Taps Coogan – December 3rd, 2022

Enjoy The Sounding Line? Click here to subscribe for free.

Short answer? Yes.

As the following chart form Top Down Charts via Isabelnet highlights, global central banks have executed a highly aggressive tightening campaign against the backdrop of rapidly deteriorating economic fundamentals, as embodied by manufacturing PMIs.

There has been a lot of celebration that the Fed may be slowing from triple rate hikes every meeting to ‘just’ double hikes. Let’s do a quick history lesson. The Fed ‘paused’ in September 2006 (completely stopped hiking) a year before the market peaked and started cutting rates in August 2007 as the market was still rising. That was more than a year before Lehman blew up and before the recession started.

We’re almost a year into a bear market, we’ve had two quarters of negative GDP in the last three, yield curves are severely inverted, CEO confidence is imploding, earnings estimates are plunging, multi-billion dollar crypto funds and exchanges are blowing up daily, countries like the UK have already declared recession, housing is turning down, and the Fed is still tightening aggressively.

Would you like to be notified when we publish a new article on The Sounding Line? Click here to subscribe for free.