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The Recession Trade Is Right In Front Of You
Market pricing for prospective Fed cuts in the back half of 2023 is indicative of elevated recession odds.
Policymakers continue to suggest a deep downturn shouldn't be the base case, but at least some traders beg to differ.
As illustrated and discussed in these pages on too many occasions to count (most recently here), H2 easing bets are markedly out of step with a Fed still wedded to a "higher for longer" narrative.
In that context, it's worth noting that raw materials appear to agree with
Good piece.
To be fair, BCOM includes quite a bit of oil and gas. And both are pressured mainly by very strong supply side. In oil, mainly in sanctioned Iran, Russia and Venezuela as the sanctions are not being enforced. Demand looks OK-ish for now. So weakness there might be more commodity-specific and less recession-related.
Albert Edwards used to call mega-caps cyclical stocks masquerading as growth stocks. It always seemed a dubious claim to me. They had shown growth in the 2010s ‘recovery’, they handled COVID (though you could argue that wasn’t a standard economic cycle) and, sure, reopening/inflation/rates hikes damaged both their valuations and their growth rates but many still managed to grow top line revenues.
It’d be nice to delve a little bit more in that… Is Big Tech (but beyond just MAGMA/FAANG) revenue growth resilient or not?
I’m amazed at how resilient gold is. It appears that every gold miner is still selling every ounce they process. Somebody is still buying. The price is hanging in the 1900 to 2000 dollars per ounce. Not going crazy – no panic, but edging up slowly over time.