Juggling Dynamite

The first 57 minutes of this presentation are a worthwhile macro overview. (The final 17 minutes are a micro dive into individual debt types for US investors and less accessible for Canadians and lay people).

In his annual “Just Markets” webcast presented Jan. 9, 2024, DoubleLine CEO Jeffrey Gundlach among other outlooks shares his forecast for a U.S. recession, sees U.S. stocks forming a bearish double top and down the road expects an initial rally in bonds upon recession followed by an inflationary monetary response. He also warns of federal deficits turning critical amid an explosion in the federal debt in the context of higher interest rates and, thus, higher interest expense on that debt. Here is a direct video link.

Unemployment spikes as recessions begin, but before that, early warning signs are fewer job openings and a shorter work week. The latest December jobs report showed spreading cyclical weakness.

Year over year, Indeed job postings fell 15% in 2023. See Finding a New Job is Getting Harder. Under the hood, postings for lower-paying positions increased while higher-paying openings in leading sectors like finance and software development decreased.
Economist Liz Ann Sonders offers a good overview in her latest update.

Liz Ann Sonders shares her perspective on the U.S. stock market and economy in this monthly Market Snapshot video.

January US Empire Manufacturing reading this morning was -43.7, much worse than the -5 estimated and much weaker than during the 2008 financial crisis/great recession.

January Empire Manufacturing Index plunged to -43.7 vs. -5 est. & -14.5 prior; interestingly, index was never this negative/weak during GFC … new orders sank to -49.4, shipments fell to -31.3, employment eased a touch to -6.9, and prices paid moved higher pic.twitter.com/uHDkVGiz5u

— Liz Ann Sonders (@LizAnnSonders) January 16, 2024

Meanwhile, the analyst consensus is for S&P earnings per share growth of more than 10 percent over the next 12 months (red line below since 2000, courtesy of Mikael Sarwe) even as nominal new orders are contracting (in blue). Typically, earnings follow new order trends. At the same time, US Gross Domestic Income was -.2% year over year in the third quarter compared with a 4.9% estimate for GDP. This disconnect is extreme and commonly, GDP is revised lower in retrospect to meet GDI.

Dr. Hunt illuminates many of these readings in the segment below.

Here is a direct video link.