So Far, So Good

The first quarter of 2024 took a lot of strategists by surprise. Many doubled down on their unrequited recession forecasts for 2023, only to be left at the altar once again. The business of forecasting is turning into an extended version of “Waiting for Godot” (or is it Guffman?).

Why do they keep getting it wrong? In the opinion of this observer, it’s because this cycle is just different from the typical business cycle due to the pandemic and the government response to it. Unprecedented amounts of stimulus were placed in the hands of consumers during the pandemic and then the government followed that up with massive investments in semiconductors, onshoring and clean energy, all on borrowed money. We are levered up, and we’ve got the debt and deficits to prove it.

Let’s look at the numbers, courtesy of JP Morgan Asset Management as of April 15, 2024:

Weekly Data Center

There’s no debating the numbers, the numbers are good. The question is, are they coming only at the expense of debt and deficits? And what about the geopolitical situation?

Add it all up and I’d say we’re due for a pause. It’s not WW III, it’s not the end of the world, I believe it’s just a pause at the end of a very good run.

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