quote:
How did JPow and crew pull off such a heist? The All-in podcast besties were convinced that we would have a hard landing and a severe recession for almost a year now. Even billionaires seemingly with a finger on the pulse got it wrong.

Your stance is foundationally flawed as we haven't landed yet. We're still just circling the runway.

One of the best predictors we have of an incoming recession is the inverted yield curve. Once the yield curve moves back to normal behavior, we get either more inversion or a recession within the next 6-12 months. Every. Single. Time.

When the red line (shorter-term bonds) is above the blue line (longer-term bonds), that's the warning sign. We've been in an inverted curve environment for over a year and a half now. There's no known correlation between depth and/or length of inversion to the strength and/or length of the proceeding recession. What there is correlation about though is that a recession will happen (if not, this would be the first time it did not happen).

Another counter to your stance comes from the continued high inflation (which now appears to be sticky at 3%, 4% for Core CPI) while real wages have barely risen since pre-COVID. Along with that, consumers seem to have been trying to offset inflation on the backs of their credit cards, cards with rates higher than we've seen in decades. To underscore how big of a problem that is, we've seen credit card delinquencies shooting upward for two years now with no end in sight.

Now you may be thinking "but GDP has been so strong". Has it? GDP is a measure of money spent, not units sold. Real GDP has grown only 1.3% from Q2-Q3 of this year while growing only 3% YoY. During those same periods consumer credit card debt grew by 2% and 10.2% (respectively).

So with all that said, is this really a "soft landing" or just wishful thinking?

This post was edited on 12/17/23 at 11:08 am