![There’s A Bear In There](https://i0.wp.com/heisenbergreport.com/wp-content/uploads/2024/09/BearClosetSept62024.png?fit=1152%2C680&ssl=1)
There’s A Bear In There
The holiday-shortened US trading week wasn't kind to equities.
The world's benchmark risk asset par excellence headed into Friday afternoon on track for its worst week in 18 months, a near 5% pullback capped by a jobs-day downtrade.
Suffice to say stocks weren't enamored with the prospect of a decelerating US labor market and a Fed that might be behind the curve.
A lot of the concern appeared to stem from revisions which lopped a combined 86,000 jobs from the June and July NFP headlines. Th
Practically every known macro “recession inbound” warning indicator has been triggered by now. Whether it is yield curve inversion, de-inversion, housing volumes, change in continuing claims, leading indicators, etc. I just finished looking at a slide deck with dozens of time-tested indicators, many I hadn’t heard of. All triggered. Some of these have long and variable lead times to the recessions they have reliably forecasted over the past many decades, others have short lead times. All triggered.
Practically all the current positive macro data can be shown to be unreliable as contra-indicators to inbound recession. Meaning, in the past these data series have sometimes looked fine until suddenly they weren’t.
Many of those inbound recession indicators have been triggered, and thus increasingly wrong, for quarters if not years. And many things in the pandemic and post-pandemic economy and market have not followed historical patterns. Believing in those patterns would have cost a lot of performance over the past few years. Like, career-ending amounts of lost performance.
We seem to be in a stage when investors swing weekly or monthly between extremes of optimism and pessimism. Two datapoints is a trend, three a confirmation, four a funeral – and contrariwise on the flip side.
And, of course, the data and patterns that actually move the market week to week are those from systematics and derivatives – not the macro data.
It is unsatisfying. It is September.