Soft landing: Did the Fed really somehow achieve the impossible?

Did the govt spending slow down? It will be a hard landing m, it is just a matter of time.

Idk if this answers your question but it feels like they are just pulling some of this economic data out of their arse each week.

We have given $75 billion to Ukraine which is pumped directly to defense contractors and into the economy. The government still has the money faucet on full blasts. If the money ever ends, we have a really hard landing. It’s unsustainable.

Hard to believe government reports around economic data.

Nah, inflation is slowing down…just not to 2% yet.

The bigger issue is they are going to create unemployment issues eventually in their pursuit of 2%.

In past big market dips the dip occurred months after the Fed pivots. Meaning the Fed pausing rate hikes or not cutting doesn't mean we're out of the woods. Not enough data to know if that's a coincidence or not, but if history repeats itself we are 5-10 months from the potential pain.

In September 2007 the Fed cut rates and did so fast, In October 2007 the market peaked then held steady until June 2008 when the crash started and bottomed in March 2009.

In 2000 it was less pronounced but happened four months after the Fed cut rates.

So in the last two rough recessions Fed pausing rate hikes and then cutting rates were followed by massive market dips. I certainly hope we can dodge it this time.

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We have given $75 billion to Ukraine which is pumped directly to defense contractors and into the economy. The government still has the money faucet on full blasts. If the money ever ends, we have a really hard landing. It’s unsustainable.

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The Ukraine is such a red herring though. I don’t support the money we’re spending there, but it’s so insignificant from government spending standpoint it’s irrelevant for any discussion purposes.

Market is pricing in 5 or 6 rate cuts next year. Think about that objectively. In my opinion, that means something broke.

If that happens, does inflation come roaring back?

I have to think so.

Things look like they’re trending well. Until you look at consumer debt. Feels like the average American has decided to prop this economy up on credit.

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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.

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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?