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acneadjr OP t1_j6fs61w wrote

Reply to comment by GoodGuyDrew in The case for recession & why retail spending is now more important than inflation. by acneadjr

I agree with you on scenario 1. The one difference maker may be the cumulative earnings of the S&P at the end of next week. If it continues to decline optimism may start to fade. I am watching but not diving in to this scenario.

On Scenario 2 I think inflation is sideways to down. However as long as services continue to stay sticky we see the Fed increase or hold rates in '23. I am sort of past inflation, I see this as last year's story.

The story in '23 will start to switch to consumption as it is 70% of the US economy and business investments 18%. As we see these numbers decline GDP falls fast. This is why I am more interested in Retail Sales now. I think it's all about when more hard data starts to show this decline.

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GoodGuyDrew t1_j6fzvzi wrote

The hard data will definitely tell us plebeians when the tides have turned. But by then, big money will already be on the other side of the trade.

I’ll keep focused on the data for long-term prospects, but I think Fed “tone” and market whim will dictate movements day to day and week to week for the rest of 2023. So as per usual, I’ll just be hoping to get lucky 🍀

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Moist_Lunch_5075 t1_j6gydog wrote

>big money will already be on the other side of the trade

If 2020 taught us anything, it's that capital flows matter and the economy basically doesn't.

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