(Tyler Durden) Ignore Janet Yellen’s soft landing thesis. There are only two realistic choices…
Related Goldman Sachs Research Analyst Shot Dead In NYC Subway
by Tyler Durden, May 23rd, 2022
Soft Landing Thesis
📣 MARKET IMPACT
Yellen: still believes US Fed can achieve ‘soft landing,’ will require some skill and luckhttps://t.co/CCwRqxdvdP #forex— Forex Factory (@ForexFactory) May 19, 2022
The Real Question
As you & I have discussed already Danielle, I think the “Great Resignation” is poised to flip over into the “Great UnRetirement/Please-May-I-Have-My-Job-Back” movement way faster than most can imagine
— Adam Taggart (@menlobear) May 21, 2022
Key Comments
- DiMartino Booth: “Amazon first announced it was going to be laying off 100,000 workers, and we really did get validation of the slowdown with Target, Walmart, Kohl’s saying we’re sitting on way too much inventory, demand is not there.”
- Adam Taggart: I think the “Great Resignation” is poised to flip over into the “Great UnRetirement/Please-May-I-Have-My-Job-Back” movement way faster than most can imagine
- Case Capital CEO Kenny Polcari (from video clip): “If we are not in a recession, we certainly are headed there.”
Democrat analyst Laura Fink noted the strong points: Consumer outlook on the future, the April, Jobs report, and US growth is outpacing China for the first time since 1976.
Jobs Discussion
The April Jobs report was not all that strong. On May 6, I commented In April, Jobs Rise by 428,000 but Employment Drops by 353,000
In the past few years, discrepancy between the Household Survey (employment and unemployment) vs the Establishment Survey (Payroll Jobs) always resolved in favor of the Establishment Survey.
At turning points the opposite happens but when does it show up?
Lagging Indicators
The unemployment “hook” is interesting. This is where I disagree with @menlobear.
Before big layoffs, companies won’t fill jobs. Then they cut hours.
The Fed can easily overshoot neutral (I think they will). Even 100 more BPs might overshoot by a lot!https://t.co/wYtIdIIjPk
— Mike “Mish” Shedlock (@MishGEA) May 22, 2022
More on Lagging Jobs
Thanks Adam, I added another Tweet on jobs to my post.
Lagging Jobs will be the hook that causes the Fed to overshoot neutral, perhaps by a lot, assuming there is no credit event that stops the Fed in its tracks.
Still maintain neutral is much lower than most think.
— Mike “Mish” Shedlock (@MishGEA) May 22, 2022
Cycle Compression
#CycleCompression https://t.co/Shm3m7Ve16
— Danielle DiMartino Booth (@DiMartinoBooth) May 22, 2022
Adam Replies: “Just to clarify: I don’t disagree. That will be the likely progression: hiring freeze> hours cut > layoffs I just expect we’ll progress through it faster than most are currently imagining.”
So, will the Fed hike faster than the #CycleCompression?
That seems to be what we are really debating!
My guess is yes. A rare policy error in the opposite direction.
US vs China
China has been in a lockdown for a month. Ports are just starting to clear. Regardless, alleged relative strength is not strength.
Mythical Credibility
So to retain its mythical credibility, will Fed follow through on its forward guidance and raise rates thereby making the recession more severe or will the Fed say, wait, all the contemporaneous data we have suggests we are in a recession, so time to halt rate increases? https://t.co/jiBERD9ZHO
— Richard Field (@tyillc) May 22, 2022
Already in Recession
Forgive me, but we are already in a recession. The only issue is how deep and how long. Fed has an impact on this. I worked at the Fed in the early 1980s. We couldn’t show higher rates and a recession slowed down inflation. What we could show is energy prices drove inflation.
— Richard Field (@tyillc) May 22, 2022
Another Recession Vote
Whoa. I honestly would trust her opinion over economists… pic.twitter.com/ejss2YnKP1
— Livingston (@RetirementRight) May 22, 2022
Declining strip club attendance is a proposed leading indicator.
“The strip club is sadly a leading indicator and i can promise y’all we r in a recession,” says ReverseCowgirl69.
Exhibits A & B
Exhibits A and B, folks pic.twitter.com/lLKbYPWHvq
— Emmanuel (@thebluemaverick) May 21, 2022
Retail Sales Easily Beat Expectations, US Treasury Yields Jump in Response
On May 17, I noted Retail Sales Easily Beat Expectations, US Treasury Yields Jump in Response
I thought that ruled out a second-quarter recession. But the presumption was the report accurately reflected sales.
On May 18, I asked Target Plunges 25%, What About Yesterday’s Big Retail Sales Blowout?
It’s not just Target, but Walmart, Amazon, and Kohls all warning about too much inventory and slowing sales.
Factor in a housing slowdown.
Recession When?
A recession may have already started. A huge revision in consumer sales coupled with continued weakness in housing could do it.
Regardless, look for a recession that starts no later than the third-quarter of 2022.
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Source:
https://www.zerohedge.com/economics/recession-way-or-has-it-already-started
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