The Recession is Canceled! Party On!

I came across the biggest red flag I’ve seen in a long time on Yahoo Finance this morning. Bullish investors drop recession calls for the first time since April 2022. Oh, for F’s sake.

This is the first time since April 2022 that fund managers have dropped their calls for recession, the survey showed.

“Expectations for strong macro and no recession keep investors in the “soft landing” camp at 65%, with “hard landing” probability fading to just 11%,” BofA said.

Come on, do you think we could engineer a soft landing? That’s always been a pipe dream because people are expecting the Fed to lower interest rates. The Fed will only lower interest rates if the economy is starting to stagnate or teeter on the brink of collapse. You are sorely misled if you think the Fed is there to keep the party going for you and your portfolio. In other words, a healthy economy doesn’t need rate cuts.

It seems that I’m not the only one who thinks a recession is coming.

A recession is likely to hit the US economy in 2024, according to a new economic model highlighted by economist David Rosenberg.

Utilizing what Rosenberg calls the “Full Model”, the economic indicator suggests there is an 85% chance of a recession striking within the next 12 months.

That is the model’s highest reading since the Great Financial Crisis in 2008. - Via MSN.com

If you ask me, the only indicator I use to keep an eye on the health of the economy is the 2 and 10-year T bill spread. You can find a handy chart of it right on the St Louis Fed site.

Even through COVID-19, the spread remained positive. Today it sits at -0.29 and has been negative since July 2022. Normally in a rising interest rate environment, the stock market will pull back, instead, the market shot up like a rock with the Magnificent 7 leading the way.

Everything is pure air right now and yes, a recession will come. I just don’t know when and it’s probably later than I want it to be.