Stocks and bonds are betting Powell achieves the softest of landings, in spite of coming in upside-down.
JUL 24, 2023
Bond traders, who are supposedly the wiser money, are betting the bond yield curve, which is FAR more inverted now than it has been in decades stretching back through one truly bad recession and two horrendous stock crashes and which has been virtually unfailing in accurately predicting recessions, is WRONG because the recession “isn’t happening” as had been predicted….
They are betting on Nirvana when their own yield curve predicts hell on earth. In fact, if this yield curve is Powell’s altimeter for making that landing, what it says is the nose cone of his plane is already buried deep in the dirt.
Clearly, these traders must have been stunned due to the blow they took to their unshielded heads when their plane landed upside-down, leaving them with scalp skid marks. They, and many others are betting on the softest of imagined landings (no recession at all) due to the most failed economic gauge in history, which I have been sounding the alarm about for two years. (And I am NOT talking the yield-curve gauge, which I assure you is as accurate as it has ever been.)
It is not surprising, of course, that the dumb money in stocks is making a run for its past record; but, as one analyst says, this is exactly what happens before most recessions. Stock investors think everything looks great when it really doesn’t, then suddenly things clearly do not look great to anyone, and the bottom falls out of the market. Investors in both stocks and bonds are betting on heaven from the mouth of hell….