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‘No Landing’ May Presage Stock Selloff, Late-Year Recession
The likely result of a "no landing" macro environment in the first half of 2023 is a "hard landing" for the US in the back half of the year.
That was one message from BofA's Michael Hartnett who, in the latest installment of his popular weekly "Flow Show" series, suggested stocks may suffer a meaningful drop over the next few weeks.
Despite 450bps of Fed hikes in just 11 months, US retail sales are at record highs, the unemployment rate is at a half-century low, the economy is adding jobs at a
Leave it to Mike Hartnett to shine light on a significant dose of reality! Yes, “Fed tightening always breaks something.” But the animal spirits impulsively seek any news bits that justify desired or imagined outcomes. The thing is the US economy, with the exception of the 2008 financial crisis, has in the last 30 years, had a certain assured resilience for years upon years during the time of globalization.
Sounds like the CPI and PPI shredding the Fed’s credibility is not a good thing. What the Fed will say and do, and how they say it and do it, will probably take on even more importance in the meantime.
I doubt Jerome Powell will drown the market in bad news. But he will splash cold water. It’s always a process of fits and starts before the engine really gets going. And the quality of the road certainly matters too. There’s a lot happening in our world. But it’s the only world we have. Like it or not, we all need to keep our powder dry and keep our minds clear.