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Recession

Recession on the Horizon - FOMC and LayoffsYesterday, the FOMC confirmed the backing of higher interest rates for longer. The market reacted negatively signaling negative sentiment on rate expectations for the following quarters. Federal Reserve official, Neel Kashkari, who often has the most dovish views on market anticipation stated that inflation may have peaked but sees interest rates rising higher for the next few meetings. He sees the FED raising rates by a whole percentage point from the current level of 4.25%-4.5% to 5.4% (MarketWatch, Jan. 5). The inflation fight is not over yet, and it remains sticky despite all the economic weakening observed. In a previous thesis where I challenged the US economy about a year ago, I warn of massive layoffs in 2023 despite most analysts and the Fed saying otherwise. Meta and Tesla have already laid off thousands of employees just months ago. Today, large layoffs in tech are happening with Salesforce: “layoff about 10% of its employees, the company also says it will close some offices as part of its recruiting plan, but it is still unclear if any of the bay area offices will be impacted, undertaking major cost cuts in a challenging economy.” (CNBC, Jan. 5). Amazon Chief Executive Andy informed his employees that the number of layoffs in the company has now been increased to more than 18000 roles (ArabianBusiness, Jan. 5). Other firms are cost cutting, most cutting employee benefits. It is just a matter of when or not we are going to see higher unemployment rates in 2023. The most obvious fundamental reason for these layoffs and cost cuts is the fact that all these companies responded to the “bubble” fueled by stimulus and extensive quantitative easing. As a response, the Fed is raising interest higher, and tightening the monetary policy and we see the equity evaluation of these companies dropping significantly. Eventually, that demand is gone, and these companies are left with thousands of employees hired in response to a "fake" demand, over-hired. As equity evaluation is going down, they have to improve the margins by laying off employees and reducing expenses since revenue is going down. I see another reason for large layoffs, perhaps, a more IMPORTANT and IMMEDIATE aspect. Salesforce admitted business activities going down, demand slowing, and growth staggering, however, their stock went higher because they laid off employees, reducing their expenses. On paper, it shows higher margins, and thus, the stock reacted positively. What can become a norm during this economic environment is that we see more companies, especially in the tech industry which saw major lows, employing this technic by raising their stock prices with restructuring and engaging in mass layoffs. My plan of limiting my exposure to risks has not changed. I am holding a majority in cash and short-term government bonds. Looking to increase exposure to my trading in gold when the US 10-Year Real Rates falls from the inverse correlation between the two. Reminder: Higher real yields = expensive to hold gold when compared to other yielding investments such as fixed income, thus the inverse correlation on the charts. This is for personal recording but feel free to comment and argue.
NYSE:CRMShort
by ssavi
Which Forex trading opportunities could 2023 bring?Fundamentals drive the markets... Here is what we could see happen in 2023... 1. Inflation reversal - possible downside for the US Dollar. Rising inflation and inflation fears drove the USD higher in 2022. Now that inflation is coming down and is more under control, we could see USD downside throughout 2023. 2. Global recession trades - this is already priced in, as the recession has been so well broadcast over the last few months. What isn't priced in is if the recession doesn't happen or is much deeper than expected. Look out for opportunities on CHF and USD pairs - CHF and USD strength if the recession is worse than expected. The opposite if no recession crystallises in 2023 and if no recessions are expected in 2024. 3. Russia-Ukraine war escalation/de-escalation trades - hopefully, we see an end to this war. Either way, we could see EUR and USD pairs impacted. USD strength and EUR weakness, if there is escalation. The opposite if the war ends. 4. GBP recovery trades(?) - sterling is undervalued (it is looking cheap). Possible GBP upside throughout 2023, as stability returns to the UK. GBPCHF, GBPJPY and GBPUSD could provide strong upside opportunities, depending on the outcome of points 1 and 2 of this post. Obviously, anything could happen - this is the current outlook as of 5th January 2023, things could look very different in a month! Wishing you all the best for 2023!
