Brainstorms: Look at the past
Foresight is difficult
Remember a few months ago when everyone was screaming recession because the market was going down and about to hit 4,000 on SPX? Everyone was convinced that the sell-off in stocks was an indication of recession and the deteriorating fundamentals of the economy.
During that time everyone who was in the business of capturing short-term attention raged confidently. But as soon as the Treasury announced a change in their issuance, stocks rallied violently.
Why does this matter? It is very simple. One of the things I emphasized over and over in the macro reports was that the bear steepener was the driver of stocks, NOT a recession. Earnings expectations remained flat!
Here is a chart of SPX and its earnings expectations. Earnings expectations (blue line) remained flat:
This small yet instrumental fact was ignored by those who only looked for evidence that confirmed their view. This comes back to the defining force behind this Substack:
In the information age, you simply need to be at the right place, at the right time, with the right information to succeed
You only need a couple of calculated and well-thought-out actions within this framework to truly change your professional and financial trajectory in life. When I talk about this, I am not talking about gambling and hoping for the best, that is for amateurs. Professionals make their success inevitable because they harness all the variables in their control and then ensure that all of the things outside their control only cause small losses.
This is how life works and markets are part of life.
As we move into the end of the year, economists continue to think there is an “imminent recession.” We are at another point where they or ignoring the tensions of economic data and not accounting for the timing that takes place in a complex system.
This is what I stated in the most recent macro report (link):
We remain in this interim period of time. Part of the clear evidence of this tension is the most recent unemployment rate print which decelerated and came in below expectations:
Part of analyzing these dynamics correctly is quantifying the tensions accurately. I will be publishing a real estate report breaking down how macroeconomic tensions are expressing themselves in the real estate market. This will be available to EVERYONE because I know real estate impacts your life individually.
If you want to see a further breakdown of the reports I am writing, check out the “About” section. You can also DM me on Twitter or just email me.
The best is yet to come