Where is the Economy? Recessions are ultimately about mistakes, about too much optimism given underlying economic conditions and the need for economic activity to adjust back downward.

Not All Recession Theories Make Sense. Why does this matter now? We think a recession is coming because the economy was artificially stimulated during COVID but the M2 money supply has declined in the past year. In addition, by rewarding short-term cash, the inverted yield curve should eventually limit business investment and risk-taking in general.

Still Growing. No one should be popping champagne when they see Thursday’s GDP report. The good news is that it won’t be negative. The bad news is that even if it hits our estimate of 2.1% this is a far cry from the robust growth of the economic expansions in the 1980s and 1990s.

Is the Recession Threat Dead? We hope they’re right about this; wouldn’t it be great! Unfortunately, ...

Discount the Happy Talk. We are not often pessimistic about equities and think the long-term is still bright. However, we think there are still problems ahead in the near term and investors need to be prepared.

Closer to a Turning Point. Ultimately, recessions are about mistakes...Almost always, it is government policy mistakes that cause this over-investment (or “malinvestment”).

Still Bearish. Given the drop in the money supply, we are headed for a much colder economy; we’re just not there yet.

What Happened to the Recession? We obviously hope there is no recession on the way. It’s pretty obvious that the stock market isn’t worried. But January’s economic data aren’t as clear as many might think.

The Game Isn't Over. Unprecedented actions on the scale that we experienced in 2020-2022 will bring unexpected results in 2023. So, while we never want to ignore a number like the January jobs report, we have to question how much is signal and how much is noise.

The Aftermath Economy. We will forever believe that locking down the economy for COVID-19 was a massive mistake. In other words, the US enters the decades ahead with more debt, less spending power, an undereducated population, and less petroleum put aside for national defense. The US has made the future riskier.