YouSaid · the spoken record

Nick Reece

lines on the record: 89
first: 2022-07-14
most recent: 2022-07-14
sittings or episodes: 1
sources: podcast

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“Was moving higher through 2019. Off of those correction lows right around Christmas of 2018. So it's really not, I don't think, a good framework to say, well, these PMIs are decelerating. That for sure means recession, or that means that the market's going lower. Very important that China's moving higher and back above 50 and moving in the right direction. The other thing is that these readings are still an expansionary territory. They have plenty of room over the next few months to continue to decelerate, to trough, and to re-accelerate higher. And I think if there's a pivot from the Fed, as I think there will be in the coming months, and as fiscal policy moves from being contractionary to being expansionary again, and as you have this build up in excess savings that's been accumulated in 2020 and 2021, which clearly was a big drive, that's the fiscal helicopter drop that I'm referring to, clearly inflationary. Those excess savings are being worked off.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“It's in and of itself, it's tough to say too much about that. It's another piece of the puzzle. But as I pointed out in a chart earlier today that I sent out, all 12 of the largest economies in the world have manufacturing PMIs above 50. And anything above 50, as you know, is expansionary is an expansionary reading. In China, the world's second largest economy is moving higher. And as you say, they actually look like they're re-accelerated. So that should not be underestimated the importance of that. And if you look at these mid-cycle slowdowns, and I would again go back to 2019, you actually had, I think, the”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Oriented recessions of 73, 79, and 1990. So that's something to keep in mind. So I just would caution against valuation as a timing indicator, as you rightly point out. I mean, people have been talking about valuations for 10 years. It's very, very difficult to use that as a realistic guideline. Yes, it's something to be aware of, but it needs to be part of a bigger mosaic of data that's being looked at.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“For that, actually, the early 2000s was a pretty mild recession. In the early 90s, there's probably a better analog and kind of fits with where we might be in this sort of ongoing secular bull market that you had the crash of 87 and a lot of people talked about, including Paul Tudor Jones, that the US economy is going to go into another depression, and Stan Dracula was saying those things in the early 90s. And you can go back and read what these greats were saying at the time. And it was very, very dark. And then the market just went on to sort of rip higher for the next 10 years. And that early 90s recession was in part precipitated, I would say, catalyzed by a supply shock to oil prices. There was the Iraqi invasion of Kuwait, and you had a spike in oil prices and a mild recession somewhat associated with that. We have something similar with the Russian invasion of Ukraine. This oil price spike actually, since it's pulled back a bit, is not quite consistent with what we've seen in terms of supply shock.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“And if you look at generational lows, and I'm kind of taking 1942 and 1974 as generational lows, and you map that to the 2009 low, we're still only sort of a halfway to two-thirds through what very well may be an ongoing secular bull market that behaves much like those markets. And so I would say my base case scenario is that this is a cyclical bear market within an ongoing secular bull market. Of course, that could be wrong, but just looking at the historical analogs, that would fit. And this recession that we may get over the next year or two, I would think is going to be quite mild, especially relative to the last two. I mean, the last two were exceptionally deep, the COVID lockdowns and the global financial crisis. And that's ingrained in people's minds. But if you look at the recession before those two, the two before.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“We're making a lot of arguments that you hear today, but historically these secular bull markets last a lot longer than people think possible. And that happened in the 90s, you know, in the 90s. I think the market kept surprising the upside in the 60s. The same thing happened with the sort of the go-go nifty 50 stocks.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Right. And this is a perfect example of how the constellation of factors is never going to be perfectly aligned. And it's a good point that you raise, hey, valuations are probably a lot higher today than they were back then. But yes, valuations are not a good timing indicator. If you look at sort of near term, you know, the valuations I'd say have been trading pretty closely in line with 10-year yields. Certainly that TINA effect kind of going away with this big rise in yields, I think, has been the primary driver. We've seen multiple compression. So we're now sort of on a forward multiple down to more normal levels. I know a lot of people say, well, we should be overshooting rather than sort of settling into some kind of average level there. And that's fair enough. And yes, the bigger picture, valuations do remain somewhat elevated as well. You could argue, but they're really not a great timing indicator. And if you look at what people were saying in the late 80s, early 90s,”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“What did the valuations of stocks look like in 1947, and how do they compare to the valuations now? Because I noticed that you note that valuations remained stretched on a sort of longer term basis. Obviously, valuations is not a good timing tool.