open up from COVID-19 pandemic-related lockdowns.

In China, Fraser mentioned she “wouldn’t be surprised to see action taken on fiscal stimulus.”

Reporting by Elizabeth Dilts Marshall and Noor Zainab Hussain; Writing by Denny Thomas; Editing by Nick Zieminski, Will Dunham and Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

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