"Devoid of confounding variables like earnings or growth, Bitcoin or Ethereum are good sentiment and liquidity litmus test. Each experienced a >40% trough-to-peak rally during the month of January."
Well, recent price action would suggest that the bear may be emerging from hibernation. SPX nominally up on Friday's close, the cryptos down 2 or 3%.
Great writing, thank you Bear. So true that the answer to so many seemingly paradoxical indicators is yes. I fear scenario 4 may be the ultimate path. I am yet to hear anyone indicate softening of the labor market anecdotally - every business owner I talk to is exhausted with the lack of willing labor supply. On another facet: I may be over simplifying, and I'm sure that there are all sorts of fancy credit terms out there, but I just can't get past the reality that when operating cash position dries up it's not long later that the music has to stop for a business. The data that keeps catching my eye is the sharp reversal in trend related to commercial entities, checkable deposits. Very opposite of the checkable situation for households. https://fred.stlouisfed.org/series/NCBCDCA
Great write up as always! I have also been thinking about this disconnect particularly the 10Y & 2Y yield inversion. As you mentioned we haven’t seen this type of inversion since the 1970s and 1980s. The longest it has taken for a rescission to hit after the 10Y & 2Y is 24 months. We are currently around 9 months in, my thinking is that we might see equity markets rallying for another year and three (maybe longer). Until the market finally breaks and the yield curve corrects.
A really nice YTD rally. I wanted to lock it in. My gut feeling is we give up the YTD gains and flip red for the year sooner than later. Bought some boomer preferreds. This market and environment is not easy.
Powell’s brief aside quoted above stood out to me as being the most candidate and insightful."
People don't really analyze crumbs ... I'm sure you're making a point that although many of the words are of little value they are all being scrutinized as though they had value?
And, probably, "candid"? Auto-corrupt strikes!
OK, back to the article. I hope you'll make the point that one reason for the apparent contradiction in the data is that deeply entrenched Narratives are purposely obscuring and outright lying about Reality.
Read some relevant pieces about labor hoarding that may explain some of this macro puzzle. A lot of the construction workers that should have been laid off with the drastic decrease in housing activity was instead retained as firms are paranoid of being unable to hire back workers when things “go back to normal.” This may be informed by how fast the economy recovered in 2020.
"Devoid of confounding variables like earnings or growth, Bitcoin or Ethereum are good sentiment and liquidity litmus test. Each experienced a >40% trough-to-peak rally during the month of January."
Well, recent price action would suggest that the bear may be emerging from hibernation. SPX nominally up on Friday's close, the cryptos down 2 or 3%.
Great writing, thank you Bear. So true that the answer to so many seemingly paradoxical indicators is yes. I fear scenario 4 may be the ultimate path. I am yet to hear anyone indicate softening of the labor market anecdotally - every business owner I talk to is exhausted with the lack of willing labor supply. On another facet: I may be over simplifying, and I'm sure that there are all sorts of fancy credit terms out there, but I just can't get past the reality that when operating cash position dries up it's not long later that the music has to stop for a business. The data that keeps catching my eye is the sharp reversal in trend related to commercial entities, checkable deposits. Very opposite of the checkable situation for households. https://fred.stlouisfed.org/series/NCBCDCA
Great write up as always! I have also been thinking about this disconnect particularly the 10Y & 2Y yield inversion. As you mentioned we haven’t seen this type of inversion since the 1970s and 1980s. The longest it has taken for a rescission to hit after the 10Y & 2Y is 24 months. We are currently around 9 months in, my thinking is that we might see equity markets rallying for another year and three (maybe longer). Until the market finally breaks and the yield curve corrects.
A really nice YTD rally. I wanted to lock it in. My gut feeling is we give up the YTD gains and flip red for the year sooner than later. Bought some boomer preferreds. This market and environment is not easy.
"Every word is analyzed like a bread crumb ...
Powell’s brief aside quoted above stood out to me as being the most candidate and insightful."
People don't really analyze crumbs ... I'm sure you're making a point that although many of the words are of little value they are all being scrutinized as though they had value?
And, probably, "candid"? Auto-corrupt strikes!
OK, back to the article. I hope you'll make the point that one reason for the apparent contradiction in the data is that deeply entrenched Narratives are purposely obscuring and outright lying about Reality.
Read some relevant pieces about labor hoarding that may explain some of this macro puzzle. A lot of the construction workers that should have been laid off with the drastic decrease in housing activity was instead retained as firms are paranoid of being unable to hire back workers when things “go back to normal.” This may be informed by how fast the economy recovered in 2020.
Micheal Burry once said high inflation and multi-year recession. No one is telling this.
Sum coffe, it’s Friday plus some great article from TLBS, what else? Thanks Bear!