People can’t seem to grasp the fact the stock market does not predict recessions. Hard economic data points do and right now, none are pointing to a recession. The best quote on this is, ” the stock market has predicted 11 of the last 2 recession” . We’ve had 11 10% drops in the S&P 500 since 2000 and only two recessions. In fact, we average a 10% drop in the S&P about every two years on average and a recession every 7-8 years so (present expansion excluded). Over 70% of corrections turn out to simply be fantastic buying opportunities as the market regains it prior levels in only a few months. Data here
Q3 hedge fund letters, conference, scoops etc
“Davidson” submits:
There are multiple indicators which can be used to predict a recession. One of these is the Delinquency Rate on Single-Family Res Mortgages for smaller banks. The series is published quarterly and in always in arrears, but at 1.55% for July 2018 we are even after 9yrs of economic expansion still approaching historical lows of 1.51%.
This is simply not the sign of a pending recession. This series continues to support continued economic expansion as it is giving no signs of turning higher. Even though the data is quarterly, this lending indicator provides 14mos-24mos warning prior to recessions. One can estimate that a above 1.75% could be signaling pending difficulty for bank lending.
