There Will Be No Soft landing. Why a Recession Is Inevitable.

LewisBraham

Not saying I agree, but worth reading to stay informed of the different viewpoints if you have a subscription: https://barrons.com/articles/recession-inflation-fed-soft-landing-51651183401?mod=hp_LEAD_1
The basic premise here is this:

It seems there are two realistic scenarios for how the coming months play out. Both end with recession. Either the Fed sufficiently fights inflation or it doesn’t, the latter resulting in the stagflationary combination of high prices and slow growth that inevitably leads to a worse recession.

larryB

Are not downturns by whatever we choose to name them part and parcel of our economic system? I was a grad student in American history a million years ago. It’s part of the American experience. Good times. Bad times. They come and go,,,,, sure as high tide follows the low. As the headline says ,,,, “ Recession is inevitable.” Only the timing is newsworthy.

LB

Old_Joe

I'm inclined to agree with LarryB.

LewisBraham

Well, yes and no, but this story argues for an imminent recession in the next few months. This is interesting especially if you think, for instance, about the lengthy discussion here about I-Bonds. I don't think that the high and low tide analogy is quite accurate as I don't think economic systems, any economic system, are a force of nature. It's a social, political and economic construct that can be changed if enough and the right people will it to be so, or people panic. If a recession is induced by the Fed to stop inflation and it works, that means I-bonds yields will decline, and regular bonds will do well. It's also bad for labor. If the alternative stagflation scenario occurs, then I-bonds do well and regular bonds poorly. So, it matters a great deal if you're an investor how this plays out. I'm not saying the argument is right, but that it's worth considering the different scenarios as to the likelihood of a soft landing--which would be good for markets. This articles argues for no soft landing.

larryB

I certainly agree that it matters a great deal if you’re investor how this plays out. That’s for sure. Maybe tides are not a perfect analogy but tides have their own schedule. We sailors get a new tide book every year or did before smart phones. Too bad downturns aren’t as predictable.

hank

Excerpted from today’s Wall Street Journal (May 2, 2022)

“Joseph Sternberg uses the ‘soft landing’ analogy (Will the Mighty Dollar Prevent a Soft Landing From Inflation? Political Economics, April 22) to discuss the predicament now faced by the Federal Reserve: how to slow inflation without creating chaos in the economy. This analogy brings to mind an airliner on a glide path to a specific airport, guided by precise instruments and pilots with spotless safety records. The only challenge is to get the speed of descent right. Is it really that easy? Perhaps there is a better analogy for the Fed’s dilemma. Try to picture Chairman Jerome Powell driving the monetary-policy bus down a curvy road at excess speed. It’s foggy and visibility is poor. The steering is loose and the brakes only work with an unpredictable time lag. Various passengers, led by Neel Kashkari of the Minneapolis Fed, have been distracting the driver by insisting the fog is merely transitory while nattering about policies that have nothing to do with the task ahead. What could possibly go wrong?”

From Letters to the Editor
By Em. Prof. Robert F. Stauffer Roanoke College Salem, Va.

Old_Joe

"an airliner on a glide path to a specific airport, guided by precise instruments"'
Hah. If only!

johnN

The managers at Boa say 33% recessions

Where as ML management advisor say we are at possibility new babybull formations


How crazy inputs from similar team

Few free to pm me and will send article

hank

Old_Joe said:

"an airliner on a glide path to a specific airport, guided by precise instruments"'
Hah. If only!

If I were Powell, I’d be “bracing” myself about now for the landing.

On a serious note, you can’t time these things or predict how far the Fed & other central banks might go to stimulate afterward. Not doing anything rash. Stick to the plan. Add to some beaten down areas.

AndyJ

I get occasional commentary emails from this guy Keith McCullough. Here's what he had to say yesterday. It's never all that hard to figure out where he's coming from.

"After stimulating the economy with largesse for two years, the Fed has finally been tasked to pick up their rate hike axe and break sh*t tomorrow at the FOMC Meeting. The market sees the Fed loading up 250 basis points of additional rate increases as the modal outcome for Fed Operation Break Sh*t #FOBS. And first on the chopping block? Housing."

johnN

Putin is under the knife/has surgery
Market stagnation
If he passes on maybe +3k dji upswings

hank

@AndyJ +1

Best analysis I’ve heard.

AndyJ

hank said:

@AndyJ +1

Best analysis I’ve heard.

I nearly always get a good laugh out of his opinions. And he's pretty much right on a lot of the time.

Old_Joe

@JohnN: Sir, the only recent reports regarding Putin and surgery were in the NY Post yesterday and the British newspaper The Sun. Both of those publications are owned and controlled by Rupert Murdoch, also owner of Fox "news". No reliable or responsible source has verified this. No major publication has since mentioned this. Surely if this story were true some reliable source would have verified this by now.

Irresponsibly repeating and promoting this sort of speculation is a major contributor to the problems the United States is having regarding confidence in news reporting.

Crash

Murdoch is spooge.