The Market Ear on the recession that never was.
Best recession ever
Once again, the recession never came. Economists and markets spent much of the past year bracing for a downturn—citing rate hikes, inverted yield curves, and slowing indicators—only to watch the economy remain stubbornly resilient. It’s a familiar pattern. As the old adage goes, “macroeconomists have predicted seven out of the last three recessions.” This latest false alarm reinforces a truth markets hate to admit: timing the cycle is harder than it looks. Here are a number of charts that show that the US economy is staying out of the recession.
It’s crashing
US recession in 2025?
Source: Polymarket
Earnings revisions got a pulse
GS: “For the first time in 3 months, we observed positive earnings revisions to near-term estimates.”
Source: Goldman
100% better
S&P 500 1Q 2025 EPS grew by 12% vs. 6% expected. Double better…
Source: FactSet
Maintain is good
Companies are maintaining guidance more than usual.
Source: FactSet
Forward earnings have no fear
“S&P 500 forward operating earnings—which is the time-weighted average of analysts’ consensus EPS expectations for 2025 and 2026—rose to a record high of $279.13 on April 3. It has been hovering around that level since then, as of the May 8 week. So despite the downward revisions of analysts’ quarterly and annual EPS consensus estimates, there’s is no evidence so far of a recession in S&P 500 forward earnings, which tends to fall sharply during economic downturns”. (Yardeni)
Surprised by surprises
The Citigroup Economic Surprise Index for the US has been only slightly negative since April 29.
Source: Yardeni
Out to eat
OpenTable United States Seated Diners (year-on-year % change) – we’ve not seen a decline in restaurant bookings yet.
Source: Open Table
Container’s cool
Container Ship Tonnage (TEU) – Departures from China to the United States – Levels have now stabilized at a point we saw for much of 2024.
Source: Deutsche Bank
Within the range
The US weekly initial jobless claims (thousands) have remained in their range over the last year.
Source: Deutsche
Easing on the uncertainty
US financial conditions have eased from early-April highs and US economic policy uncertainty has moderated, although still at elevated level.
Source: policyuncertainty.com
High yield
US HY spreads (bps) have unwound the bulk of their widening.
Source: Deutsche
Recession will be a no-show
“Even though Q1 earnings were fabulous, most economists, industry analysts, and corporate managements have low hopes that Trump’s Tariff Turmoil won’t dunk the US economy into a recession this year. Not us: We’re counting on the economy’s resilience. Why will the widely expected recession, like others in recent years, will be a no-show? Hard-to-ignore reasons include record-high forward earnings, strong economic indicators, and a forward P/E that hasn’t plunged as happens when a recession is imminent. Stock investors seem to be in our camp”. (Yardeni)
Impressive
NDX up around 28% since April 7 lows…
Source: LSEG Workspace
Teflon tech
NASDAQ broke above the neckline of the HS formation we have been pointing out for some time. RSI at very overbought levels, but as we all know, overbought can stay overbought for longer than most think possible. This is max pain market.
Source: LSEG Workspace
1997?
Still some similarities compared to the 1997 brutal bull…
Source: LSEG Workspace
More pain
The crowd missed the latest melt up. FMS US equity allocation lowest since May’23.
Source: BofA
Not yet…
…but getting closer to strong “put hate”. Chart shows SPX vs. put/call ratio weekly.
Source: Tradingview
Way overbought, but nobody in the rally = overboughterer.
