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US RECESSION – WHAT RECESSION? Source "Boom Finance and Economics"

Early last week, as US stock markets experienced a short, sharp, well earned retreat from recent highs, the official narrative pushed by mainstream media outlets all over the western world was that a US recession was coming. Fear ruled our airwaves and TV screens as every media outlet followed the exact same script. Sheep followed sheep ……. followed …..

“A US Recession is Coming”they repeated, over and over again. A conga line of “journalists”, “economists” and “experts” was rolled out to reinforce the message. Some amplified the message to say –“the recession is already here”(!). Most TV presenters stared wide eyed at the cameras.

Little, if any, evidence was presented as justification. They had been given their narrative and they knew not to veer away from it if they wished to remain employed in the media.

Our mainstream media seems to know nothing except whatever agreed narrative explains the current issue. Clueless. And those narratives seem to come from somewhere unknown, on high. The journalists are devoid of curiosity. Impartiality and considered debate are nowhere to be found. Fear, fear and more fear is the endless strategy, perfected over decades but especially since the Covid Panic was launched in 2020, based upon little evidence. Narratives that support fear are always preferred. So ……

What is the real situation in the US economy?

Here was the situation report on the US economy advance estimate as of 25^thJuly – just 2 short weeks prior to last week’s “stock market panic”. Source: Trading Economics.

“The US economy expanded an annualized 2.8% in Q2, up from 1.4% in Q1, and above forecasts of 2%, the advance estimate showed.

Consumer spending rose faster (2.3% vs 1.5%), led by a rebound in consumption of goods (2.5% vs -2.3%), mostly motor vehicles, recreational goods and vehicles, and gasoline while services slowed (2.2% vs 3.3%). Also, private inventories added 0.82 pp to the growth, after being a drag in the past 2 periods, led by wholesale trade and retail trade industries. Meanwhile, nonresidential investment accelerated (5.2% vs 4.4%), namely equipment (11.6% vs 1.6%).”

Does that sound like an imminent or “hidden” recession? BOOM thinks not.

Another “explanation” narrative -- the Yen Carry Trade reversal -- was also rolled out to explain the US stock market volatility. There may be some truth in this narrative. However, BOOM had a quick look at historical examples. The narrative doesn’t hold much water if you look at previous occasions when the Yen/USD suddenly appreciated during its long term decline. Surprisingly, the impact on US stocks was then decisive and positive. The (temporary) improvement in the Yen was a signal that was soon followed by long uptrends in US stock indices.

The facts show that in October 2022, the Yen began to suddenly appreciate and did so for about 3 months. And in November 2023, it appreciated for about 2 months. This is shown clearly in the chart below which shows the Invesco ETF for the Yen (Stock Code: FXY).

The impact on US stocks was clearly positive. In October 2022, the S & P 500 turned upwards and ran higher, along with the Yen. And in November 2023, the exact same thing happened.

PAST YEN SURGES TRIGGERED US STOCKS TO GO INTO UPTREND
WILL HISTORY REPEAT?

If we consider these two charts carefully, we can conclude that short term, past appreciations in the Yen/US Dollar cross have actually been a net positive for US Stock markets. If history repeats, the Yen Carry Trade hiccup will soon pass and then the true nature of the US stock uptrends should re-assert themselves, all other things being equal. If this hypothesis holds water, then perhaps a good “Buy the Dip” opportunity is here now or coming soon?

Readers can now sit back and watch the drama unfold with a better perspective. BOOM is always cynical of mainstream explanations for anything. Any search for the truth was abandoned a very long time ago by the Fourth Estate. They do what they are told. They follow instructions. Objectivity and independence are no longer evident anywhere in the Western mainstream media. Thus, it is all akin to propaganda or, at best, entertainment.