Economic Forecast Crowding | Gold ATH | High Yield Spreads Not Recession Levels | Flight to Quality Trades Not Working | No the VIX Is Not Predicting Actual Moves Still
By Derek Moore
Show Summary:
Derek Moore talks about airport business as a sign or lack thereof of recessions. Gold makes another all-time high while the safety trade like treasuries and the US dollar aren’t working lately. Plus, looking at typical widening of high yield spreads during recessions compared to today. Later, the VIX Index is still not appropriately pricing in historical volatility given the moves again this week in equity markets. Also, surveys of economists are up to 45% probability of recession in the next 12 months although short of the 60%+ probability in late 2022 and early 2023 so why should we even consider them? Finally, how fund managers were overly long US Equities in December but now after the selloff they are saying they may reduce US equities. A little late no and how even professionals may react, panic, or be influenced by prevailing sentiment.
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Topics Include:
- Gold all-time high
- US Dollar and US Treasuries get correlated with US equities and weren’t the safe havens
- The airport crowdedness indicator of recessions?
- Fundamental EPS estimates are down a little but not much so far so what are they waiting for?
- Big earnings week including Tesla and Google (Alphabet)
- Fund manager surveys show they were overly long US equities before the selloff
- Fund manager surveys also show as equities are in drawdown, they are thinking of selling
- High Yield spreads not showing recession levels of widening currently
- Typical high yield spread during recessions is 1000 basis points plus
- How economists tend to crowd together in their predicting recessions
- VIX Index implied volatility (expected) vs actual volatility (historical)
Mentioned in this Episode
Jay Pestrichelli’s book Buy and Hedge
Derek’s new book on public speaking Effortless Public Speaking
Derek Moore’s book Broken Pie Chart
Contact Derek
Last Week’s Episode:
Market Bottom? | VIX Should Be 100 | Bond Market Yields Spike | Bitcoin and S&P 500 10 Day Volatility is Equal Wow!