Hoisington Management’s latest quarterly review and outlook is available here. Always worth a mull; here’s a key takeaway:
A long list of pre-recessionary indicators is already present. These include declines in the volume of retail sales in five of the last seven months, a steep drop in new and existing home sales, housing starts, building permits and mortgage applications; vehicle sales at levels quite depressed from the 2019 level, severe erosion in the NFIB small business survey, flat trucking volumes thus far in 2022, and an outright decline in rail freight. New weekly unemployment claims have been working higher since the beginning of April. Manufacturing, at best, has plateaued, but indications of a downturn have been increasing along with signs of moderation in capital expenditures. Inventory investment, the main driver of growth in 2022, could slow and pose a major restraint on economic growth well before year-end. International economic conditions do not always line up with the U.S. business cycle, but conditions are extremely poor around the globe.
…Monetary considerations coupled with these real side indicators point to recession and a reduction in inflation and long-term Treasury bond yields.
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