Taps Coogan – December 13th, 2022

Evercore ISI Chairman Ed Hyman, one of the fathers of modern market research and perennially ranked as one of the top institutional economic advisors in the world, recently spoke with Wealthtrack’s Consuelo Mack to detail his outlook for the economy and markets going into 2023.

The punchline is that Ed sees inflation dropping and the economy slipping into recession in 2023 and points to “recessionary” conditions in the housing market and near-recessionary conditional in trucking activity, both of which are highly correlated with slowdowns in the broader economy. He notes that 100% of tightening cycles have ended in a financial shock or crisis and thus he is waiting for things to deteriorate, going as far as to say “I won’t say that I sleep really well. I wake up occasionally worried about this stuff.”

Summing it up he says “One of the feelings I’ve had is that the odds of having a shock or a crisis are 100% and it seems to me that the Fed puts the odds at zero because they keep saying the terminal rate ill be 5%… Between here and there something is going to float to the surface.”

Surpsingly, he doesn’t sound all that bearish on financial assets, a view that doesn’t seem to jive with his outlook. It’s something we see very often these days and we suspect that it’s the lulling effects of the bear market rally over the last couple months. That being said, we’ve been in a bear market for a year now and, as we noted frequently in October and November, a mild to moderate recession was starting to get priced in.