Great piece, thanks! I particularly like "A lapse in patience is often a fatal flaw in the Business Cycle".
So since 1970, the current #1 + #2 has always led to a recession. Can you, in broad terms, explain how you have adjusted your portfolio exposure due to this reality?
Great article. I like the caveat at the end about not using this information to nail market tops and bottoms (which everyone still tries to do despite the plain evidence that it can’t be done). My question after reading this: what is the underlying truth of the past 6 decades that makes the mentioned indicators valid? I don’t know that there is an actual answer to be had beyond guesses and theory. So I suppose it is more of a thought experiment. My own answer (guess) is somewhere in between better data and the point at which the Fed began the earnest attempt to ‘manage’ the economy post WW2. These days especially, it feels like we are all the tail of the slinky dog being whipped around by the head (the Fed’s interest rate policy).
Interesting article! However, the method that Eric use for his signaling system is old. Modern methods that are used in todays signaling system do not capture a recession signal. Nonetheless, great article and a nice reminder of the past!
Great piece, thanks! I particularly like "A lapse in patience is often a fatal flaw in the Business Cycle".
So since 1970, the current #1 + #2 has always led to a recession. Can you, in broad terms, explain how you have adjusted your portfolio exposure due to this reality?
I watched the YouTube video but appreciate being able to ponder the newsletter format. Thanks Eric!
Some people enjoy the videos and others like the written format. We'll do both!
Great article. I like the caveat at the end about not using this information to nail market tops and bottoms (which everyone still tries to do despite the plain evidence that it can’t be done). My question after reading this: what is the underlying truth of the past 6 decades that makes the mentioned indicators valid? I don’t know that there is an actual answer to be had beyond guesses and theory. So I suppose it is more of a thought experiment. My own answer (guess) is somewhere in between better data and the point at which the Fed began the earnest attempt to ‘manage’ the economy post WW2. These days especially, it feels like we are all the tail of the slinky dog being whipped around by the head (the Fed’s interest rate policy).
On that note, the NBER is stupid and I ignore them. When the Fed starts dropping rates is when I know the recession has begun. https://fred.stlouisfed.org/series/FEDFUNDS
Thanks! Glad you enjoyed it.
The NBER is a historical dating archive. They purposely wait a year for all the revisions to come in so they can be as accurate as possible.
They aren't trying to time recessions in real-time.
I stand corrected.
Thanks Eric. Great report. In the last 6 decades, what has been the longest duration between pending recession and actual recession? Much thanks
So far, this current cycle is the longest. Before that was the 2008 cycle.
Appreciate the reply Eric. Thanks and noted.
There's evidence that the increasing lag time is a secular trend related to the time it takes to complete housing units.
Check this out: https://x.com/EPBResearch/status/1883201362441441707
I cant thank you enough. Thanks again Eric.
Interesting article! However, the method that Eric use for his signaling system is old. Modern methods that are used in todays signaling system do not capture a recession signal. Nonetheless, great article and a nice reminder of the past!
I don't think you understand what you read.
Great work, thx for sharing
A compelling argument. Could you go into what we might see generally in terms of sector changes during a recession?