credit economy high yield investment grade Markets recession stocks

What Are Stocks And Other Assets Saying About The Odds Of A US Recession?

Remember: anything is better than Larry Kudlow's "models".

Remember: anything is better than Larry Kudlow's "models".
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4 comments on “What Are Stocks And Other Assets Saying About The Odds Of A US Recession?

  1. I indeed see the value in simplicity, but I probably wouldn’t put too much weight into this. Modern mechanics and post-QE regime have likely changed the dynamics too much to put much faith in what they’ve presented here. That’s in addition to the stark contrast of HY.

    What I found most interesting was the magnitude of decreases going from the 1950s to 2008, clearly showing bubblenomics at work and appearing to suggest the next meltdown will be even more catastrophic. My gut tells me we’ve likely seen the worst on a vol-unadjusted basis, and we’ll continue to see higher volatility and gains into mid-year until earnings collapse, and the next crisis will come from either the currency market (EM and USD) or credit bubble pop in China.

  2. I wonder how these forecasts back-test? And after the predictors reach a trough and reverse, how does that implied change in forecast back-test?

    No need to wonder about Kudlow’s competence as a forecaster. He was a hack on TV, its like appointing Judge Judy to the Supreme Court, which I’ve no doubt is next.

  3. We can argue predictive data for recessions all we want but a recession is merely a downturn if the data is ‘cooked by the Government to achieve that particular end… Hate to be cynical, but look at inflation calculation methodology for an example!!!

  4. Anonymous

    I like to look at it the other way. What is priced into stocks, credit, etc. so if there is a recession how much will I lose (or possibly make on govt bonds). Or stagflation, or mild growth, stronger growth etc.

    My goal is to make good risk reward bets rather than predict an event and then try to maximize that call.

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