Neil Dutta, head of economics at Renaissance Macro Research, fired off a note saying "the statute of limitations has now kicked in. There are several...
The index of leading economic indicators peaked in February 2022, recession warnings started appearing on Wall Street in the middle of last year, and the yield curve became inverted, for good, by July 2022.
Neil Dutta, head of economics at Renaissance Macro Research, fired off a note saying “the statute of limitations has now kicked in. There are several reasons to be upbeat on the U.S. economy. The recession clock has been reset.” Dutta also attacked some of the bear arguments. Bank lending has been slowing, but he points out this business cycle has been driven by income, not credit. While initial jobless claims have been elevated of late, continuing claims haven’t followed in the way they usually would, perhaps a signal that those who get laid off can quickly find another job.
And what about the inverted yield curve? “Is it the yield curve inversion that signals recession or the bull steepening of the curve that does,” he replies. “That is, when the Fed starts aggressively cutting we know we’re in recession. An inverted curve doesn’t necessarily mean financial conditions are tight.”
The buzz Nvidia NVDA and Advanced Micro Devices AMD shares fell on a Wall Street Journal report the White House might ban a sale of AI chips to China. Also in chips, Micron Technology MU reports fiscal third-quarter results after the close.
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