FNArena’s Weekly Insights – August 01 2022
In this week’s Weekly Insights:
-The Non-Recession Recession
-August Preview: Curveballs, Profits & Forecasts
-Conviction Calls
-Focus on Quality
-FNArena Talks
By Rudi Filapek-Vandyck, Editor
The Non-Recession Recession
When is a recession not a recession?
I’ll leave the debate to the global community of economists, but needless to say the first two quarters of 2022 did not deliver the recession the US economy had to have, irrespective of the statistical outcomes for the period.
As to why US share markets simply shrugged and moved on, CIBC’s Avery Shenfeld provided the answer:
“Rumours to the contrary, economists don’t define two consecutive negative quarters as a recession.
“One needs to see a material decline in a broader range of activity measures, and the key missing ingredient thus far has been in the labour market.
“There can be job-free recoveries for a while, but the very definition of a recession essentially rules out having one without job losses, let alone a recession with a hiring boom.”
When share market commentators, including myself, talk about recession coming, we’re referring to company earnings falling by -20%, or maybe by -10%. Could be zero growth, on average, or a tiny positive number.
We just don’t know yet which scenario is most likely. We might find out between now and February next year.
This year’s August reporting season is too early in the cycle to provide investors with all the answers needed.
