NEW POST: "Part 2: #Recession2020, Really? A Review of the Data" macro-ops.com/part-2-recessi… I talk about the popular hysteria building around #recession2020 and then share my dashboard of recession indicators. 
1/I don't spend much time trying to "predict" an event as complex as a recession 12m out because that's a fool's errand. Rather, I trade the market in front of me and keep an eye on a number of signals & change my trend bias when the data says to. Here's what I look at
2/ The Conference Board LEI which has a median lead time of 10-months is at cycle highs currently and positive on a YoY% basis.
3/ The 2s10s yield curve has a median lead time of 19-months and only briefly inverted 2-months ago. It's currently positive.
4/ Initial jobless claims typically trough 8-months before a recession. They put in their low 5m ago so this is something to watch, though claims are moving sideways so not a major red flag yet.
5/ The $SPY tends to peak 7m before recession. It made its last new highs roughly 2-months ago and overall breadth remains strong. You usually see the AD Line negatively diverge from the index for an extended period when putting in a top. The AD Line made new highs last month
6/ New housing starts have a median lead time of 28-months. They made a new cycle high.
7/ The Breadth of Philly Fed State Leading Indexes is at 1.4 currently. When it crosses below 0.7 is when you want to worry about recession.
8/ Financial conditions are still incredibly loose. Tough to have a recession and a crushing bear market when conditions are this easy.
9/ And we're still not seeing enough weakness in the leading areas of the labor market, like Temp help to warrant high conviction recession calls. Maybe this changes over the next few months but we're not there yet.
10/ YoY% Real retail sales are at a healthy 2.3%. The consumer is still spending.
11/ Real rates remain well below real GDP growth.
12/ Credit markets are not sniffing anything out yet.
13/ The corporate financing gap isn't yet raising alarm.
14/ That's not to say there aren't things to be worried about. There are. We live in a top-heavy economy where most of the spending comes from the rich. A selloff in markets could hit consumption (like we saw in Dec) and a recession/bear market become self-fulfilling.
15/ Profit margins have contracted quite a bit. The risk is that companies begin cutting costs (layoffs) to preserve margins and we get a feedback loop.
16/ And then pessimism arising from trade wars and slowing global growth may drive a continued pullback in capex could also tip us over into recession.
17/ Bottom line is that there's plenty to worry about but there always is. It doesn't serve you to focus on 1 or 2 indicators that confirm your prior (like weak ISM). Better to look at things holistically and focus on trading the market in front of you. /fin