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“That, yeah, we could shop sideways here for a couple more years, and it might take a few years before the market makes new all-time highs in the S&P. On the other hand, we might not be very far from the lows that we see over the next few years in the market.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Inflation related decline from the recession related decline that occurred in that 1946 to 1949 period. So the inflation-related decline was something like 25, 26%, and then the market almost fully recovered that. And then went into this late 1948, early 1949 mild recession, I think it was 11 months long. And that recession-related decline was about 20% in the market. So that took the sort of max drawdown to about 29%. So the point is that from the recession lows in the late 40s to those sort of like crash lows of 1946, which were directly associated with that inflationary spike, there wasn't a big difference in price in the S&P 500. And that's, of course, without dividends reinvested. So you could look at that either as a positive or a negative. If it is at all a guideline for the situation that we're in today by saying,”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Combined with a reorientation of the supply side away from the wartime economy towards the peacetime consumer-led economy. That's a pretty good analog to the situation that we're in today. And if you look at inflationary spikes that coincided with market declines, which was certainly what happened in that 1946 to 1947 period, what you notice is that the market tends to bottom within a few months plus or minus of when you hit the peak year-over-year rate of CPI. And so if we are hitting the peak year over year rate of CPI, that's actually historically consistent with being very close to the bottom in the market. In that situation, there was eventually a recession in the late 40s starting in late 1948, and the market had not fully recovered to new all-time highs by that point. But I think we have to separate.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Well, I'd say that this expansion or this economic recovery is pretty unique given the circumstances that we've been coming from. And of course, in any present situation, you have a constellation of economic data that's not going to be, that you're not going to have a perfect historical analog for. That's always going to be the case. But one of the historical analogs that I think is very helpful is to look at the late 1940s. The highest inflation that the US has experienced in the past hundred years was actually in 1947, CPI year over year peaked at 19.7% in March of 1947. And there was a big decline in the market.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Nick, I'm looking at your checklist from June where you look at a variety of factors, earnings growth, the business cycle, financial conditions, technical factors, margin debt, and the like, and you say whether it's neutral, positive, or negative. And in the business cycle, you write that it's neutral and or positive. Can you flesh out your thinking? Because you're a professional business cycle analyst. I'm sort of on the sidelines, but to me it looks like typically unemployment rate bottoms at the end of the cycle. Typically inflation peaks at the end of the cycle. Inflation is likely to peak very soon and the unemployment rate is likely to bottom very soon. So do you think that this is a end of cycle? It's just that the transition from end of cycle to beginning of cycle is going to be gentle? Or do you think we have, you know, we're not at end of cycle yet?”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Though the Exactly, it's two factors it's the return of the labor force participation rate, which is still below pre-COVID levels, both in terms of the overall as well as prime age. And the other thing is that you have new people, always new entrants coming into labor force because they're graduating from school and they're coming into working age, and all of those normal sort of population growth factors. So what you want to see is actually the total labor force growing a little bit faster than total employment, but total employment still growing. So that's expansion for sure. But you are going to see just mathematically a rise in the U3 unemployment rate. So if we get that 3.6 to 3.7 in the unemployment rate accompanied by an increase in the labor force participation rate and positive net job gains, again, I think it's like that kind of 100,000 to 400,000 net gains is sort of the sweet spot. I think that's what's going to be most positive for the economic outlook as well as for the market.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“In that scenario, the people going who are out of the labor force going back into the labor force. So even though the unemployment rate picks up the total number of workforce goes up. Exactly. It's too fast.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“It's really important to note that the unemployment rate going up or the unemployment rate in general is not part of the criteria that the NBER looks at when they define a recession. Total employment is. And so the key is going to be to continue to see on net job gains both in the establishment survey and in the household survey. So if we get headline non-farm payrolls tomorrow really anywhere between 100 and 400,000 net gain with an increase in the unemployment rate from 3.6 to 3.7, that's a really positive report. That's the happy medium that the Fed wants to see. That's the soft landing scenario. You actually do want to see.