(Yahoo! Finance) - It may be JPMorgan's (JPM) investor day today, which brings with it the inevitable Jamie Dimon CEO successor chatter.
But a hat tip to Citigroup (C) CEO Jane Fraser for aiming to snag a few headlines of her own in a rare blog post on Friday.
"We are entering a new phase of globalization — one less defined by cooperation, and more by strategic self-interest," Fraser wrote. "Long-held assumptions are being challenged, not just by tariff announcements but by a deeper confidence shock. The near-term impact is already being felt, and the long-term trajectory is being rewritten in real time."
Fraser said the markets are signaling a "shift" by moving to price greater risks into assets.
"If you're looking to markets for clarity, you might be a tad disappointed," Fraser wrote. "But if you're looking for signals, they're everywhere. Treasury yields rose even as equity markets wobbled. The U.S. dollar, typically a safe haven, has weakened at moments when it used to rally."
"That tells us something deeper is going on," she continued. "Investors aren't just pricing near-term risks; they're reevaluating the credibility of long-held certainties. It's showing up in how capital moves. Pensions and asset managers are tilting more towards Japan, India and parts of Europe. Hedge funds are being selective and didn't chase the April equity bounce. Sovereign wealth funds are diversifying more aggressively. Hedging against the dollar is now at levels we haven't seen in years."
Investors would be wise to reflect on Fraser's thoughts.
Markets just got a negative surprise in the US losing its sterling triple-A credit rating. Moody's downgraded the US government late Friday, blaming large fiscal deficits and rising interest costs. Stocks sold off across the board on Monday as the 10-year Treasury yield (^TNX) rose above the key 4.5% level.
Another market surprise lying in the weeds is the third quarter earnings season, which typically begins in mid-October. Pros think the cumulative effect of tariffs will be most severe in the third quarter, much to the dismay of upbeat analysts who continue to expect bumper corporate profits.
"I think there's a lag between the tariff announcements and when they actually hit the earnings," Trivariate Research founder Adam Parker said on Yahoo Finance's Opening Bid podcast. "So I suspect it's more likely that third quarter numbers that are going to soften a little bit."
Citi's Fraser sees the concern on corporate profits from her perch, noting that the economic consequences of tariffs will take time to play out.
"Tariffs work like sand in the gears of growth, increasing friction over time," Fraser wrote. "We're hearing it directly from clients. ... At the same time, there may be a break in the clouds. With inflation cooling slightly and a temporary agreement between Beijing and Washington to lower tariffs, markets rallied sharply this week and investors now believe the worst-case scenario is off the table."
"Still, uncertainty remains," Fraser added. "Companies are pausing decisions, delaying capex and holding off on hiring. Many are preparing for second- and third-order effects, from demand shocks to supplier uncertainty."
By Brian Sozzi - Executive Editor
