Alfonso – also known as MacroAlf – joined Adam and Mike to discuss his most recent report entitled “Yes, But When Recession?” Our conversation covered:
- Alf’s experience managing a $20B multi-asset book at a global bank
- Experience launching an independent macro newsletter for greater freedom of views
- Benefits of interacting with central bankers, regulators and senior officials at the bank
- Currently focused on recession – when and how bad will it be?
- Economic, social and market impacts of recessions
- How recession might change the Fed’s reaction function
- Powell and other central bankers questioning the benefits of QE and whether Fed may have a different reaction function this time
- Exploring the pros and cons of QE
- Why banks lend, and why they didn’t want to lend over the past decade of QE?
- Powell’s focus on Volcker and implications for policy trajectory
- Expectations for a second leg down and the 2000 – 2002 analog
- What happens in bear markets after Fed pivots?
- Prospects for a longer, grinding bear market
- Impact of high returns on cash competing with low returns on real estate and other risk assets
- Character of stock market bottoms in a cyclical downturn
- Market indicators of recession and inflation risk using Alf’s Volatility Adjusted Market Dashboard
- Negative credit impulse signaling recession in Q2 2023
- Impact of rate of change vs level of credit given enormous surge in bank reserves in 2020
- Leading indicators suggesting recession in late Q2 2023
- Housing market and Sahm Rule implying recession in Q2 2023
- Expectations for returns on stocks, bonds and other assets over the next several years
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