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Focused on current inflation, but as Powell said, the reason that they are is because of the linkage to inflation expectations, as you rightly said in his press conference. Who the heck knows what core inflation is? I mean, the average person doesn't know, doesn't care. What they know about is what they're paying at, you know, in these gas prices are posted on the highway. Everybody sees them. Everybody knows what they are. They're very in your face. So of course that impacts the psychology. And in their framework, they've been very, very focused on this concern about unanchored inflation expectations. So I think that's what spooked them. But as we see gas prices come down, I think we're going to see those survey-based inflation expectations come down. I think we're going to see headline inflation itself come down. We're also going to get a jobs report tomorrow. And I think that the key with this jobs report and the Fed's been criticized for having this increase in the unemployment rate in their summary of economic projections without a recession.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Very high because those measures are taken in the middle of the month, in the middle of June, really had the highest commodity prices, highest gas prices. So let's not be too surprised with a very high month over month reading on headline CPI, perhaps close to 1%. Clearly that annualizes to over 10%, annualizes to above where the year-over-year reading is currently. But let's just be aware of some of those timing effects of what's happening there and keep that in mind. But like I said, gasoline prices have been coming down since the middle of June. And that has a big impact if you chart inflation expectations and the gasoline, national average gasoline price, very strong relationship. If you chart the inverse of the gas price to consumer confidence, that's a pretty strong relationship. So I think that the Fed does need to be a little bit forward-looking and not so dogmatic.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“On the FOMC, and she came out in favor of doing 50 basis points instead of 75 at the June meeting and in her statement about why that was the case, she felt like it was unhelpful to have the policy uncertainty. Number one and number two, she did talk about the fact that monetary policy acts with a lag. And so this inflation is showing up with a lag. Again, I think primarily from fiscal stimulus. And so the idea that the Fed is just going to keep hiking based on what's happening with concurrent inflation readings doesn't make a lot of sense. It's not like this July rate hike is really going to affect the July CPI reading. And the other thing is that actually the reading that the Fed focuses on most, which is core PCE year over year, has been coming down three consecutive months. Now CPI, we're going to get a CPI report in the next couple of weeks. That's probably going to be...”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Now, yeah, back to the question about the Fed and their approach. I mean, the thing is that the Fed used to say, rightly so, that monetary policy acts with long and variable lags, and we haven't really heard that too much, except in the dissent by Eslo George, which is somewhat ironic that she's the one dissenting because she has historically been considered one of the really most hawkish people.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“If I just run a chart that shows at the end of the quarter where's the reading and where does the official come out, it's not, you know, you've seen it being off by 2% points historically. I mean, that data series has only been around since 2013, something like that. So I'm just saying it's within the range. I mean, and I'm excluding the crazy outliers of the pandemic crash and bounce back. As things normalize a little bit more, I'm just saying it's not out of the realm of possibility that that thing is off by two percentage points.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“It could. I mean, let me just comment on the Atlanta Fed GDP now indicator for a second. So, yeah, that is suggesting currently based on data that Q2 would be negative. We're going to continue to get data. That's going to continue to be revised for Q2. So that was actually updated earlier today and came in a little bit, came more towards zero, less negative. Q1, by the way, the NBER's business cycle dating committee, like I said, they don't use the two quarters of negative GDP growth. They also consider GDI gross domestic income. In terms of”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Let's say that the Federal Reserve can't print more oil, they can't print more copier, right? So the only thing that they can affect is financial conditions. And if inflation continues to be hot, the Federal Reserve will continue to tighten. So what is your outlook on inflation? And then also how far, I mean, I guess you already said you think that the Fed will do a triple in July this month, and then they would be done under what circumstances do you think that would happen? And let's get the data dependence into here. Has the very negative readings of the Atlanta Fed negative 2.1% annualized quarter over quarter growth, do you think that will play a role and also in a Fed pivot?”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Do you think that the Federal Reserve will continue to hike rates, continue to go on its plan of quantitative tightening? If there is no sign of recession or no sign of no clear sign of an immediate, very sharp fall in business activity and inflation remains stubbornly high because”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“I think that was heavily influenced by a worse than expected CPI report, and in this case worse than expected, I mean higher inflation than what was projected by the consensus. Also, the University of Michigan inflation expectations, we saw a breakout there to 3.3%, and then we saw national average gas prices above $5. I think those three things, which all kind of happened in a blackout period, contributed to the Fed going 75 instead of 50. And so that's another area where they've gotten into a little bit of trouble with forward guidance, and they should just be focused on data dependency. And let's see how the data comes out and not talking too specifically about exactly what they're going to do, two, three months in advance at these meetings.