Our Thoughts
What’s in store for Q4
Uncertainty is ramping up. Most notably, expanding geopolitical tensions and US election rhetoric, extreme market valuations, and unsustainable national debt.
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.
Will Spring Awaken The Bear?
The Fed does expect a "mild" recession in 2023 according to the recent Fed minutes. We can only hope that "mild recession" is not similar to the "transitory inflation" scenario the Fed touted in 2021.
Is the big BEAR finally hibernating?
While the yield curve and leading economic indicators have been signaling a recession, other data such as the lagging indicators that the National Bureau of Economic Research (NBER) tracks to actually call a recession has held up, as of right now, AMAZINGLY well.
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”.
Stop Talking About Stocks.
Honestly, I don't want to talk about stocks this Thanksgiving.
Not because of the brutal year we have had, but because I believe that the fragile state of the treasury debt market should be the real topic of discussion.
Debt rules the world. Without it, companies do not grow... We do not grow. And when it does not function properly, it has the potential to throw some serious punches at all asset prices.
Red October?
As I am sure you are aware, rising interest rates, the extremely quick rise of the US dollar (see chart), and inflation are all trending headline topics currently.
All three are connected and even worse, they are playing a big role in pushing the WORLD into recession.