FEAR OF MISSING RECESSION

The debt deal is a done deal. Deja vu of 2011, it was a last minute agreement just one business day prior to default. Now we will find out if a fiscal gong show was worth going ALL IN artificial intelligence in a recession. Basic logic would suggest it is a bull trap of biblical proportions...

“Monopolistic tech” is winning through pricing power and the squeeze on smaller suppliers, Hartnett wrote in a note, highlighting the Nasdaq 100 Index is now at a record high relative to the Russell 2000 small-cap index"

Many pundits including the ones above show the NDX / Russell. Whereas I show the S&P Tech sector relative to the NYSE Composite, which is in a broadening top. Each touch of the upper trendline has brought a larger crash since 2021. Meanwhile, we also see this is the largest surge since March 2000 (lower pane).

Outside of Tech the entire stock market, commodity markets, and the bond market are screaming recession. Once again this week the yield curve soared, however the Friday (today) jobs report came in much stronger than expected. During the recessions of the 1970s-1980, jobs rolled over AFTER the economy was already in recession. Meanwhile looking at the chart below, we see that in 1980 the unemployment rate hit 10%. Currently it's at 3%.

The minimum jobless increase in any recession in 45 years is a double from this level (6% in Y2K).

For the past two weeks, retailers have been warning of impending recession. This includes Home Depot, Costco, Macy's, Advance Auto Parts and even Dollar General.

Consider what happens to consumer sentiment during recession. 

Today's bulls believe that it will improve.

Getting back to Tech, we see that FANG+ - the ten largest Tech stocks in the market - have returned to the left shoulder level. Look what happened to Nasdaq volume when they rolled over (lower pane). That's minor compared to what is coming.

This set-up is now very similar to what happened during the Trump Tax cut. There was a FOMO melt-up into the event, but as soon as it came into effect, the market exploded. 

It was a Monday after a hotter than expected jobs report. 

FYI.