OK. I’m convinced. I’ll join up. But I’m not convinced on the no recession bet. Are markets just going to ignore the fact that for as long as records have been kept, and the 2/10 inverted for longer than 90 days, there has been a recession? Every single time. The average length of time from inversion to recession is 19 months. The 2/10 first inverted 10 months ago. Hence, a recession is not just likely by Q3, its more probable than not.
Conclusion. Both the bond market and the equity market are ignoring history. A history that has been correct 100% of the time. Those who believe it will be “different” this time are likely to get their ass handed to them.
Same with the housing market BTW. It won’t be different this time. It actually might be worse. Mean reversion really is a thing.
Alf, so according to this you basically are saying "anything can happen", right? Maybe there will be a recession, maybe not. These charts are really difficult to an average person, but the conclusion is not clear to me either.
Nice piece Alf. Unfortunately little too steep for me for the 'All Round Investor Tier'. AU$200 per month isn't cheap. For example, Real Vision charge $80 per month for their Plus Tier.
What about the LEI of The Conference Board? Soft surveys (ISM, PMI, Chicago, Philly)? Durable goods orders? Real income down for months? Soaring inventories? Decline in real consumer durable goods? Housing market tanking? Inverted yield curve? Global widespread weakness?
Market expectations/futures have notoriously been wrong.
Excellent piece! Still won’t buy because I’m the cheapest man in America, but will continue to sing your praises and share your work. Recent breadth thrust makes a rally more likely over the next few months, but risks of a volatile second half has increased as complacency comes back to the market. Just look at the popularity of the 0-1 dte options market.
Thanks for the update as always. Looks like things are changing and therefore need to be agile in terms of being open-minded to new data yet vigilant in light of what's happened historically.
So you’re saying to fight the Fed and invest in stocks based on the consensus estimates of “senior analysts”, many of whom were still in college in ‘08. Gotcha.
I understand that the bond market and the stock market are not pricing in a strong recession; but what is your own position? Is it like you mentioned "Not to fight the FED" who is unhappy with the complacency of the markets. Should we expect surprises from the FED? Is a strong recession already in the charts? Thank you for your great work. Ciao. Franck
Thank you kindly Alfonso for your hard work presented here for free ... and taking the time to respond graciously
To the posters with an ingrateful attitude and misunderstanding of objectively presented data, tweaking for free "instructions" because you won't take responsibility for your own DD / trades ( and are too cheap to realize the value of the work ) .... quit trading/investing ; you are going to lose money
You’re under fire here and I honestly think that is unfair. This piece, unlike the others, is not clearly a change of mind but is not a underlining of the last 3 months. I understand, by your comments of the comments, that you’re not sure what this rally is pricing in or if it is really pricing in anything.
Imo, and I’m just a interested guy on macro views, I think we’re observing a strange and unique manipulation of all markets by central banks to try to avoid an hard and long recession. They’re day trading like never before and this markets moves are a result of that force.
OK. I’m convinced. I’ll join up. But I’m not convinced on the no recession bet. Are markets just going to ignore the fact that for as long as records have been kept, and the 2/10 inverted for longer than 90 days, there has been a recession? Every single time. The average length of time from inversion to recession is 19 months. The 2/10 first inverted 10 months ago. Hence, a recession is not just likely by Q3, its more probable than not.
Conclusion. Both the bond market and the equity market are ignoring history. A history that has been correct 100% of the time. Those who believe it will be “different” this time are likely to get their ass handed to them.
Same with the housing market BTW. It won’t be different this time. It actually might be worse. Mean reversion really is a thing.
Se l'inglese avesse un congiuntivo vero, saremmo in grado di dire quando eri scettico.
Alf, so according to this you basically are saying "anything can happen", right? Maybe there will be a recession, maybe not. These charts are really difficult to an average person, but the conclusion is not clear to me either.
Nice piece Alf. Unfortunately little too steep for me for the 'All Round Investor Tier'. AU$200 per month isn't cheap. For example, Real Vision charge $80 per month for their Plus Tier.
What about the LEI of The Conference Board? Soft surveys (ISM, PMI, Chicago, Philly)? Durable goods orders? Real income down for months? Soaring inventories? Decline in real consumer durable goods? Housing market tanking? Inverted yield curve? Global widespread weakness?
Market expectations/futures have notoriously been wrong.
www.peterdag.com
Excellent piece! Still won’t buy because I’m the cheapest man in America, but will continue to sing your praises and share your work. Recent breadth thrust makes a rally more likely over the next few months, but risks of a volatile second half has increased as complacency comes back to the market. Just look at the popularity of the 0-1 dte options market.
Thanks for the update as always. Looks like things are changing and therefore need to be agile in terms of being open-minded to new data yet vigilant in light of what's happened historically.
Thanks Alf :) I am not sure what quadrant we are in right now. Does anyone know if we can start buying gold and silver miners?
Yeah I would not bet against a recession, 100%. LOL
I guess I am not fully clear on the intended message either. I will reread.
Ok, I get when someone changes bias or ideas, but until now we where surely in a recessions in middle 2023 - Your words.
This thought, was you 4 days ago on tweeter:
“Inflation-adjusted retail sales only print this week for so long when you are approaching a recession.
Next up: earnings recession.
Soon after: labor market recession.
Yes, respect the cyclical boost from the Chinese reopening.
But medium term: soft landing my a*s.”
My point is: have you changed your mind. Don’t mind if you do, but this wasn’t clear enough.
Btw, I’m a subscriber but we don’t have a forum on the macrocompass platform to debate. ( it would be nice though)
The Fed is F’ed. No way out. Bet on WW3 but will we survive as ICBMs rain down?
So you’re saying to fight the Fed and invest in stocks based on the consensus estimates of “senior analysts”, many of whom were still in college in ‘08. Gotcha.
Hello Alfonso,
Thank you for this very elaborate research.
I understand that the bond market and the stock market are not pricing in a strong recession; but what is your own position? Is it like you mentioned "Not to fight the FED" who is unhappy with the complacency of the markets. Should we expect surprises from the FED? Is a strong recession already in the charts? Thank you for your great work. Ciao. Franck
Thank you kindly Alfonso for your hard work presented here for free ... and taking the time to respond graciously
To the posters with an ingrateful attitude and misunderstanding of objectively presented data, tweaking for free "instructions" because you won't take responsibility for your own DD / trades ( and are too cheap to realize the value of the work ) .... quit trading/investing ; you are going to lose money
You’re under fire here and I honestly think that is unfair. This piece, unlike the others, is not clearly a change of mind but is not a underlining of the last 3 months. I understand, by your comments of the comments, that you’re not sure what this rally is pricing in or if it is really pricing in anything.
Imo, and I’m just a interested guy on macro views, I think we’re observing a strange and unique manipulation of all markets by central banks to try to avoid an hard and long recession. They’re day trading like never before and this markets moves are a result of that force.