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recession

Recessionary Impacts: ‘Down The Road’

When JPMorganChase reported earnings in mid-July, CEO Jamie Dimon quipped: “This is not a normal recession… the recessionary part of this you’re going to see down the road.” This observation is spot on. Dimon was observing that, while government had shut down much of the “nonessential” (i.e., 80%) economy, they also transferred $2.1 trillion to private households which more than made up for the $720+ billion of lost wages. We have seen many …Read More

The Recovery Begins – The Steep Part Of The “V”

The big market mover this week was Retail Sales, up 17.7% in May. Consensus estimates averaged 8%. A pop was expected; the magnitude wasn’t. Remember, the economy has never seen this kind of shutdown, or experienced such fiscal or monetary policies, so there is no experience or precedent upon which forecasts can be based. In this recovery, the consensus is likely to get the direction right, but as we have seen with other data …Read More

On Gazing Into The Abyss

The six large cap stocks (FB, AAPL, AMZN, GOOGL, NFLX, and MSFT), which now compose 22% of the S&P 500 (vs. 10% five years ago) are, amazingly, up about 4% YTD as of Friday April 17. The S&P 500, itself, closed Friday, down only -11% YTD (and only -15% below its all-time peak), even in the face of the most severe Recession (Depression?) since the 1930s. And, Wall Street is raving that …Read More

The Recession Has Arrived, & with a Vengeance

For some time, I have outlined the growing softness in the U.S. and world economies.  Most of the recent data is pre-virus, and are generally meaningless.  The numbers we will get for March will be awful, but the worst is yet to come.  An example of March’s data is from the Philly Fed.  The print of their Manufacturing Index was -12.7 for March, down a record amount from the +36.7 …Read More

FOMO, Momentum, The Fed, But No Fundamentals

As of this writing, the equity markets are on a three-day losing streak, caused by less optimism on the “trade war” file. And, while there were some positives in recently released economic data, most major economic indicators continue to show business contraction. The equity market has been driven by “the economy is strong” narrative, FOMO (Fear of Missing Out), momentum, and the injection of huge amounts of liquidity by the Fed (QE4). Unfortunately, …Read More

A Full-Employment Recession: Post-WWII Growth Model Flawed

There were three big interrelated economic events at the end of October. We had the first pass at Q3 GDP, followed by the Fed meeting (another reduction in the Fed Funds Rate), and the week ended with a much stronger than anticipated jobs report. The data continue to imply that the traditionally accepted post-WWII growth model (emphasis on positive aggregate GDP growth) is no longer applicable, and policies based on it …Read More