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The excellent Michael Hartnett at BofA.
Heard on the Street: “Like watching a mad donkey thrashing around in a field bouncing off all the fences”…investor on stock market of 2023.
Tale of the Tape: 1year ago Fed funds was 0%, yield curve 40bps steep; today Fed funds 4.5%(heading toward 6%) and yield curve 100bps inverted (Charts 3 & 4); S&P500 in neurotic 3.8-4.2k trading range driven by dependence on data-dependent Fed; ends once data unambiguously recessionary (e.g. negative US payroll >-200k) and yield curve steepens; if oil, HY, SOX, banks, EM catch bid…SPX heads toward 5k; if not SPX heads toward 3k.
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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.
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