Posted on 06/27/2023 9:11:19 AM PDT by lasereye
The first half of 2023 will come to a close on Friday.
And when it does, one of Wall Street's big predictions for 2023 will officially be a bust — the stock market did not fall and the US economy did not enter recession.
When the year began, we flagged a "surprising consensus" among Wall Street strategists, many of whom expected a dip in the stock market in early '23 as the economy fell into a downturn before a rebound over the second half of the year.
Instead, investors have been treated to a stock market rally accentuated by AI hype, a pause in the Fed's rate hikes, a cooldown in inflation, and growing optimism that a seemingly inevitable recession may be forestalled.
And writing in a note to clients on Monday, Neil Dutta at Renaissance Macro pulled no punches when taking to task his peers on the Street who have called for an impending recession for a year.
"Wall Street has had recession on the brain since at least mid-2022," Dutta wrote. "Analysts have a tendency of falling in love with their forecast, and it is clear some are having trouble letting go even as evidence piles up to the contrary. Strong jobs growth? Late cycle! Rally in US equity markets? We had a big rally in mid-2008 too! None of these arguments stand up to scrutiny."
Dutta added: "There is only so long one can keep claiming that the recession is just six months away. The statute of limitations has now kicked in. There are several reasons to be upbeat on the US economy. The recession clock has been reset."
"There will be no recession in the next six months, and it is increasingly likely that we’re not seeing one in the next year either."
(Excerpt) Read more at finance.yahoo.com ...
And in looking at the housing and auto markets specifically, we see the crux of the argument, with Dutta writing, "the Fed has been tightening for 18 months already, and it is the cyclical-credit sensitive areas of the economy that have shown improvement of late — housing and autos!"
When the economy is slowing down, or on the verge of doing so, we'd expect these categories — what Dutta calls the "cyclical-credit sensitive areas" — to be slowing.
Instead, we see the opposite today.
I have a feeling Dutta is right. No recession till 2025 at the earliest, although some signs of impending recession might appear sooner. I've said that Biden will probably be reelected with a decent economy. The economy will be far from perfect a year from now. However, if there is no outright recession and inflation is not all that high (maybe in the 3-4% area), the media will portray it as quite good.
The market sets itself. These clowns have no idea what is going to happen. They are attention whores holding themselves out as gurus.
“Re-elected”? As if he was elected in the first place?
Where is the analysis of DEBT levels by EVERYBODY? Federals will pay out $600 BILLION in fiscal 2023 to service national debt. That will gallop higher quickly due to new treasury bonds paying double or triple of the maturing bonds.
40 states are in record level debts.
Credit card debt is at record levels. Consumers are forced to use credit cards to buy essentials.
Mortgages are becoming unaffordable to many which is another damper on economy.
Here is the kicker...The whole world, especially African & South American countries are drowning in debt.
How have excessive record debts ended historically? Not good!
Wait till the grocery prices actually spike. Like I read beef prices will triple in the next few weeks. People will feed themselves long before they spend money on other things.
And don’t forget the elephant in the room...CHINA.
The real-estate bubble in China makes Japan real estate bubble in the decades gone by look tiny.
I never ate much beef, and eggs were $1.19/dozen yesterday at my grocery store. But I feel the pain of beef lovers.
When people are having to spend more than they earn, and max out their credit cards, and/or have little or no savings in their bank accounts, then, those people are experiencing a recession.
When wage increases are eaten up by higher prices of goods and services, then, you are experiencing a recession.
When you can no longer afford to purchase a house, or can’t afford to get a mortgage, or can no longer pay for your cuttent home or apartment, then, you are experiencing a recession.
When the stock market is no longer representative of how the economy is performing, then, the country is experiencing a recession. People with money to invest in stocks, don’t represent the majority of people in the country, and investors will try to put their money to work in the stock market, because, they are hopeful and likely have no other way to invest their money.
Biden and democrat point to jobs gains as indicative of a good economy, but, that jobs growth is still people coming back to work after the pandemic jobs losses, and those jobs increases also include people having to take a second job just to make ends meet.
Recession? It’s been with us for most of the last 3 years. It just depends upon who is noticing ot not.
Let’s say officially reelected, and without needing tens of thousands of fraudulent ballots in several key states.
I agree. But it’s always unclear exactly when those things will actually cause the economy to break. Those same things were true a year ago obviously.
Oh yes. A bubble can last lot longer than money in short sellers pockets. I do not try to guess the top. I just wait on the sidelines until the “break” happens, which always happens. Then pickup bargains. In the meanwhile collect the yield which currently is better than in a decade.
As if I believe any of the economic numbers out of this administration....
Anecdotal news on economy.
There is a new Carnival cruise ship that sails from New York called the Venezia that I have been following. It had its first voyage from NY recently. It is has had 4700 passengers on the trips it is making while it is rated for 4200 double occupancy.
It has several 3rd world complaints including: 1) The lines for the restaurants are too long 2) The ship is short staffed 3) Too many people using the pool.
Somehow the folks spending money on these cruises did not get the message that we are in hard economic times and Carnival is apparently having trouble getting workers.
They’ll still need it.
It would be here now if the Republicans, make that Speaker McCarthy & a few others, had not capitulated on the debt ceiling. That is what spared the realities from hitting now, but hit they will. Because there will be consequences from raising the debt ceiling yet again and continuing the reckless spending that politicians of both political parties are guilty of doing.
M2
just goes to show how strong the Trump economy was - despite all the Biden craziness.
Yep, Politicians have to work hard to crush an economy, Biden has only had two years and there is typically a 1-3 year lag as fiscal policies don't get implemented immediately and then take time. Same for monetary policy.
No sign of a recession. The fact that they are having trouble getting workers suggests that wage growth is still too high for the Fed which means more rate hikes.
Luxury goods makers like LVMH are doing very well. Things are good at the high end.
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