Recession: How to predict it?

Wall Street's 2023 recession forecast has been called into question by a string of stronger-than-expected data. Why is the US economy defying the most aggressive Federal Reserve rate hikes in decades? What is fueling the strong labor market and retail sales? Why has credit card delinquency stayed low despite the surge in borrowing cost? Why hasn't the housing market gone bust? What does the loose financial conditions mean for inflation and interest rates? Is the strong data bullish or bearish for the stock market? What will it take to get a recession? How should you be investing your money right now?

A former top-ranked Wall Street global macro strategist tells it as it is. You may not agree with everything he says but he will make you reassess everything you thought you knew.

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#investing #recession #inflation

[bilbobaggins]

Your financial content is fantastic and insightful David, but the video clips with actors are incredibly annoying.

[stevenobinator]

Great content, people are really missing out on your market insight

[professorwang]

If the fundamental position is that inflation will remain higher than target, then the implication that bond yields are too low is correct. But I don't think it's as easy a conclusion to say that stock prices are too high. Saying that nominal inflation remains higher than nominal bond yields implies that real yields are negative. Negative real yields means that any company that can sustain a stable or growing real cash flow stream should actually increase in price. That certainly changes the relative valuations between sectors/companies the market, but it is uncertain whether that means that the overall market should fall. I would guess that on balance, even though the US has more low/unprofitable tech companies and unicorns than any other, even the US equity market generates free cash flows that are linked to inflation... and therefore is likely to rise, unless the Fed raises nominal policy rates significantly above inflation or there is another shock to the system.

[horridohobbies]

How many of those new jobs are "good" jobs and not inferior gig economy jobs?

[jimw]

Fed could have reduced it's balance sheet much more over the past several months. I also think stocks heading much lower, but I still have 25% allocation there. My reason, I dumped 95% back in summer of 2020 not realizing they were about to inject several trillion into economy and balance sheet and missed a good portion of the huge rally

[watermill]

Jeff Snider was discussing terrible figures re shipping traffic China Japan and others indicating a very slow /non start in China. Do you see China as a big influence on U.S.A. economic future David? Or is U.S.A. restoring just adding to China problems. Great. Video again!

[mukaniwatkins]

We are already in a recession since last year.

[danutc]

Why you think J.Powell keep insisting for the last 2 press conference that financial condition are tighten when is so obviously that they are loosen? Is he so sure that markets will make a 180 turnaround when intarast rates will be higher for longer and no pivot in next 4-6 months for now...