🌍 Soft-landing rally underprices the lag risk

“I think the consensus view of the street is that inflation is largely in the rear view mirror... I think there are at least two really big risk factors to that. One is that inflation could still rebound... there is typically a big lag in the impact on the real economy of rate hikes and I think you could still see these rate hikes take effect over the next several months and you could see a real dip in the economy, potentially a recession... right now the markets are pricing in a soft landing or no landing.”

“this is not like the Fed's, you know, impact with this tool is not like driving a car where you hit the accelerator, you hit the brake, and you get an immediate reaction. This is more like driving a train where, like, it takes a little while to get up to speed... And if you slam on the brakes, this thing can come off the rails. And that's the scary part for me.”

“his typical positions are 50 basis points, 80 basis points, 100 basis points. So he's not a big risk taker. So what he probably has on is what's called a short straddle... So this is a big much ado about nothing. It's good headlines in a moment where there's not much to talk about.”

“I don't think Wall Street and Main Street can be disconnected forever. I think it's got to reconcile one way or another”

“But it's really confounding for the markets. I think it's really bad for markets in general. It's probably the worst for private companies”

“let's say that this blockade of the Red Sea continues for all of 2024 ... What does that do to global prices? Because I think right now, the market is pricing in rate cuts next year on the theory that inflation is coming down and is a solved problem.”

“soft landings are like second marriages. It's the triumph of hope over experience, meaning they almost never happened. ... the fact that we didn't get that, I think that was basically a pretty important bullet dodge.”

“we've now started to see folks come back from the new year and start to affect some pretty big layoffs, and they're across industries ... demand has yet to reset properly”

“my prediction for the year was bumpy landing. I thought soft landing was a little too optimistic. And I also thought that this big stock market rally that we had in November, December was too much too soon.”

“So we are on track here for the soft landing, it seems like. But yeah, there's definitely potential storm clouds on the horizon.”

“they're pricing in these rate cuts as if they're definitely going to happen... people, I think, are maybe gambling in the sense that they're counting on rate cuts that haven't happened yet.”

“after three straight months of inflation being more persistent and stickier than people expected, I think that narrative is basically dead... So I think the new narrative now is it's going to be, rates are going to be higher longer”

“as a country that is a net importer, we are going to feel the price of those decisions as inflation”

“But the average individual American isn't feeling that. They're actually feeling that they have less money. So I would actually go with them and actually say, if we don't revisit this thing from first principles, we're going to get this dynamic where we think one thing is happening, but the actual exact opposite is happening. In this case, I do think we're in a quasi-synthetic recession.”

“So people's wages have not kept up with the rate of inflation. This is why they feel worse off. When you actually look at purchasing power, people are worse off in terms of their actual ability to buy things. Their purchasing power has gone down. Wages may have gone up a little bit, but they have not gone up as much as inflation, so people feel worse off.”

“So a lot of people will say, oh, they're price gouging, they're ripping off consumers to make profits for shareholders, but the truth is the biggest component of running those restaurants is labor, and labor has gotten more expensive because the employees that work there have to earn enough to pay their bills and to afford their food. And this is the circular effect of inflation. It finds its way all through the economy, it filters down and it eventually hits everyone.”

“More than half of Americans think we're in a recession. I think we're in a vibe session right now because we're not in a recession, but people are feeling really bad.”

“It took a long time for this to work its way through the economy, but I think we're finally seeing it now.”

“This is, I don't know what else is more definitional of stagflation. The economy is not growing, prices are going up, and the cost of borrow has gone through the roof.”

“So the economy is only growing by 1.3% and it costs more than 3% more each year to buy stuff.”

“So I think what we're starting to see is that for the large portion of the economy, we've run out of cash to spend. And as a result, I do think that we are going to see an economic slowing.”

“So honestly, I think your introduction overstated how positive this news was.”

“Yeah, my position is I think he might have already stuck the landing.”

“the economy may not be in recession yet, but I just think it's weak, and this is just one metric showing that.”

“what's interesting about the Rick's Cabaret stock price is that it has presaged the last two recessions. And whenever the stock dives, people have said it actually predicts an upcoming recession. And the stock just puked up like 25% or 30% in the last week.”

“I'll counter the Rick's cabaret recession indicator as valid anymore based on the theory of our good friend on the group chat, who I think has done a very good job highlighting that the strip club industry has been decimated by OnlyFans.”

“but it looks like there's a really good chance that it has. I think the bigger question, though, is if we are on the verge of a real contraction in the economy.”

“I think the market's priced in a lot of the expectation already.”

“I just think people get a little too excited reading into these prints when these are not huge changes in numbers.”

“And then the whole consumer cycle, the consumer credit cycle, that doesn't look good, to be honest. And so I think the fall is going to be complicated.”

“I think we're in a recession. And I think the problem with a recession is even as inflation diminishes, if you're purchasing power is shrinking faster than prices fall, it still feels like prices are going up.”

“One is that what we've seen over the past year or so is that the economic data that comes out keeps getting reforecast down. So they put out a provisional number or an estimate. And then when they finalize the number three months or six months later, it always seems to go in one direction.”

“I mean, these are businesses where some folks have told me orders completely fell off a cliff in capital equipment, that some small business owners that sell whatever piece of equipment you want to come up with, they are not getting orders. There's no revenue.”

“I don't think the demand is there. I think we're in a recession.”

“I've been predicting recession for like three years now, because I just think when you jack up interest rates so suddenly, so violently, you get recession. So I guess if you pit me down, I'd say recession.”

“Yeah, I think there's a great chance of a recession.”

“And it looks like maybe it's going to be a bumpy landing rather than a soft landing, as one might suspect.”