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Minyan Mailbag - Economy

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Maybe the market was held enough as a child?!?

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Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue amoung the Minyanship. We share this next discussion with that very intent.

Toddo,

The economy is no longer about GDP it's about an historic split between the corporate and consumer/housing sectors. The 2001/2002 recession was the ONLY modern era recession when consumer spending and housing did not have a recession. The consumer/construction recession has been delayed until now. The job growth number is signaling the inevitable slowdown in consumer and construction spending. Using previous business cycles as a template, if we break out the consumer and housing components the next six months should slow rapidly and the "consumer/housing" recession should end 12-18 months from now - at which point the economy can then rebound.

  • These factors were outlined months ago in the written piece I sent you.

  • Interest rates are no longer about "the Fed" - in this environment they will be about the deficit. In which case this is a great place to finally initiate long-term bond shorts (not advice).

  • Stagflation as a theme is growing in our studies. If you wish - we can update the chart previously sent.

Bottom line: the rate of change in recognition of a consumer/construction slowdown should increase quickly. This will surprise markets until they adjust to that reality.

Hope this finds you well. Keep up the great work. Sorry I can't join you in the Mountains - but maybe in NYC in September if you are free.

All the best,

Minyan Andreas Calianos

Minyan Andreas-

Thanks, as always, for offerin' your take.

Toddo


R.P.

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