S2N Spotlight
I tend to look at the markets from a sceptical lens. I have heard more descriptions about the landing of this economy—soft, hard, and now no landing—that I decided to actually look at the data as produced by the National Bureau of Economic Research. Its a fancy name, so I assume they are important.
What I liked is they have lots of data. We go all the way back to 1854 and measure in months the period of expansion. I will show you tomorrow the contraction table. The average period of economic expansion according to the NBER business cycle measurement is 41.7 months. We are currently 54 months into this expansion. But that is not exactly what it seems, as the contraction between the last expansion was only 2 months, which was COVID-induced and was so quick I am inclined to ignore it. With the previous expansion being a record of 128 months, I think we are more like (128 + 54) 182 months into an expansion, which is more than 4.5 times the average.
I just read King Solomon’s book, where he writes that there is nothing new under the sun. No, we have not invented a way to deny the physics of the business cycle. We have invented sliced bread and driverless cars, but this time is not different. I have read economic books far older than 1854, and I have seen a business cycle all the way back to Joseph’s dream.
S2N Observations
Late last week, US Retail Sales beat forecasts with year-on-year growth of 0.34%. I have produced a long-dated chart so you can look back in time to see if this looks like anything special. I would say nothing special.
For those crypto enthusiasts, Bitcoin Futures trading on the CME open interest hit a new all-time record. For the first time in a very long time, I don’t own any Bitcoin. You can take that as a signal that we are on our way to making new highs. I believe we are likely to make new highs from both a technical and also an alternative to the money printing.
There have been many pretenders as stores of wealth over the centuries. That is something that always makes me a bit nervous about Bitcoin. If you think Tulip mania was something of the past, you have a short memory, as we have just lived/living through NFT mania.
I came across this chart on the weekend. It is simply staggering the extent of the debt bubble in China relative to its GDP.
I was hoping to be a bit more upbeat when I started and then I just wrote what I thought. 😎
Performance Review
For those who are new to the letter, the shading is Z-Score adjusted so that only moves bigger than usual for the symbol are highlighted.