Investors have now gone “all in” on the soft landing narrative, just like they did in 1989, 2000 and 2007.
Soft Landing Optimism Is Everywhere. That’s Happened Before. https://t.co/k1CX8VVg76 by @jeannasmialek pic.twitter.com/5tmLjYW9oE
— Jesse Felder (@jessefelder) July 27, 2023
Funny how they forget each time that “it’s all about the lags.”
'During the tightening cycle, the economy typically expands at its fastest pace, as it feeds off the lagged effects of the prior period of policy accommodation. It slows down precipitously in the two years that follow the END of the Fed tightening cycle.' https://t.co/VJs8z01qL9
— Jesse Felder (@jessefelder) July 27, 2023
But there’s one group that clearly hasn’t forgotten and that’s the folks in the c-suite.
'As a percentage of companies for which there has been any insider activity, those with net insider buying dropped to 12%. That percentage is lower than for any other month over the past decade.' https://t.co/bYRrhlnlNd
— Jesse Felder (@jessefelder) July 26, 2023
And there are indications within the markets that suggest their caution could be warranted.
'There are very few conditions in which we have any specific expectations for near-term action. One exception is when the market is strenuously overextended in a "trap door" situation combining rich valuations with unfavorable internals.' https://t.co/mX7CMUP9tT by @hussmanjp pic.twitter.com/dsJDhrxuXB
— Jesse Felder (@jessefelder) July 24, 2023
Longer-term, there may be cause for greater economic volatility than the “soft Landing” narrative would suggest.
"It's this paradox where we are investing massive amounts of capex in every possible sector; from biotech, to healthcare, to industrials, to new materials, except in commodities which you need to accomplish all these other goals." https://t.co/qrzRxhGkk1
— Jesse Felder (@jessefelder) July 23, 2023
Thanks for reading and have a great weekend!
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