Our Thoughts
Normal Pullback or Deeper Correction?
With the Fed's perceived strong arm on monetary policy and the recent US debt and banking institution downgrades (possibly more on the way), a continued decline in leading economic indicators, and the Chinese economy blowing up, investors are suspicious that the current path will produce any positive outcome.
Bank runs and 54% chance of recession?
If you recall, in last month's market outlook I remarked that I am cautiously optimistic (read here). I likened my cautiousness to the yellow flag that is waived in a formula one race.
Reduce speed, do not overtake, and be prepared to change direction.
Operation Break Stuff?
Take a look at the FHFA House Price Index from Q3 2022 (Q4 out in January). According to Nataliya Polkovnichenko, the Supervisory Economist for the FHFA, “House price gains have substantially disintegrated in the 3rd quarter with a pace comparable to the one we observed during the great recession”.