A “Sold” sign outside a home in the Toll Brothers Regency Ranch at Folsom housing community in Folsom, California, US, on Tuesday, May 16, 2023.
David Paul Morris | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Stocks rebound
Major U.S. indexes rose Tuesday in a tech-fueled rally, shaking off their multiday losing streaks. However, U.S. futures dipped slightly in overnight trading. European markets traded higher too. The pan-European Stoxx 600 inched up 0.05%, breaking its six-day losing streak. That’s partly thanks to a 16% surge in shares of fintech company Wise, which reported income growth of 73% year on year.
Recession warning
The U.S. will slip into recession in the fourth quarter this year, and will continue languishing in it for 2024, according to HSBC Asset Management. Additionally, the euro zone will join the U.S. in seeing its economy contract next year. The silver lining of this forecast: Inflation will fall quickly, and HSBC expects the Federal Reserve to cut rates by the end of this year.
Higher rates for longer
European Central Bank President Christine Lagarde said inflation in the euro zone is still “too high and is set to remain so for too long.” In May, headline inflation was 6.1% for the region, lower than April’s reading of 7% but still three times the ECB’s target of 2%. Lagarde warned that it’s unlikely the ECB will pause rates, let alone cut them, anytime soon.
Unity’s A.I. marketplace
Unity shares jumped over 15% to touch $42.38 per share after the company launched a marketplace for artificial intelligence software. The company develops a game engine — also called Unity — that allows users to produce games for phones and consoles. With the new marketplace, users can choose software from other companies to generate AI graphics, text, voice and so on.
[PRO] Seth Klarman on markets
Legendary investor Seth Klarman of Baupost Group spoke with CNBC Tuesday in an exclusive interview. Two highlights: Klarman pointed out one of the most common mistakes regular investors commit when buying index funds and identified a “hunting ground” for investors looking for opportunities. Watch the full interview here.
The bottom line
Recession, recession, recession. The calls are getting so loud you’d still hear them even if you covered your ears.
Here’s Joseph Little, global chief strategist at HSBC Asset Management: “”The coming recession scenario will be more like the early 1990s recession, with our central scenario being a 1-2% drawdown in GDP.”
JPMorgan Chase’s top strategist Marko Kolanovic: “We expect a more challenging backdrop for stocks … given the decelerating economy and a likely recession starting in 4Q23/1Q24.”
Baupost Group Chief Executive Officer Seth Klarman: “The goal of the Fed is to reduce the…