Tag: recession

AI Can’t Create Demand Out of Thin Air

AI Can’t Create Demand Out of Thin Air

Some of the hyperbole that I hear around AI - Generative AI in particular - simply does not make any sense. For example, one of the things I hear from the Financial Media is that AI will help facilitate a soft landing. How so? AI can't create demand out of thin air. Reducing the cost … Continue reading AI Can’t Create Demand Out of Thin Air

The Powell Curve Predicts Recession

The Powell Curve Predicts Recession

The Near Term Forward Spread (NTFS) is calculated as the imputed 3-month Treasury yield 18 months from now less the current 3-month Treasury yield. The Fed's perspective is that the NTFS is a "measure of the market's expectations for the near-term trajectory of conventional monetary policy rates. Its predictive power suggests that, when market participants … Continue reading The Powell Curve Predicts Recession

Student Debt Payments Are Coming Due in October

Student Debt Payments Are Coming Due in October

Student debt payments will be coming due in October (interest resumes in September), and will likely translate to less spend across consumer retail and other pockets of the economy. $100+ billion in student loan delinquencies is a reasonable expectation based upon historical delinquencies. For background, when the Trump Administration lost its mind and shut down … Continue reading Student Debt Payments Are Coming Due in October

Tomorrow’s CPI = Noise

Tomorrow’s CPI = Noise

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

Equities Have A Tough 2023 Ahead

Equities Have A Tough 2023 Ahead

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

Stocks To The Moon, Fundamentals Be Damned

Stocks To The Moon, Fundamentals Be Damned

"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 In Flux

P/E Multiples In Flux

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