US recession risk is high, unless it’s not. After months of conflicting signals from various business-cycle indicators, debate and disagreement reign supreme in the land of nowcasting and forecasting the odds for an economic downturn. In other words, the value of combination forecasting in the current environment has rarely been higher.
Macro Briefing: 8 March 2023
* Fed’s Powell says rate hikes may go higher than previously expected
* 2yr/10yr Treasury yield spread falls deeper into below-zero readings
* Workers across France protest pension reform proposal
* China announces shake-up of government oversight of financial system
* Eurozone GDP change revised down to zero for Q4
* US shale-oil boom appears close to peaking
* Buffett’s Berkshire Hathaway buys more Occidental Petroleum shares
* US 2-year Treasury yield (proxy for rate expectations) rises to 5%, a 16-year high:
Markets Continue To Flirt With Risk-On Signals
There’s no shortage of threats lurking, ranging from inflation, elevated interest rates that may go higher still, and various geopolitical threats. But market sentiment has improved recently, climbing a wall of worry and suggesting that investors are presuming that the worst has passed for the world economy, based on various ETF pairs through yesterday’s close (Mar. 6).
Macro Briefing: 7 March 2023
* China foreign minister warns of conflict with US
* China exports fell 2.8% in Jan-Feb vs. year-ago levels
* Debt-ceiling risk for US economy in focus today in Senate panel
* Fed Chair Powell will testify in Congress today on economic outlook
* US supply chains return to normal in February, says NY Fed
* Meta plans for another round of job cuts
* US factory orders continue to decelerate in January via 1-year trend:
Global Markets Recovered Some Of February’s Losses Last Week
Repair and recovery was on display last week as the major asset classes clawed back some of the across-the-board losses in February.
Macro Briefing: 6 March 2023
* Fed submits report to Congress: more rate hikes needed to tame inflation
* China sets lowest growth target (roughly 5%) in decades as challenges loom
* Base metals mostly lower after China sets modest growth target
* Veteran emerging markets investor says he can’t get his money out of China
* Housing headwinds strengthen ahead of crucial spring selling season
* US services sector growth remains moderate in February via survey data
* Former Fed Vice Chair Blinder predicts Fed won’t raise rates to 6%, but…
* San Francisco Fed President Daly sees tighter policy for longer as ‘likely’
* US Treasury yield curve remains deeply inverted as hawkish Fed policy prevails:
Book Bits: 4 March 2023
Kathleen McLaughlin
Summary via publisher (Simon & Schuster)
Journalist Kathleen McLaughlin knew she’d found a treatment that worked on her rare autoimmune disorder. She had no idea it had been drawn from the veins of America’s most vulnerable. So begins McLaughlin’s ten-year investigation researching and reporting on the $20-billion-a year business she found at the other end of her medication, revealing an industry that targets America’s most economically vulnerable for immense profit. And she unearths an American economic crisis hidden in plain sight: single mothers, college students, laid-off Rust Belt auto workers, and a booming blood market at America’s southern border, where collection agencies target Mexican citizens willing to cross over and sell their plasma for substandard pay.
Will The Labor Market Inoculate The US Against Recession?
US economic activity looks strong or weak, depending on the data sets you choose to craft a narrative. That’s always true in some sense for the simple reason: there’s always some slice of the economy bucking the broader trend. But this time is different because the degree of the conflicting signals is so stark.
Macro Briefing: 3 March 2023
* German Chancellor Olaf Scholz is meeting with Biden at White House on Friday
* Robust global economic data suggest central bankers need to raise rates further
* China business activity in services ‘rises sharply’ in February
* Eurozone business activity rebounds in February–fastest pace since June 2022
* Entire US Treasury yield curve now above 4%
* Average US 30-year mortgage rate rises above 7% again
* US jobless claims post downside surprise, highlighting labor market strength:
Total Return Forecasts: Major Asset Classes | 2 March 2023
The Global Market Index’s (GMI) expected long-run performance held at 6.0% annualized in February, unchanged from last month, based on the average estimate for three models (defined below). Today’s revised outlook is slightly below the trailing 10-year return for GMI, an unmanaged, market-value-weighted portfolio that holds all the major asset classes (except cash).