Debunking FEAR
In 1982, The Fed (Paul Volcker) telegraphed the pause,The market went to ALL TIME HIGHS in a month.
If the Fed is done, markets are going to RIP
- This is the 1970's Inflation - Nope
Today's Macro Set Up
- Rate Cuts are going to Crash the Market - Nope, This is not 2008 or the Dot com bubble......Markets are not at all time highs, Economic Actviity already Crashed, You need a Black Swan
THE LAST PAUSE WAS BULLISH
- The S&P rallied 40% from the Pre-Pandemic Pause....The Pandemic was a black swan.
Is the Fed Done... CORE is Trending Lower, Headline is suspect.
The Market Thinks so...here's why
- Shelter Rolling Over
- Producer Prices already Rolled Over.
- Global Supply Chains have Eased, NO supply-side inflation - thus was the root cause.
- Super Core is falling.
- Wage Inflation - Falling
- Oil is the sole contributor to the August Inflation increase - Transportation Services...how high until oil gets their attention...
OKAY, the economy is in an Early Cycle Recession....
- Tight lending standards in Commercial Real Estate
- Delinquincy rates recession level- late cycle
Forward-looking economic Indicators are telling us, we are looking at a recovery.
Economic Activity is Rising
Regional Activity is starting to tell the Same Story.
After declining for 9 months, U.S Money Supply is no longer falling
Global Money Supply has also picked up
WHY THIS CONTINUES....
Chips Act -The U.S Government is trying to Onshore a GLOBAL Semiconductor Supply Chain.
- IRA - Inflaiton Reduction ACT
SOME WINNERS - SOME LOSERS - Innovation vs Traditional Legacy
Bond Market Crash
"Treasury issuance will Crash the Bond Market " - NOPE VOL is Down...
"There's not enough Liquidity Rates will go Higher" - NOPE - Shadow QE.
The Economy is way too HOT rates will rise...NOPE - Not too Hot, not To cold
The Lag Effects Will Crush The Market - Yes, Maybe Mid 2024?
The Full Effect of Rate Hikes WIll be Felt NEXT SUMMER...QE
U.S. Equities, Stock are Still Under Owned.