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Drop. And I think we're seeing that come through in the inflation with a lag. Now, clearly, that's combined with negative exogenous supply shocks. So that's obviously a big part of the picture. But on the demand side, I do see it primarily coming from fiscal policy. And if you look at the money supply growth M2 year over year, that's now back down to pre-COVID levels. And it's not surprising to me if that's going to show up in inflation with the lag and that if over the next year we see these inflation readings year over year come down quite sharply. So back to your question about the problems that the Fed has gotten into with forward guidance. The average inflation targeting clearly is one. And then the other one is talking too specifically about what they're going to do with rate hikes. The Fed does always emphasize that they're data dependent, but clearly the data did change during the blackout period and they came out with $75 basis point hike in the June.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“For one thing, the average inflation targeting regime that they announced, I think they expected inflation to run a lot lower than it has. And then, of course, as it really accelerated, then it sort of becomes a question of, well, you're running so far above target. Does that mean you're going to try to run below target? The old framework was simply that wherever we are, we're going to on a forward-looking basis target 2% inflation. So if we have a one-off increase in the price level, which is transitory. And transitory depending on how you define it, the loosest definition is something that is not permanent. So this inflation will be transitory. It's just a question of how many months, how many years. But if you think about inflation from the demand perspective, I look at this primarily as pretty much a one-off high marginal propensity to consume fiscal helicopter.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Indication to maybe start to think in the other direction about things. There's so much pessimism in the dominant narrative that it might not take much for the glass to go from half empty to half full.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Markets, if you look at the national average of the gasoline price, which I think is a really critical variable here, that's suggesting that we may have, we may be sort of through peak inflation expectations, through peak rate hike expectations, and through peak actual realized inflation, if you want to look at some of these readings, core PCE year over year has come down for the past three months. And indeed, perhaps through peak Fed hawkishness. And so if we're sitting here in three months and that is indeed the case and the markets bottoming around these levels, would that be so surprising that the market bottoms when inflation peaks year over year and we're through peak inflation expectations and through peak ad hocishness? I think that's a narrative to keep in mind about where we could be, what should the themes be in three to six months from now. Clearly the sentiment right now is really, really negative and that's of course a good”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Today, I actually still think that the soft landing scenario is probably being underappreciated as a possible outcome here. I think the two things that are really potentially going to push things over the edge would be an overtightening of monetary and fiscal policy. But as I noted a couple weeks ago in my note, I actually think the Fed is pretty close to the end of this tightening cycle. I would not be surprised if the July rate hike is the final one for this cycle. They've got two months between the July meeting and the September meeting. And if you remember how quickly they made the Hawkish pivot and they just came out and said mission accomplished on maximum employment, that happened pretty quickly. And they've gotten in trouble with Ford guidance in the past. And I wouldn't be surprised if they come out in August or September and say mission accomplished on the clearing convincing evidence for inflation coming down. If you look at commodity...”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Is on timing, but if And what happened is that in 2019, a lot of the data did deteriorate, but it troughed in the middle of 2019. And the global growth cycle and the U.S. growth cycle was re-accelerating higher before we got hit with the exogenous shock of COVID. And so I would refer to that 2019 period as a mid-cycle slowdown. And indeed, the market from that 2018 correction went on to make new all-time highs before the next recession. So I would actually give that one, not that the Fed has control over this, but you could put that in the camp of a soft landing for Powell. I mean, the Fed did hike in 2018 and then was cutting in 2019. And that, I think, was would have been looked back on as a soft landing like the mid-90s soft landing that Greenspan is credited with. If it had not been for the exogenous shock of COVID. So as we look at the data.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Certainly, as of the May data, which we pretty much have now, but if we look at the June data, which we're starting to get, I don't think in hindsight, you know, June 2022 is going to be part of an official U.S. recession. In terms of the outlook over the next six months, let's say for the remainder of 2022, the risk is elevated. I'd say it's much more than it normally would be if you were just to pick any given month of being an expansion. But I would still say it is not my base case scenario. I would say it's less than a 50% chance that the U.S. economy goes into recession through the remainder of 2022. Next year, obviously, the further out you look, the more uncertainty there is, and there's, I'd say, greater risk somewhat naturally, greater risk as you extend that time horizon from six months to 12 months to 18 months. And for sure, there will be another U.S. recession at some point.