5/10/2023
Inflation
- https://prometheusresearch.substack.com/p/the-observatory-f3c
- Housing is holding up inflation from coming down faster – there is a severe lag with housing data being reported into CPI.
- Prometheus models that we won’t get back to 2% inflation without a recession.
Economy
- https://humblestudentofthemarkets.com/2023/03/25/why-the-dot-plot-doesnt-matter/
- Quoting the article, “Putting it all together, the banking crisis pattern of 2023 more resembles the 9/11 shock. The stock market was already in a bear market, and interest rates rose after the effects of the shock wore off. Expect a similar pattern of a short-term stock market recovery, followed by further weakness as market fundamentals reassert themselves.”
- https://macro-ops.com/em-stocks-are-at-record-cheap-levels-dirty-dozen/
- Bridgewater thinks that interest rates are going to stay high for 18 months?
Trading
- https://macro-ops.com/double-barrelled-buy-signal-dirty-dozen/
- This post from January seems to be playing out. It details several different kinds of breath thrusts that are worth paying attention to and tracking.
- https://macro-ops.com/how-to-evaluate-stocks-like-michael-burry/
- Good write-up on Michael Burry’s investment thought process
Final Thoughts
With the stock market rallying off of the December lows and showing a gain this year, after firing a number of breadth thrusts, I wonder how far it can go. The market is currently expecting the Fed to cut rates near the end of the year, but Bridgewater’s thesis that we need to hold rates high for 18 months seems more realistic than the current interest-rate curve forecast. The fact that inflation is decelerating slowly in the U.S., due to housing data lags, underlines Bridgewater’s thesis.