Trick or Treat?

Got that double-digit correction, but without the wolf.

Last SubStack was a warning, telling you as August began that the markets were too certain they were right about “no landing”. Macro values that I measure had rolled over in July at 4500, which meant a slowing was underway, and so I assumed that *finally* a recession was coming. As always, I make the forecast and then wait…for data. Macro is a time-series analysis, updates daily. Over time, it can rollover, but then slow its decline and bottom. When it changes, so does my outlook on the economy (and my investments).

Macro has slowed, but remember what the end game is - slow-and-low GDP and Inflation. Bull Markets love moderation. Macro is slowing TO TARGET, which is a good thing. It might overshoot and recede, but we’re not there yet. As for the SP500 at 4150, that value seems too certain that higher-for-longer has killed GDP (which, btw, if true would kill inflation too). Rates at 5% are getting absorbed. As I forecast in Q1, even the housing market is resilient. The pain remains contained in the low income (low spend) part of the economy. (Don’t shoot the messenger) The spenders have moved their cash to AmEx and Discover for an extra 4.25% of income, are not yet unemployed by AI, and so the party goes on.

I cried wolf, and will again if I see another one coming. The recession is still not here. In our version of the tale, we have many boys crying wolf as they are all connected to the internet. They scare the village often, pushing the SP500 up 200 and down 300 in a scary October. Does the market need a capitulation move down like other bottoms? Maybe, so be prepared. If so, those type of moves in Bull Markets happen in a flash, tagging 3950 and then back up 200. They are both trick and treat.