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Recession ‘Here In A Few Months’
Jeff Gundlach says a recession may be right around the corner.
That isn't news. If I had a nickel f
Gundlach is entertaining, but I do not pay much attention to his market calls. That said, tighter C&I loan standards cannot be overlooked. Considering the trauma banks are experiencing, it seems likely that C&I loan tightening will only continue in the months ahead, which probably feeds into a hardish landing at some point. I don’t know if it occurs in 2H23 or bleeds into Q124. All I know is markets appear to be range-bound for the foreseeable future.
Every 3-4 months or so my conviction that markets may finally capitulate, after a year or so plus of orderliness, gets triggered and heightened, only for more orderliness to result…now mix in nontrivial new banking and lending stressors, another FOMC hike, looming debt limit standoff, persistent inflation, +++, … it sure seems like something’s gonna give over next 6 months or so…
Looking at the date of the initial yield curve inversion and the peak inversion, relative to the ensuing recession, suggests that peak inversion – which we may have just seen – can still be as much as 2-3 qtrs ahead of the NBER-designated recession start.
Nowcast GDP for 1Q is above 3%. It is difficult for me to imagine GDP going negative before mid year. Maybe I should be more imaginative.
But the market doesn’t need the recession to formally start to price it in.