What is the Eurodollar Market?
The most important and least understood driver of global financial markets.
We lay out a four-step process that showcases how a US soft landing could materialize.
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In an editorial we published a couple of weeks ago, we helped contextualize (fairly brilliantly in my completely unbiased opinion) which part of the cycle we may currently be in (spoiler: not at the bottom). For those of you who are busier than a crypto bankruptcy lawyer in 2022, the TL;DR of why we think there’s still downside ahead of us is:
There’s also a plethora of other indicators used by people much smarter than me that tend to point to the same conclusion:
Excellent table showing how recessionary bear markets tend to bottom when:
— Alf (@MacroAlf) November 22, 2022
- PMIs are well below 50
- Unemployment rate has already risen by 1.3pp
- Future expected EPS have been revised down 10%+
None of the conditions are met today, and unlikely to be met until Q1/Q2 2023. pic.twitter.com/FDOoT8TjW8
This makes intuitive sense:
The fact that this conclusion also seems to be very much the consensus view makes me a bit nervous, I’m not going to lie.
Bearish consensus for 2023 aside, there has been an extraordinarily positive move in equity markets since the beginning of Q4.
Whilst I cannot justify this move as being “rational” given the current economic, geopolitical, and financial backdrop in which we find ourselves at year-end, a potential rationale might best be explained by JP Morgan’s 2023 outlook: