Did The Recession Start Three Months Ago? By Tyler Durden

[Manuel Tavares]

Did The Recession Start Three Months Ago?
By Tyler Durden
https://rayviolet.blogspot.com/2022/06/did-recession-start-three-months-ago.html

Jay Powell has spent the last 3 hours in the Senate answering questions how long until the US slides into recession (really, it’s mostly been a filibuster by Dems on the Senate Banking Committee explaining to Powell how Biden is not responsible for soaring inflation), but a much better question is “whether the US is already in a recession”, especially since the .Bloomberg Econ model now sees 98% odds of a recession in 24 months (up from 75% just a few days ago).

The first to answer this question is Piper Sandler, which answers “perhaps” and shows that the typical bear market follows the start of a recession with a delay of 95 days, and eventually exhaust itself with an average total drawdown of 40%..

…which means that current recession probably already started some time in March and has another 20% or so to go (to hit the 3,000 bogey that so many have mentioned in recent days).

Of course, following the worst start for stocks to a year since the Great Depression…

…and also the worst start since 1932 in total return terms across all asset classes…

…one would be excused to ask if instead of a garden variety recession, the US isn’t rushing straight into a depression.

A slightly different perspective comes from Morgan Stanley, whose chief equity strategist Michael Wilson writes that the bank’s clients continue to debate whether we will see a recession in the next 12 months (one which may have already started), and whether it be a formal economic recession or an earnings recession. Understandably, the second most popular question asked by clients is what is the floor value – or worst case scenario – in terms of price. How low can equities trade in the event of a recession and what is already priced?+++
https://rayviolet.blogspot.com/2022/06/did-recession-start-three-months-ago.html