The ‘soft landing’ stock bulls promise is more likely a double-dip recession
The unusual policy response to the COVID pandemic.
Had global authorities not acted, the sudden economic halt would have amounted to a slowdown of Great Depression proportions. Instead, we saw an unprecedented level of fiscal and monetary stimulus.
While the programs could have been better designed with full hindsight, it was imperfect battlefield surgery designed to keep the patient alive.
The global economy is now paying the price of those stimulus programs in the form of unwelcome inflation.
The closest analogy for current circumstances is the double-dip U.S. recession in the early 1980s.
The bear market didn’t end until August 1982, when the Mexican peso crisis caused the U.S. Federal Reserve to relent and ease.
Investors at that time were afforded the opportunity to buy the market at a single-digit P/E and the August 1982 bottom turned out to be a generational low.
Fast forward 40 years. Median wage growth is moderating but it’s still very high at 6.3%. The soft landing mirage. The Fed’s main challenge is getting inflation down to 2%, or near 2%.
Monetary policy is a blunt tool, and it’s virtually certain to induce a recession.
Cam Hui MarketWatch 26 June 2023
Cam Hui writes the investment blog Humble Student of the Markets, where this article first appeared.
https://humblestudentofthemarkets.com/
Dow’s bear market low of 777 points in August 1982.
Det datum som angavs som utgångspunkt för uppgången på börsen i New York var den 12 augusti 1982. Vad var det då, frågar man sig, som hände fredagen den 13 augusti, som satte fart på världens aktiebörser.
Jo, det som hände den dagen var att Mexiko förklarade att man inte längre kunde betala sin utlandsskulder. Det var /den dåvarande/ skuldkrisens födelsedag
https://englundmacro.blogspot.com/2022/05/volcker-if-i-had-known-what-was-going.html
Jag har skrivit en bok om det.
https://www.internetional.se/re82bok.htm
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