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Pretty scary bear markets, and oftentimes they're in the category of crashes outside of recession. So the crash of 1987 would certainly be an example of that. There was a crash in 1946 that I'll probably come back to in reference to today because I think it's a really valuable historical analog to look at. But to the second part of your question on recession risk right now, I am looking at the data. And for starters, When we talk about recession, when I use the word recession, I'm talking about what will be determined as official NBER recessions, and they have a business cycle dating committee that provides the dates for those. I'm not using a two-quarters of negative GDP growth definition, nor does the NBER. Based on that data and looking at the data that the business cycle dating committee looks at and looking at the leading indicators, I don't think that the U.S. economy is currently in recession.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Right. So I'll get to that in a second. But on the first part of your question, I would say that it is true that the economy and the stock market are different things. But what I'm watching out for is when they sort of become the same thing in the same direction and you get an economic recession with a major market downturn. To reiterate, all major market declines historically in the US are associated with recessions, with the one exception of the onset of World War II, which was about a 46% decline. But there, you know, the market actually bottomed in early 1942 well before the outcome of the war was clear. So that's something to keep in mind and potentially relevant analog today with the invasion of Ukraine and just some concerns about height and geopolitical risk that we haven't seen for many decades. So I do want to make that caveat when I talk about major market declines being associated with recessions. And you can get bear markets and certainly some”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“A real estate bubble, which caused a financial crisis. But we still saw margin debt build up. And I look at margin debt relative to the market. There's a lot of focus on dollar value of margin debt. I think that's misleading. I think you do have to look at it in terms of the market cap that's out there. And we really didn't see towards the end of the bull market, whether you're talking about 2019 or 2021, a concerning buildup in margin debt. Now, that's just one of many frameworks that I cross-referenced, but I have, as you know from my reports, sort of a checklist of indicators, both in terms of the economy and the equity market. And I'm looking for what I would describe as sort of evidence beyond a reasonable doubt that you've got an impending recession risk or an impending bear market or market downturn coming.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“The data using the SP index, which goes back to the late 1920s, actually one third, five out of the past 15 recessions have not had bear markets if we define a bear market as a 20% plus decline in the S&P. So that in and of itself, I think, is noteworthy that a recession is not necessarily as bearish as people might think. But I would be the first to say that all major bear markets are going to have a recession, you know, a recession in there. So it's a combination of a rolling over of the business cycle with, in terms of the big recessions, with potentially an asset market bubble or a speculative mania or some kind of buildup in margin debt, margin debt buildup was definitely a feature of the 1920s bull market. It was definitely a feature of the late 90s and even of the mid-2000s bull market, which I wouldn't really put in the category of a stock market bubble that was really.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“In terms of corrections, it's hard to say corrections which are typically defined as 10 to 20 percent drawdowns tend to be somewhat, well, very difficult at time, I would say. And there's always a narrative that's assigned after the fact. So you're never going to get a correction that sort of, I mean, to me, they sort of come out of nowhere, but there's always a narrative associated with them. Nobody's ever going to say, oh, the market's down for no reason at all. So that's something to be mindful of of those sort of headlines, those narratives that are going to influence investor behavior. So that's one category. And I think to answer your question with respect to what causes major bear markets, I would say that there's definitely typically a role that recessions play. So the way I think about it and what the history suggests is that all major bear markets are associated with recessions, but not all recessions are associated with bear markets. And going back through”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“To make a call around a correction, a 10 to 20% correction. I'm really looking to make potentially defensive shifts around major recession bear markets like we had in the early 2000s, like we had during the global financial crisis and great recession. And sometimes, of course, the market's going to be trading pretty much in line with the fundamentals. And if there's not a material mispricing there, then there may not be much action to take. So in other words, you can't really look at fundamentals in a vacuum. You have to look at fundamentals always relative to price.”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT
“Sure, yeah. So I put out, as you know, a monthly report on the US business cycle and a monthly report on the equity market. And two of the things that I'm looking to assess there on an ongoing basis is what is the risk of recession over sort of a six-month forward-looking period. And with respect to the market, as we've been in this secular bull market, what are the chances that that's potentially coming to an end? And as we've been making new bull market highs, are those highs consistent with past major market tops or not? And so I'm not really looking to”
2022-07-14 · Forward Guidance · No Clear Sign Of Recession Yet, Says Nick Reece · IDENTIFIED FROM THE TRANSCRIPT