🔔 "Recessions Don't Happen When Everyone Is Expecting Them"

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"Recessions Don't Happen When Everyone Is Expecting Them"

I've seen this comment thrown around a lot on FinTwit (financial markets Twitter) recently...

Even Business Insider are in on the act 👇

Most people would know that things go up and down, even Joe Public, right?

If they didn't, we'd just have an infinite up only business cycle and everyone would be exorbitantly wealthy - absolutely no relativity theory of give and take at all.

I completely disagree with this notion that recessions don't happen if people are expecting them.

For one, if people are expecting it to happen, people turn defensive.

Secondly, Trichet (the ECB's President in 2009), when referring to the underpricing of risk said, 'Warnings by the authorities about the possibility of an abrupt correction in financial markets date back to 2006.'

So clearly there were people expecting a downturn before the Great Financial Crisis happened. Duh.

One of his solutions to preventing another crisis was, 'Finally, a third factor that, in my view, needs to be addressed is the excessive pro-cyclicality of the financial system in its entirety, i.e., the tendency of the financial system to accumulate too much risk and leverage in good times, and to shed risks hastily in a downturn.'

I mean, consider the last two years.

In Q1 2021, retail piled more into stocks than the previous TWELVE YEARS COMBINED, with margin debt hitting records through 2020 and 2021...

When people in the financial sphere make these bold claims of 'priced in', especially when referring to recessions, we must remember that recessions are painful to the REAL ECONOMY, not just asset prices that we gamble in day in & day out.

They hurt, and we are a very small sample size who are hyper focused on markets and economic data - we are not representative of the real economy, so what might seem priced in for us isn't necessarily by the 95% who experience recessions by living through them and forecasting (or not) them.

Follow The Light

There's never a shortage of innovation in the chip industry. Moore's Law keeps on delivering even though the absolute wizards behind this microtechnology have to dig deeper into their creative reserves to deliver progress.  

IBM & Samsung are developing a vertical chip to solve the size problem  👇

Now we're onto the NEXT BIG THING™

Yeah it sounds really geeky and boring, but it's pretty much fiberoptic technology in a chip, which sounds way better. 👇

It's a fast-developing sector, and investment's flowing in at a faster rate now too...

Who's investing? Just a couple of minor multinationals... 👇

On the AI front 👇

Definitely something to keep an eye on as chips and data continue their exponential rise.

Here's a 2 minute explainer video of how it works 👇

Dollar dominates, but for how long?

The dollar's on a rampage and hurting plenty who've tried to fade the trend. It's very obviously 'overbought', and there are plenty of these types of charts doing the rounds 👇

Sentiment is very much one way (wth good reason). Now though, dollar bulls are taking victory laps & euro bears are all "death to the euro".

Some people are taking it even further...

But the trend is your friend until it ENDS

Here's a chart of the euro with two crayon lines drawn on 👇

Nothing about that looks bullish. The trend hasn't ended. But there could be some catalysts for relief from tomorrow ahead of the FOMC next week 👇

We'll be running through them with Macrodesiac Premium members as the data drops.

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