Taps Coogan – Jun 21st, 2023

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 CNBC to reiterate his bearish outlook for the economy. When asked directly if a soft landing is possible, he says “no” and pushed back on the idea that just because a recession hasn’t started yet doesn’t mean one isn’t coming.

 

Ed Hyman:

“It takes a long time for monetary policy to work, like one or two years… The Fed pause in the summer of 2006… the recession started in 2008, 18 months later. So, what I am seeing might take another 10 months to impact the economy. We’ve already had an inverted yield curve for eight months…”

“I don’t think the economy is going to reaccelerate for a long time… I don’t see a pickup in, let’s say, the first half of 2024.”

When asked if a soft landing is possible:

“No. A lot of times I’ve said ‘no’ and it turned out to be ‘yes’ but in this case the yield curve is one of the inputs to your question. It’s deeply inverted and the money supply is contracting the most it’s done since the 1930s, which gets my attention and lastly, in addition to the aggressive rate increases, they have QT going on…”

“The consumer… is in pretty good shape… but I think employment is the key… in order to get a weaker economy you have to get weaker employment but I think that is going to come… Unemployment claims, which is the best timely measure of labor markets, they’ve moved up already a fair amount to about 260,000 from 180,000. 300,000 is a recession level…”

There is more to the interview so enjoy it above.