A Broken Record
My point of differentiation
I’ve been posting online for a number of years now. Before I started these long-form posts on Substack, I mainly posted on Twitter. What I observed there was similar to my observations of economic commentary over decades working in financial markets.
Institutional economic data process
For over 30 years I have received economic commentary from banks, brokers, asset managers and others. The way this has come to me has been a summary of the latest data plus any implications sent as quickly as possible after the data hits the headlines. It is essentially a production line of publications produced by economic departments within sell-side institutions. What this process does is condition recipients to:
all data being of equal value;
each data piece standing in isolation (i.e. not forming part of a cohesive & holistic picture); and
data as a disposable item (i.e. it is absorbed and then forgotten as we look forward to the next data release to see what direction markets will move next).
In summary, “macro” data increasingly resulted in micro behaviors. The banks and others who produce this data think they are providing a value-added service, but they’re really not.
Instaguru economic process
Likewise on Twitter, the big macro players (those with the largest followings - typically 10k or higher) tend to fall into this trap of producing noise too. It’s slightly different because they are more often driven to do so by their new found ‘celebrity’ status.
Just thinking back, I have witnessed these players be:
Political experts;
Trade war experts;
Repo market experts;
Pandemic experts;
Laser-eyed crypto experts;
Supply constraint experts;
#BTFD experts;
Geopolitics & invasion experts;
Inflation experts;
Energy crisis experts;
That’s right, they jump from topic of the week to maintain their following - playing to the audience. Some of these people are actually quite good at the macroeconomic stuff, but they dilute their offering by being all things to all people.
Why do I point this out?
My point of difference
I do so as a reminder that economics is a slow moving sphere, which goes counter to our culture of information being instant. We as a society no longer appreciate large scale background shifts. We want the distraction. We want to be entertained. We want the band to play on as the “too big to fail” Titanic glides serenely through icy waters.
I have been publishing here on Substack for little more than one year (since June 2021), and in that time I have really only had a single message: a large and long-lasting global economic downturn is coming … is upon us!
Certainly, I have looked at this single message from multiple angles, e.g. why labor market data will be misleading going forward; or why regulators and institutions will fail to pick it up in time; or how to interpret various series of economic data etc. I still like to keep things interesting - even I get bored saying the same thing over and over and over.
Nevertheless, there is value in my process and my singular focus. Either that or I have just been lucky …
In July 2021 (as the chart above shows) there was still quite a bit of “reflation” narrative around, and the “BTFD” market speculation was yet to peak, and there I was calling for a recession in 2023.
In October 2021, right as we were at peak “BTFD” mania, I said we were in the process of forming a broad market top through to mid-2022. A bold call given the strong trend and the exuberance of the time.
Then I posted this earlier this year …
And in early July 2022, I posted this …
Show off!
I’m not engaging in self-tootery here. I’m merely trying to highlight that:
economics is slow moving;
economics is not as hard as some make out;
the process employed by regulators and institutions blinds them to what is actually going on;
when I say we are heading into an economic environment that is closer to that of the Great Depression (circa 1930s … or Japan 1990s … or Europe 2000s) than Dot-com bubble (circa 2000) or Global Financial Crisis ([GFC] circa 2008) and you had better mentally prepare for the adjustment, that I have laid out a track record which gives some validity to my opinion [not that I consider it “opinion” because I use data to build my view of the world].
I don’t enjoy being a Cassandra (both for foretelling doom, and for not being believed), but I do see it as offering a value-add service.
Learn how to live a simpler life with reduced fixed costs, and reduce your dependencies in terms of income. Such lifestyles are not difficult to live - they can be enjoyable with less burden - but the adjustment is.
PS. I will change my message as circumstances warrant it but as I’ve said before, economics is slow. It could be late 2023 or into 2024 before the current cycle bottoms and we begin a new growth cycle - for markets too.