The Reckoning
The big macro wheels are turning and everybody better pay very close attention. The Reckoning is coming. Best hope for a substantive China trade deal and a last minute save on Brexit to perhaps delay the inevitable: The Coming Recession.
This week’s full frontal capitulation by the Fed has not only removed a key buying carrot, but also has brought about the inversion of the yield curve, a classic confirming warning sign that a recession is coming. The key question of course: The when and the how. Bulls will want to hope the recession is at least another year or two away to engage participants in a final game of musical chairs before the rug gets pulled. Bears will point to structural forces and factors that suggest that a recession may come a lot sooner than anyone expects.
In this edition of the Weekly Market Brief I’ll outline some key macro risk factors and dissect some key technical developments I think everyone should be aware of.
Before I do that a quick announcement: After considering all the feedback I’ve received (thanks by the way) I’ve decided to continue to provide a video component as part of the Weekly Market Briefs whenever possible. They truly help provide context and color to the charts. If you want get notifications of the videos you can subscribe via my channel here: NT YouTube Channel.
Now onto markets:
Let’s me get something straight here: Bulls continue to be wrong on the macro and bears continue to be right.
Fact: All the glorious projections made by bulls about growth and earnings continue to get overrun by the deteriorating macro reality. The same folks that didn’t forecast the 2015/2016 earnings recession also didn’t predict the 2019 earnings recession (or the 2018 20% market drubbing for that matter) and are once again clinging to dovish central banks to bail them out.
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