“So, welcome aboard! Oh, and by the way: You’re not going to convince Albert. Don’t try.”

I don’t know if new hires in SocGen’s research department are duly apprised, but if they try to pitch the bank’s most famous employee on a bull case for equities or a glass half-full assessment of the macro environment, they’ll figure it out on their own, and pretty quickly.

On Wednesday, Albert Edwards explained, in simple terms, why sell-side economists are almost never ahead of the curve when it comes to forecasting recessions. “On the sell-side, it is career threatening to get such a call wrong,” he wrote. “So, when the most widely predicted recession in history failed to materialize last year, it was only human to chuck in the towel or at least cover your head with it.” Yep. And the same goes for top-down equity strategists and bear markets, by the way.

Albert could’ve retired years ago, so I’m not sure career risk is relevant for him at this point, but I’m quite sure that even it it were, he wouldn’t be dissuaded from predicting recessions and stock swoons. This is, after all, a man who still vaguely entertains the idea that the S&P might revisit the lows. Not the October 2022 lows. Not the March 2020 lows either. The March 2009 lows. (Ask him about it. He’ll tell you.)

“The simple fact is that recent record highs in the equity market have buoyed the economic narrative,” Albert went on, in his Wednesday missive. “Yet despite one or two key data points coming in surprisingly robust much else has looked frail.”

With respect, robust macro news out of the US economy isn’t confined to “one or two key data points,” but Edwards embodies the phrase “benefit of the doubt.” Whatever he says, and sometimes irrespective of topic, he gets the benefit of the doubt. Unless you’re author-turned CNBC personality-turned money manager Josh Brown, who tried to assassinate Albert’s character on too many occasions to count over the years, proving beyond a shadow of a doubt that he (Josh) didn’t get the joke. And probably still doesn’t, bless his heart.

Anyway, Edwards on Wednesday wondered if macro optimists are willing to dismiss simultaneous declines in full-time jobs and temp work in the US.

“The US jobs shoe is certainly dropping in plain sight,” he declared, describing the chart above.

Edwards’s memo didn’t make it to his colleague Manish Kabra. “SocGen’s three turning point signals, which guide us through cyclical macro and market regimes, continue to suggest upside to risk assets and an overshoot for the S&P 500,” he wrote, in an update published less than four hours after Edwards warned on recession risk.

Kabra highlighted the figures below, explaining that the bank’s Global Cycle metric is based on OECD leading economic indicators, while the Consumer Composite Indicator is “driven by US consumer confidence, housing and employment trends.” The former has been in an uptrend for nearly a year, and the latter “turned positive in January and remains positive, driven by strong growth in US house prices.”

The OECD-based gauge, Kabra went on, “signals that 76% of countries’ leading economic indicators have improved over the past six months and 65% have improved over the past 12 months.”

That’s all a bit hard to square with Albert’s narrative, but… well, don’t try to square that circle. Better men (and women) have tried. For four decades. They all failed. Albert’s intransigence is undefeated.

With that in mind, I’ll leave you with a highly amusing compare/contrast exercise, presented without further comment other than to note, with a chuckle, that the scare quotes around the word “team” in Albert’s job title were, as usual, in the original.

Manish Kabra, Head of US Equity Strategy, SocGen, March 13, 2024: Turning point signals say run with the bull. To cut a long story short, it’s about profit inflection. The S&P 500 has clear room to overshoot despite trading at 21x fwd P/E as the new highs on the index coincide with new highs in the profit cycle. Our 20% EPS growth between 2024 (+5%) and 2025 (+15%) that we pencilled into our 2024 outlook is exposed to upside risk. The tech-heavy Nasdaq-100 is still the most important driver and source of the EPS cycle. Our TMT bubble maths suggests the S&P 500 would need to reach 6,250 to tip over into irrational exuberance from current rational optimism.

Albert Edwards, Global Strategy ‘Team,’ SocGen, March 13, 2024: Complacency is dangerous. One only has to think of the fate of Julius Caesar on the Ides of March – which somewhat worryingly is this Friday. Hence now that almost every market guru has walked back their recession call, wouldn’t it be just typical if the US economy slides into recession? I’m sure you have seen those charts indicating that a cyclical rebound is underway – most notably the US manufacturing new orders minus inventories ISM series (which I have highlighted myself). Add to the mix the cyclical recovery signaled by analysts in their optimistic earnings forecasts and surely any economist who still forecasts a recession must be a fool, mad or both, right? All this is (dangerously) reminiscent of 2007, when all around were telling me I was wrong and should give up calling that much-delayed recession (pesky long and variable lags).