The Blind Squirrel's Monday Notes. 2/13/23
The Blind Squirrel's Monday Notes. 2/13/23
Schrödinger’s Recession
Summary
We follow the work of a huge number of eminent economists. Frankly, they are all over the place in terms of their forecasts. We like to call this state of affairs Schrödinger’s Recession – the recession that is simultaneously there and not there.
On the economy, the bond market is trying to tell us that it is (i) pretty relaxed about the longer-term inflation picture and (ii) that a pretty harsh recession will have the central bankers cutting interest rates by the end of this year. Stock markets like the look of those lower interest rates but think that they can be handed out by those central bankers without the need for taking any economic pain in the real economy (i.e., slower growth). It feels to us that equity markets are displaying a Boris Johnson level of ‘cakeism’.
Reduced volatility in bond markets is driving money back into ‘growth’ equity markets. Even Adam Neumann (yes, the WeWork 🤡!) is back, claiming that apartment…