Where Soft and Hard Data Diverge [VIDEO]

Jordi Visser

down arrow

Rather than making a directional market call, in the latest installment of Real-Time with Jordi Visser, Jordi sifts through current market data, demonstrating a recession is unlikely. While many strategists claim that a recession is inevitable, Jordi believes that these views are based on regressions, which have been skewed by the historic response to COVID in 2021 and 2022. He suggests the massive amount of printing, subsequent rate rise, and then the rise and fall of the housing market require a robust toolset of both hard and soft data. Further, a look to 2023 shows the potential for stimulating geopolitical news out of both China and Europe.

 

If you'd like to review the Bloomberg slides that Jordi refers to in this video, you may download them by clicking here

Key Takeaways:

  • The inflation flight has involved uncertainty around the size of rate hikes and jawboning from the Fed. With CPI and wages continuing to come down, Jordi believes that these fears could move to the backburner following this week.
  • Jordi highlights that each historical recession has been coupled with job losses. Given we have created 2.2 million jobs over the last 7 months, Jordi believes that recession is unlikely. Further, Jordi points to the Diffusion Index inside the payroll, which shows the percentage of industries that have created jobs at 61%. We would expect this number to dip below 50% in times leading to recession.
  • While we did see a sizeable 1-month drop in the new orders component of the ISM, this data point is typically associated with job losses. As of right now, this demonstrates that hard data, jobs, does not support soft data, and new orders.
  • With the zero-COVID policy ending in China, Jordi believes that PMIs and global travel around the world are likely to bounce. Further, as fears over winter in Europe subside, European markets are likely jump higher too. Both of these will have an impact on US PMIs and GDP.

About These Videos: Our market videos seek to provide a data-focused interpretation of the market's most critical developments. Real-Time with Jordi Visser is a recurring series produced by our President and CIO based on his macro views. The purpose of his series is to isolate macroeconomic indicators ("green marbles") that are telling the true story of the market, rather than relying on the narratives or stories often portrayed as news. Jordi is a unique thinker and tends to publish these videos during market dislocations/regime shifts when he sees areas where his views differ from consensus sentiment.

Disclosures: This content is provided to you by Weiss Multi-Strategy Advisers LLC (“Weiss”). The foregoing information contains forward-looking statements, which present the Chief Investment Officer’s expectations and beliefs regarding future financial performance, and assumptions or judgments concerning such performance. Any such statements involve estimates, assumptions, judgments, and uncertainties, and you should not rely on such statements to reach conclusions or make any investment decisions. You will not necessarily be informed if the Chief Investment Officer’s expectations or beliefs change after the date hereof. Weiss has no control over information at any unaffiliated site hyperlinked to in this communication. Weiss makes no representation concerning and is not responsible for the quality, content, nature, or reliability of any unaffiliated hyperlinked site. The inclusion of an unaffiliated third-party hyperlink does not imply any endorsement, investigation, verification or monitoring by Weiss of any information in an unaffiliated hyperlinked site. In no event shall Weiss be responsible for your use of an unaffiliated hyperlinked site. This is not intended to be an offer or solicitation of any security. Any such offer or solicitation may only be made by means of a prospectus or confidential private offering memorandum.

Important disclosures: Disclosures: This content (the "Insights Page") is provided by Weiss Multi-Strategy Advisers LLC ("Weiss"). The views expressed on the Insights Page are for informational purposes only and are subject to change without notice. Information on the Insights Page has been developed internally and is based on market conditions as of the date of the original post on the Insights Page from sources believed to be reliable. Nothing on the Insights Page should be construed as investment, legal, tax, or other advice and should not be viewed as a recommendation to buy or sell any security or adopt any investment strategy. Past performance is no guarantee of future results. Please consult your own advisers regarding business, legal, tax, or other matters concerning investments. Weiss has no control over information at any external site hyperlinked on the Insights Page. Weiss makes no representation concerning and is not responsible for the quality, content, nature, or reliability of any hyperlinked site and has included hyperlinks only as a convenience. The inclusion of any external hyperlink does not imply any endorsement or ongoing monitoring by Weiss of any hyperlinked site. Investing in securities is speculative and involves substantial risk of loss.
Important disclosures: Disclosures: This content (the "Insights Page") is provided by Weiss Multi-Strategy Advisers LLC ("Weiss"). The views expressed on the Insights Page are for informational purposes only and are subject to change without notice. Information on the Insights Page has been developed internally and is based on market conditions as of the date of the original post on the Insights Page from sources believed to be reliable. Nothing on the Insights Page should be construed as investment, legal, tax, or other advice and should not be viewed as a recommendation to buy or sell any security or adopt any investment strategy. Past performance is no guarantee of future results. Please consult your own advisers regarding business, legal, tax, or other matters concerning investments. Weiss has no control over information at any external site hyperlinked on the Insights Page. Weiss makes no representation concerning and is not responsible for the quality, content, nature, or reliability of any hyperlinked site and has included hyperlinks only as a convenience. The inclusion of any external hyperlink does not imply any endorsement or ongoing monitoring by Weiss of any hyperlinked site. Investing in securities is speculative and involves substantial risk of loss.