by Samuel_Morton_Trader
2
Leading Indicators - PPI (PPIACO) vs. Unemployment (UNRATE) I wanted to highlight how the peak (downward move) in the Producer Price Index (PPIACO) typically corresponds with the trough (upward move) in the Unemployment Rate (UNRATE) (inverse correlation), as a period of Recession takes hold on the economy, & the financial markets. I also wanted to compare the above correlation with cycle tops in WTI Crude Oil (WTISPLC) , & also with respect to the OECD Leading Indicators (USALOLITONOSTSAM) — as this helps to pinpoint some of the historic baseline(s) for predicting the peak &/or trough in the business vs. market (financial) cycles. Here is the key for the attached chart(s): Top Chart Black Line (Unemployment Rate - UNRATE): *Black Vertical Dotted Line* = Recession Timing Trough Blue Line (Producer Price Index - PPIACO): *Blue Vertical Dotted Line* = Recession Timing Peak Orange Line (WTI Spot Crude - WTISPLC): *Orange Vertical Dotted Line* = Recession Timing Peak Red Shaded Areas (Recession): Indicator via @chrism665 Bottom Chart OECD Leading Indicators (USALOLITONOSTSAM): *Black Dashed Line* = Pre-Recession Indicator Peak Green Horizontal Dotted Line = Expansion Baseline (100) Orange Horizontal Dotted Line = Current Reading (98.62) Red Horizontal Dotted Line = Danger Zone (<97) Red Shaded Areas (Recession): Indicator via @chrism665 Looking at the larger picture of both charts, you can see that typically in previous periods of Recession you would see this flow of the signals (first to peak/trough, last to peak/trough): Peak - OECD Leading Indicators (USALOLITONOSTSAM) Trough - Unemployment Rate (UNRATE) *Peak - Producer Price Index (PPIACO)* *Peak - WTI Spot Crude (WTISPLC)* *Note* - As you can see PPIACO & WTISPLC are very closely correlated as demand peaks out, you then see a shift downward in WTISPLC as this is a signal of the topping of economic growth. Now let's dive close-up into each time period of recession, as we can see some linkages/similarities in the 1991, 2001, & 2009 recessions vs. the what is (likely) a 23' recession, depending how the economic , markets , & financial data plays out this upcoming year — potentially into 24'. 1991 Recession Timeline Peak - OECD Leading Indicators (USALOLITONOSTSAM): July 1987 Trough - Unemployment Rate (UNRATE): Mar. 1989 Peak - Producer Price Index (PPIACO): Oct. 1990 Peak - WTI Spot Crude (WTISPLC): Nov. 1990 2001 Recession Timeline Peak - OECD Leading Indicators (USALOLITONOSTSAM): Jan. 2000 Trough - Unemployment Rate (UNRATE): Apr. 2000 Peak - WTI Spot Crude (WTISPLC): Nov. 2000 Peak - Producer Price Index (PPIACO): Jan. 2001 2009 Recession Timeline Trough - Unemployment Rate (UNRATE): May 2007 Peak - OECD Leading Indicators (USALOLITONOSTSAM): June 2007 Peak - WTI Spot Crude (WTISPLC): June 2008 Peak - Producer Price Index (PPIACO): July 2008 2023(24) Recession Estimated? Peak - OECD Leading Indicators (USALOLITONOSTSAM): May 2021 Peak - Producer Price Index (PPIACO): June 2022 Peak - WTI Spot Crude (WTISPLC): June 2022 Trough - Unemployment Rate (UNRATE): Sept. 2022 What do you think about this macro analysis? Have we potentially been in a recession in 22' — or are we moving closer to higher unemployment (UNRATE) in 23' as the macro/market conditions worsen, & the Federal Reserve's tighter monetary conditions (liquidity & credit) take their toll on the economy? Let me know what you think in the comments below! 👇🏼
FRED:UNRATEShort
by kylemusserco
S&P500 - Outlook - 2023 - 1st Week of January - 4 Hour ChartS&P500 Outlook for the 1st week of January 2023 on the 4 hour chart. Looking for a minor high, or the beginning of a strong move to the downside to HEAVILY short the market within the first few days, or first trading week of January. 1) Always have your stop loss in place. 2) Always have your 'take-profit' target planned before entering. 3) Always be open to being wrong, and exit when the market is not heading in the anticipated direction.
FX:SPX500Short
by U2Rinfinite
1
S&P500 - Outlook - 2023 - 1st Week of January - 4 Hour ChartS&P500 Outlook for the 1st week of January 2023 on the 4 hour chart. Looking for a minor high, or the beginning of a strong move to the downside to HEAVILY short the market within the first few days, or first trading week of January. 1) Always have your stop loss in place. 2) Always have your 'take-profit' target planned before entering. 3) Always be open to being wrong, and exit when the market is not heading in the anticipated direction.
FX:SPX500Short
by U2Rinfinite
1
No doom, gloom or pivot. Just one aliens TA.An alien trader landed on earth and was given a chart of the combined** US indices (futures). Luckily, and not coincidentally, he knew TA. He had never heard of people like J.Powell and J.Cramer, or places like China, Ukraine and Russia. this is what he saw: Bullish: - Broke out 'above' the main diagonal trend (bullish) - Made a Higher High (bullish) - Note that, on a VERY high TF, the Bull market rides on and up (see "Higher Range Frame" box) Neutral - Has arrived at the key POC (neutral) and is sandwiched between zones of lower past volume (LVN's) - The 100MA/400MA was moving towards a "neutral cross" (the midpoint between the MA's is flat and not changing) Bearish In higher time/range frames the index has not made a new swing high. (see "Higher Range Frame" box) NOTES **There are multiple ways to merge ES, NQ and YM, as well as alternative indices like $NYA and Wilshire 5000. The *best* option depends on what it is used for (ex. a sphere is a good model of the earth for the astronomer, but not for the mountain climber). A simple average (ES + NQ + YM)/3 is ruled out because one point has a different value for each index. To address this, each index is weighted so that a 1 point change will imply the same change in $ terms (For weights see www.barchart.com Alternative criterion for weighting include capitalization, number of stocks and beta weighting. [i Epilogue - After watching a TA channel on You Tube for 5 min. he departed abruptly pausing only to grab a clean towel. He is believed to be following in the dolphins footsteps.
CME_MINI:ES1!Long
by gb50k
2
Will we see another dead period for Crypto?It's no secret that we're heading into a global recession in 2023. The question is, will the Crypto market feel the effects too? At the start of 2021 we saw massive buying power come into play and the Crypto market boomed. We saw a 250% increase in prices over 2018's boom before it promptly imploded during mid-late 2022. The previous "dead period" lasted for 2 and a half years . How long will the upcoming one last for? Will we see immediate recovery? Or will we need to wait it out? Crypto is here to stay, so of course we go long (when looking long-term), but for now I'll keep my money in stocks and bonds elsewhere.
BITSTAMP:ETHUSDLong
by Chris4XTrading
2
Gold to New Highs in 2023?I had been following the playbook of GC1! 2011/2012. I was expecting Gold to fall to its lustrum current around $1,480 (at the time). And while it did fall another -7% from that tweet (-12% after breaking it's year current), what I didn't realize was that the liquidity profile was very different now. Basically the opposite. It's important to remember that in a liquidity event, Gold falls hard and fast like everything else. But it generally bottoms halfway through the recession and rises pretty dramatically afterwards. If it's following it's age-old pattern, that would suggest that we're halfway through a recession that started in January 2022 and might end around August 2023. That would see Gold double in price over the next two years. Interesting.
COMEX:GC1!Long
by sacredprofit
$DJI can move 5,000 pts lowerWhen corporate earnings decline and unemployment rises, the Dow Jones Index will fall further. Zoom out on weekly and see monthly. Macro cyclical changes are happening right now. If you plan for it, you can capitalize on it. For example, move retirement money out of equity funds into cash. You can increase savings now to buy a car or home when prices drop. Think about your job security and make backup plans. Arrange your personal finances and evaluate your spending habits so you are better prepared for an economic downturn. I am not trying to scare anyone. I am not shouting for a crash. As a 40+ adult who understands much more than the last five yrs of stock market rising, I am offering practical insight into what is possible.
TVC:DJIShort
by OptionsRising
5
Alarming Macro Conditions for BTCLiquidity issues continue and long-term holders are still selling in losses. While many on-chain cycle indicators (eg. realized price) are showing BTC is in the cyclical bottom, on-chain recovering signs are missing. The yield curve has inverted (the interest rate spread between the 10-year Treasury note and the 3-month Treasury bill). With such inversion preceding prior 8 recessions since 1960s and correlation between BTC and SPX hovering at its all time high level, the global macro condition does not look promising. Furthermore, despite peaked in Q3, the 7.1% U.S. Consumer Price Index (CPI) remains well above the Federal Reserve’s 2% target. With Q3 real GDP stats better than that of Q1 and Q2, the Fed might tighten the leash in the months to come. The above chart is from my June idea BTC: Don’t DCA Yet . It’s worth noting again that in the entire BTC history, most gains were generated in periods of healthy liquidity from either monetary or fiscal policies. Thus, under continued quantitative tightening and a potential recession on the horizon, the upside for Bitcoin is extremely limited.
SP:SPXShort
by Phi-Deltalytics
4
S&P 500 Overview and Investment OpportunityDuring Covid-19, the market significantly dropped in price. Post this retracement, the market recovered swiftly. With many indicators such as inverted treasury yields pointing towards an impending recession, we form the following view on the S&P500. We envisage the market to drop significantly during the coming months and see the marked investment zone is a good mid term opportunity. We are monitoring these movements and will continue to keep the market updated. This analysis also correlates to other major indices such as Nasdaq, Dow Jones and others such as the Ftse100. Wishing all of you a successful New Year. This year will bring ample opportunities for the patient and observant. Stay tuned for more!
SP:SPX
by RaptorLabs
WM - SWING TRADE IDEAWASTE MANAGEMENT (WM) The King of Trash It is the industrial leader in waste management environmental services to residential, commercial, industrial, and municipal customers in North America. Besides that, it owns, develops, and operates landfill gas-to-energy facilities in the United States, as well as owns and operates transfer stations. Why you should some interest 1) WM is recession-proof . Why? Are you going to let the trash pile up because the economy is in recession? NO 2) It is the industry leader in trash services. They have a market share of 30% and 47% in collection and landfill respectively. While its main competitor clocks off at 24% and 17%, respectively. They also produce electricity with the trash through methane exploitation. Net Income is rising year-over-year. Technical analysis It has been traded on ATH in August this year.... Is now trading Sideways. Big hammer on Weekly chart. On Daily: Bullish Engulfing Candle High Volume Can go both ways. See chart. You could go LONG or SHORT immediately but also on the rebound. Stop loss at ENTER prices.
NYSE:WM
by kkrypto.be