Good news, everybody.
The worst of the first post-pandemic recession could be over.
If you missed the “hidden” recession of 2022-2023, you’re not alone.
(Most of the market still expects a recession at some point this year.)
I never said that would happen, however. Quite the opposite.
Back in February, I said:
Even if there is a slight downturn, there is nothing in my research or incoming data that suggests a structural weakness in the economy.
On the contrary, my 18.6-year cycle says the global economy will do well in the near term.
The cycle isn’t over… and it will not be for years.
Watch the media change the narrative this year from “imminent disaster” to “a soft landing is possible” to “sometime in the future, we will have a recession, but for now, it’s all good.”
The latest report from Bloomberg suggests something new entirely.
A Slowdown Happened, But the Worst Is Over?
The latest research report from Bloomberg Intelligence says that a recession started somewhere in June 2022.
And the worst of it is over. Historically, now is a great time for stocks.
The model Bloomberg developed is quite interesting. Here’s how it works:
Using logistic regression, the model identifies month-over-month changes in capacity utilization and continuing jobless claims, ISM Manufacturing data and the University of Michigan Consumer Sentiment level to define the economy’s health on a scale of 0 to 1. A reading of 0 shows the indicators are behaving typical of a recession. Historically, the index averaged 0.7 in the first month of recession, fell to a bottom below 0.18, then recovered to 0.8 the first month out of recession.
In other words, the model gives the economy a score between 0 and 1 based on several parameters. Historically, the index fell to about 0.18 at the bottom of a recession.
In December 2022, the index fell to 0.02.
And now it has recovered.
Drops in this index coincided with recessions pretty consistently since 1969.
You can see the crisis of 2008-2009, the COVID recession… and the “missing” recession of 2022-2023.
Since June 2022, when this “missing” recession began, most assets have performed well.
Bonds are up 6%, and stocks are up 14%.
If historical patterns hold this time, stocks could deliver double-digit gains in the months ahead.
Note that the market has already started recovering… despite all the media noise.
The 18.6-Year Cycle Holds
By the way, did you notice a pattern in the above chart?
In 2008, you can see the “end of cycle” crash.
In 2001, it’s the “mid-cycle slowdown” of the previous cycle…
In 1990-1991, it’s the “end of cycle” crash of the prior cycle…
In 1981-1982, it’s the “mid-cycle slowdown.”
In the early 1970s, it’s the “end of cycle” crash.
The 18.6-year real estate cycle is once again, illustrated above.
I’m not saying it’s perfect. But I find it a really handy guide to the bigger picture… the knowledge of which takes away all the noise so you, too, can focus on the bigger picture and build your wealth over the longer term without stressing about the daily and weekly ups and downs.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
P.S. I want to help you take the stress out of investing. We’ve entered a period of the real estate cycle in which the greatest gains can be made… if you’re prepared for the market’s moves.
I recently launched a brand-new newsletter to do exactly this… I’ll help you navigate and ignore the constant noise in the markets… give you specific plays that do well in each part of the cycle, so you can build (or rebuild) your wealth.
Check it out right here.
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