The Summer Lull
by JDH on May 20, 2023
And so it begins.
Nothing.
Sell in May and go away.
We are in that weird time where we are obviously in a recession, but the Bank of Canada, and the Fed, continue to chirp about raising interest rates. The betting odds for a 25 basis point increase in June is now a lot more than zero.
Why? Because of inflation.
Weird, eh?
The price of nickel is down 30% year to date. Light crude is down 14% since the middle of April. Copper is down 15% year to date. So is aluminum.
The United States Core CIC, Year over Year change, was 6.72% in September and is under 4.7% now.
M1 and M2 money supply are crashing.
And yet, the cost of food at the grocery store is still high, and real estate prices have picked up (due to lack of supply, not a massive increase in demand) and so there is a significant chance that interest rates will increase.
What will that do?
It will put the final nail in the already weak economy. A severe recession is now guaranteed.
The only question is timing. I assumed the recession would be declared in the spring, and the stock market could start a new bull market in the fall.
I bought bonds at the start of the year, and my investment is merely flat.
So what do we do?
We sit and wait.
Patience is a virtue.
I will keep waiting. Enjoy the long weekend. More next week.
The Summer Lull
by JDH on May 20, 2023
And so it begins.
Nothing.
Sell in May and go away.
We are in that weird time where we are obviously in a recession, but the Bank of Canada, and the Fed, continue to chirp about raising interest rates. The betting odds for a 25 basis point increase in June is now a lot more than zero.
Why? Because of inflation.
Weird, eh?
The price of nickel is down 30% year to date. Light crude is down 14% since the middle of April. Copper is down 15% year to date. So is aluminum.
The United States Core CIC, Year over Year change, was 6.72% in September and is under 4.7% now.
M1 and M2 money supply are crashing.
And yet, the cost of food at the grocery store is still high, and real estate prices have picked up (due to lack of supply, not a massive increase in demand) and so there is a significant chance that interest rates will increase.
What will that do?
It will put the final nail in the already weak economy. A severe recession is now guaranteed.
The only question is timing. I assumed the recession would be declared in the spring, and the stock market could start a new bull market in the fall.
I bought bonds at the start of the year, and my investment is merely flat.
So what do we do?
We sit and wait.
Patience is a virtue.
I will keep waiting. Enjoy the long weekend. More next week.