Hartnett: Recession coming, sell stocks

Michael Hartnett at BofA spot on as usual.

Tale of the Tape: NRGU levered big oil ETN +286%, BULZ levered FAANG -89% YTD; secular leadership shift to inflation (commodities, small cap, industrials) ongoing while credit events getting noisier as era of QE excess ends (tech, private credit, PE, crypto).

The Price is Right: US 2s10s yield curve most inverted since Feb’82; inversion best lead indicator of recession past 50 years, but steepening best indicator recession has begun & “pivot” imminent (Chart 3); neither happening until historic low unemployment rates surge (latest US 3.7%, UK 3.6%, Canada 5.2%, Australia all-time low 3.4%…).

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.