🌍 Rate hikes bite with a lag - back in recession next year

“So look, I think we're in a shallow technical recession right now. I bet that we probably bounce out of it in Q3 or Q4, but I think there's a significant risk that we're back in it next year. Just my guess.”

“It looks to me like we're headed for, I mean, I call it a double-dip recession, I think a couple of months ago. That's exactly what it's looking like.”

“The bad news is I think that it's going to be a really tough, sticky time for the US consumer probably over the next 18 months.”

“There's an inevitability now that unemployment is going to rise. There is an inevitability now that the economy is going to contract.”

“I do think that Stan is right. We are going to see a hard landing recession.”

“And I think we're headed for a broad-based recession. That's what it seems like. You saw Druckenmiller's comments this week predicting a hard landing in 2023 No one's talking about soft landing anymore.”

“Over a million jobs burned off in August. So without getting into the macro talk, it does feel like what the Fed is doing and companies doing hiring freezes and cuts is finally, finally having an impact.”

“But I still think the huge recession is to come next year because all the interest rate increases we've seen. So, the Fed is, you know, pedal to the metal on interest rate increases, just like they were pedal to the metal on printing money.”

“Then it'll go back down because I think what David said is right. But for the short term, this thing is going up.”

“But now I think we're headed into the second part of it, which is the real recession, a recession characterized by joblessness. And you're starting to see economists say we're going to go from 3 something percent unemployment rate to say 5 or 6 percent unemployment next year.”

“I mean, remember, like we don't know, I think we all believe that we're going to have a pretty severe recession next year.”

“We're going to have major economic headwinds for the next four to six quarters. Call it year and a half.”

“Well, I think it's more like it does seem like we're headed into a recession here in 2023 The magnitude of that recession is debatable, but I think it's at least a light to moderate recession. Potentially, it's on the order of 2009”

“because I think Elon and I are roughly in the same place we have been for a while, which is like mid-24 is when the recession ends”

“And now he is predicting a hard landing in 2023 with a deeper recession than many expect.”

“It's very hard, in other words, Sacks, to have a recession if people are employed, if people are employed.”

“it's good if we have a soft landing in the economy. I wouldn't assume that that's going to happen. I still think there's a really good chance of recession later this year”

“So I tend to be a little bit gloomy with respect to the big macro picture because I just don't see how you can change rates this fast.”

“we, the four of us, have been talking for the last 18 months about the impact of rising rates. And, you know, we talked a lot about, for example, like in our portfolio, my partners and I walked into every company and made them have at least enough money to get through mid-2025.”

“Two days ago, two days ago, Powell was testifying in front of the banking committee. And they asked him, do you see any systemic risks in the banking system because of the rapid rise in interest rates? He said, no, no systemic risk.”

“Why won't you just stand pat for one month? You can always raise rates in a month. I think that this move here could in hindsight be seen as the straw that breaks the camel's back.”

“I'm sticking by it. I think we're still going to have a recession.”

“I think that speaks to the larger economy is not doing that well. I think the economists a year from now may say that the recession had already begun.”

“And the reason there's not going to be a hard landing is you just saw China today basically say, we're going to start to rip in trillions of dollars.”

“But clearly the economy is not crashing. We had a lot of people who said that the economy was going to hit the skids in Q1 or Q2 of this year due to these higher rates. The economy is incredibly resilient.”

“Hard landing was sort of the Druckenmiller thing that I think that, you know, I said, I think it was a few weeks ago. It's very difficult to see a hard landing when China stimulates just because of their natural gravitational pull in the world economy.”

“Yeah, look, I don't think we're out of the woods quite yet. So Druckenmiller, by the way, said that he was predicting a hard landing in the second half of the year. We're just starting the second half of the year. So he's still got six months to be proven correct.”

“But I think, again, what you're seeing over the last few weeks, it's just more and more evidence that it could be a soft landing, that we may not have a recession and we might even get rate cuts next year.”

“But the fact is, America is just crushing it in terms of employment, and that's why we didn't have this crash landing. I think the soft landing is because of employment, and I'll just end there.”

“I would say the market's actually betting here that the Fed is overdoing it because of what you see in that blue line and that the economy is going to slow. The lag effects of this tightening have not yet been felt.”