Anatomy Of A Recession: Remain Patient Amid Market Gyrations

Tuesday, 30 July 2024

And that's with, of course, not the full effects of the Fed tightening cycle hitting the economy quite yet and more hikes likely to come. And they had the keys in the last recession to be able to calibrate the proper policy response. Any surprises or thoughts from your point of view? Anatomy of a recession clearbridge q4. Copyright © 2023 Franklin Templeton. That's when we get the next Consumer Price Index (CPI) release. Website: Anatomy of a Recession: Economic Reacceleration in Perspective. Internal Sales Desk: (888) 225-4250.

Clearbridge Anatomy Of A Recession November 2018

The new orders component, which is part of our proprietary dashboard, fell to 42. But even with that near-term weakness, six months out, the markets are up 4. A very fast transition, historically speaking. And given how unique this cycle has been, there could be an opportunity for job openings to come back down to pre-crisis levels, and that may create lower wage growth without having a material rise in the unemployment rate. But what we found interesting is that this perfectly coincides with the Fed upping their hiking per meeting to 75 basis points. Information posted on IBKR Campus that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Host: Jeff, this is a big week in American politics with elections taking place. But these terms are all synonymous for pockets of market strength that ultimately give way to a lower low during bear market selloffs. Big businesses are starting to shed their workers, but small businesses have yet to do that. She heads up the fixed income team, overseeing nearly $120 billion in fixed income investments, and was recently named Morningstar's Outstanding Portfolio Manager of 2022. Clearbridge anatomy of a recession november 2018. Anatomy of a Recession: The Long View for a New Year. Three ended up in a soft landing.

Click on each tab for a different view of the dashboard data. It's probably going to take some time. So when we do see this choppiness, definitely want to try to take advantage of it. They are on the line there of a potential move. There was very negative investor sentiment, as evidenced by the American Association of Individual Investors Survey, better known as the AAII, which is the gold standard for retail sentiment. Do you have any final thoughts for our listeners? Anatomy of a Recession: Remain Patient Amid Market Gyrations. Anatomy of a Recession: Focusing on the Fed. This material reflects the analysis and opinions of the speakers as of October 10, 2022, and may differ from the opinions of portfolio managers, investment teams or platforms at Franklin Templeton. And the deepest that you've seen the decline there before recession hit was -5. We've had hawkish Powell, really, since that Jackson Hole conference where Powell ripped up his speech and pushed back on the idea of loosening financial conditions. Commodities and currencies contain heightened risk that include market, political, regulatory, and natural conditions and may not be suitable for all investors. And as a reminder, initial jobless claims is in the Recession Risk Dashboard, usually the last domino to turn red, confirming that a recession has started. Sources: S&P, FactSet, and NBER. Director, Investment Strategist.

And I know that this may be the most anticipated recession ever, but there is kind of a dynamic of reflexivity. So, it's probably a good time to start thinking about increasing your equity exposure, even though we're expecting some choppiness and maybe even more downward pressure over the next quarter. And that red signal, which was very weak at the end of August, has gotten to a very deep red signal with two indicator changes in October, with job sentiment going from green to yellow and the yield curve moving from yellow to red.

Anatomy Of A Recession Clearbridge Q4

7 million job openings, that's still 3 million more than what you had prior to the pandemic. Host: I almost forgot to ask you about inflation. There's really no weakness to point to at all in the labor market. And the third really comes back to companies. Host: So, we may not have hit bottom yet, but Jeff, is there some reason for optimism? And that's really a theme that you're seeing across the labor market. Jeff Schulze: Well, there has. Host: Okay, perfect. Jeff Schulze: Unfortunately, when the dashboard turns red, usually an object in motion stays in motion. Now, in thinking about job openings, one thing I like to look at is the number of job openings per unemployed. Stephen Dover, Head of the Franklin Templeton Investment Institute, talks about it all with Franklin Equity Group's Frederick... Clearbridge investments anatomy of a recession. Russia's invasion of Ukraine has led to a humanitarian crisis and new geopolitical concerns, while also affecting global economies and capital markets around the world.

So, the two questions that folks are asking now are "when will it start" and "how long will it last? " Host: It certainly sounds like December will be a big month with another CPI print and the FOMC meeting taking place mid-month. If it's going to be, you know, towards the end of 2023 into 2024, it may not be such a rosy market experience. See for additional data provider information. They are going to have a different reaction function to what they have historically. He received a BA in History and Economics from the University of York. ClearBridge Investments – Anatomy of a Recession. Yes, we're down from highs to 2. Do you have any thoughts there relative to the depth?
So clearly, the job is not done. That's why I think we're going to see a choppy environment with equities, because the data is going to be inconsistent as the lagged effects of monetary tightening bump up into a pretty resilient consumer and resilient spending. Housing permits moving in the wrong direction. And that really laid the foundation to the higher structural inflationary 1970s. But the other reason why we had expected a counter-trend rally was because of the tailwind from the presidential cycle seasonality. This is a very, very strong backdrop for labor demand. So we're moving in the right direction. So, it definitely sounds like in your view, as we get off to a start here in 2023, volatility will continue.

Clearbridge Investments Anatomy Of A Recession

Talking about it all is Ben Barber, Director of Municipal Bonds with Franklin Templeton Fixed Income, and Josh Greco of Franklin Templeton Investment Solutions. That went to an overall yellow signal at the end of July to an overall red signal at the end of August. But there's a very different inflationary feel after 1966's pivot. So, if you have more purchasing power, consumption should be able to hold up. This is the first proper recessionary drawdown that we've had to endure in 15 years given how quick COVID's recession was, but also the response by monetary and fiscal authorities. So, this is going to be a marathon rather than a sprint. Further, a shift toward longer green periods relative to history has occurred in tandem with the elongated economic cycles of recent years. But because of that stickiness of services inflation ex shelter, I think it's going to be difficult to get all the way back to the Fed's 2% target on a sustainable basis.

In fact, core CPI went from 3. And since that shallow red August, we find ourselves in deep red recessionary territory. He doesn't think it's a high probability. All rights reserved.

2 And we entered into Q4 of year two here in October. The views expressed in this material are solely those of the author and/or Franklin Templeton and IBKR is not endorsing or recommending any investment or trading discussed in the material. Please visit to be directed to your local Franklin Templeton website. Data as of September 30, 2022. I think it would maybe stave off a recession potentially. So I think that's going to be a key data point. The choppiness that will prevail for the year also will bring opportunities for investors to buy the dips, Schulze said. Markets tend to be forward looking. Host: Sounds like odds are against a dovish pivot, at least in your opinion. Rapidly changing economic and market conditions could lead to a shift in strategy for income investors. The yield curve is a really important indicator, and it's had no false positives over the last eight recessions.

It's usually the last domino to fall or turn red as a recession is starting. You've seen an average increase of a half a percent on a month-over-month basis over the last three, six and 12 months, which is a 6% annualized rate and nowhere close to the Fed's 2% target. So with a January 31st update, have there been any changes? Market Volatility: Will it Last? So when you add a lot of low-wage jobs into the mix, it pulls down the average, just the way that this is calculated. Treasuries when the securities are held to maturity. Also, we got a release on job openings.

So, in thinking about those two phases of a bear market. You saw a broad-based slowdown in inflationary pressures in areas that were expected, like used cars, like medical care services. In our opinion; this creates a higher probability of a recession than consensus is appreciating. This presentation will provide practical, actionable insight on the US economy and critical market trends. With uncertainty mounting on many fronts globally, we hear how investment strategies are changing with a focus on taking risk down, while still identifying investment opportunities. Visit our website to learn more and view other upcoming events.