July 2023 - Porter & Co

Expect More Upside Now That Rate Hikes Are “Over”

Posted onJuly 31, 2023August 3, 2023AuthorPorter & Co.

Last Wednesday, Fed Chairman Jerome Powell signaled that the rate hike cycle is close to done. He said the central bank has been able to slow inflation growth without cratering the economy. Money managers see Powell’s speech as an unofficial “no more rate hikes” announcement.
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“Don’t Be One Of Them”

Posted onJuly 28, 2023August 3, 2023AuthorPorter & Co.

Financial markets have never had to reckon with a speculative asset mania, unsustainable bubbles in consumer, corporate, and sovereign debt, and structurally high inflation – all at the same time. The potential for significant economic turmoil is arguably greater than at any time in memory.
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Several highly reliable signals suggest a recession is imminent. The Institute of Supply Management (ISM) Purchasing Managers Index (PMI) fell to 46 in June. Over the last 70 years, similar levels have indicated the U.S. was already in a recession with very few false positives (from Charlie Bilello via Twitter on July 3)…

Posted onJuly 27, 2023August 8, 2023AuthorPorter & Co.

The Federal Reserve’s preferred measure of the U.S. Treasury yield curve has never been this inverted without a severe recession following (from Ian Harnett via Twitter on July 5)…

Posted onJuly 27, 2023August 8, 2023AuthorPorter & Co.

The Conference Board’s Leading Economic Index (LEI) – which tracks a basket of indicators whose changes tend to precede changes in the real economy – also declined again in June, bringing its current “peak-to-trough” drawdown to -9.9%. Since 1960, contractions of this magnitude have only occurred when the economy was already in a recession (from Liz Ann Sonders via Twitter on July 21)…

Posted onJuly 27, 2023August 8, 2023AuthorPorter & Co.

The LEI has also now contracted for 15 consecutive months, a streak that has only occurred twice before: during the severe recession of 1973-1974 and the Great Financial Crisis of 2007-2009 (from Liz Ann Sonders via Twitter on July 21)…

Posted onJuly 27, 2023August 8, 2023AuthorPorter & Co.

And as Michael Kantro – Chief Investment Strategist at investment bank Piper Sandler – reminds us, every impending recession looks like a “soft landing,” until it doesn’t (from Kantro via Twitter on July 22)…

Posted onJuly 27, 2023August 8, 2023AuthorPorter & Co.

Mortgage rates have correctly forecasted U.S. corporate earnings over the past several years, and unfortunately, they’re sending an ominous message today (from Francois Trahan via Twitter on June 26)…

Posted onJuly 23, 2023July 27, 2023AuthorPorter & Co.

Today’s macro environment shares some “uncomfortable” similarities with some major stock market tops of the past (from The Variant Perception Blog on June 30)…

Posted onJuly 23, 2023July 27, 2023AuthorPorter & Co.

1929, 1973 and the dotcom bubbles all saw sustained monetary policy tightening and a clear divergence of surging bubble stocks vs the average stock moving sideways/falling. The 1929 top was preceded by 18 months of tightening policy and a 9-month period of divergence between surging bubble stocks (utilities + tech, thanks to buzz around new
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Investment newsletter writers were more bullish at the end of June than at the peak of the market in late 2021/early 2022 (from the Elliott Wave Financial Forecast on June 30)…

Posted onJuly 23, 2023July 27, 2023AuthorPorter & Co.

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