Operating at the Intersection of Technology and the Capital Markets
Tag: recession
The price increases of goods and services in 2021, 2022 and YTD combined with higher interest rates have ensured that a recession will follow. The economic damage is done. The Fed could take interest rates to zero percent tomorrow and restart QE and it would not stave off this recession. Prices for goods and services … Continue reading This Economic Recession Is Baked In
We are in and have been in a recession since early/mid 2020. It will get worse. Is Nominal GDP approximately accurate? It's not perfect, but it's directionally correct in my view. Is CPI approximately accurate? Not by a long shot. True price inflation for goods and services was and is far higher than the Government … Continue reading We Are In A Recession
Regardless of where CPI lands tomorrow, my view is that the Fed will hold rates higher for longer than the market believes. Higher interest rates combined with a shrinking money supply (QT), translates to: tighter monetary conditions, a higher cost of capital, less revenue visibility for companies, more employee layoffs and a deeper recession. The … Continue reading Tomorrow’s CPI = Noise
There will be more equity market fallout. Historically, equity markets haven't found a bottom while the Fed is in a tightening cycle. I see the NASDAQ index falling to 9,000 during Q1 2023 as: 1.) the Fed tightens further; 2.) weak 2023 earnings guidance is provided on Q4 EPS calls; and 3.) global recession combine … Continue reading Equities Have A Tough 2023 Ahead
"Did Powell just say that the pace of Fed Funds Rate increases may slow? Let's run stocks higher through year-end, fundamentals be damned!" I've never seen a more lazy equity market in my life. Fundamentals have not mattered since the COVID lockdowns and Fed policy matters far too much. The market is to blame as … Continue reading Stocks To The Moon, Fundamentals Be Damned
P/E multiples will be in flux for the next few months. Phase I will begin in October. Phase II will begin in January. The sequence will look something like the following: Analysts: Many sell-side analysts will revise their December quarter Revenue and Earnings estimates downward coming off of the September quarter earnings calls beginning in … Continue reading P/E Multiples In Flux
A rate hike is what's next for the U.K. The hike will come before the bank's November meeting. The U.K. has an abundance of economic problems yet deflation is not one of them. The Bank of England put forth a weak rate increase last week. The Bank of England would tell you the reason for … Continue reading What’s Next For The U.K.?
Could the NASDAQ re-test the COVID lows of March 2020 when it sat around 6,900? Yes. That would require a prolonged recession (which we expect) AND The Fed not restarting its ultra-dovish monetary policy of Quantitative Easing combined with a near zero Fed Funds Rate. Who knows how the Fed will behave in 2H 2023 … Continue reading The NASDAQ Could Re-Test COVID Lows & The Rise of High Yield
If the Fed raises by 100 BPS tomorrow we believe there is another 10% downside to the NASDAQ before October earnings. We believe the NASDAQ will continue to work lower as the Fed hikes its Fed Funds Rate and as Treasury yields climb. We expect the Fed's rate hiking will stop by early next year … Continue reading A NASDAQ Bottom. QT Or Not To QT?
With $31 trillion in public debt outstanding the Fed can't quickly take interest rates to where they need to be (north of 8% CPI), to tame inflation. The interest expense on the public debt would be punitive at that level (Debt to GDP is 123%, up from 31% during our last inflationary period of the … Continue reading The Fed Can’t Tame Inflation. A Deep Recession Will.
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