Should I Be Freaking Out About All This Recession Talk?


Tony Dwyer is here. He's chief market strategist at Canaccord genuity. Tony Welcome and you're saying you think we have had some the mini recessions but they're over now and it's clear sailing on on the show a few weeks ago we actually we called for a correction classic strategy and I I called it right but we you know it's it's John the Airways so it was a few weeks ago that we thought that the sentiment got bad enough and that some of the data was already discounted that it was especially on the ten tenure no yield dropping the ten year yield. It was time to get more offensive so the supporting evidence to that in the mini recession call is if you look back at two thousand eleven two thousand twelve when the pigs were there and Greece was going to get knocked out of the euro and the euro was going to break up. That's as bad as a trade war right so the ten year. No you'll got back below one and a half percent percents what was interesting is not tober. Two thousand eleven the stock market bottom down nineteen point six percent the tenure didn't bottom until July of that year so in that meantime the S. and P. early twenty two percent led by the defensive into the ten year yield low in July off their you went up up and additional thirty eight percent two until the ten year got over three and three percent so the whole point here is offense should be on the field not because I have some great economic prognostication Asian but all signs are that the ten year made allow and if that's true it's replicating the two thousand eleven twelve two thousand fifteen sixteen period. Were there was clearly an industrial recession or are you making a call about the ten year going back to three percent or above or I think it will go back to two and a half percent. Nobody on the Planet Planet Kelly thought that we were going to go back to one and a half percent at this point ten years into a cycle right so what I think is happening is going back and looking at the nineteen fifty sorry to do it to you going back and looking at the nineteen fifties. There were four recessions from one thousand nine hundred forty nine thousand nine hundred sixty one. They were very brief. The market only went down about twenty percent each time time and then the market went rip into new highs very similar to now and I think technology just in time inventory. More consumption is a percentage. GDP is preventing that official recession but clearly were having these mini recessions driven by global industrial output and maybe hold argument over whether we are aren't going to have one on keeps confusing the picture because what's really happening. Is You have a bunch of growth scares you have quarters or GDP goes negative or almost goes to zero. You have market correction of ten to twenty percent but that's it's a different story than everyone who keeps bracing for. We're going to have another financial crisis in here. It comes again Tony. Let me ask you this. Though I mean think about what just happened in the last couple of weeks we've seen a major moderation in the talk about trade. We've seen massive stimulus in China. We've seen of stimulatory action by the. We've had this balance in rates. No one thought they were going to go down to one five or four or five or something like that. It just seems like we're in a spot here to get out of your mini recessions what we need to do ten years on from this economic crisis that we had. It seems like it's getting a little untenable isn't it. I mean that's the thing is it sustainable and the other point about getting back up to three thousand. It doesn't break out so what's the thing that breaks it out this time in a sustainable fashion. ECB totally disappointed in action last week there. They're coming. Terry in terms of what they were going to do to make sure that inflation got back to where they want it to be. As what drove rates in the market in the spike in the tenure they got ahead of it not by the raised by Blah Blah so I don't really care if it's twenty five or fifty basis points if they do fifty basis points on Wednesday and say we're done for the rest of the time. Market's GONNA get creamed right. They need to get ahead of the market. The highest interest rate cannot be the Fed funds rate right so what gets us over three thousand and that Dan again the the global economy's week. I'm not going to be the straps getting on here telling you oh it's good. It's getting less bad in the data. If you look at the purchasing managers there's breadth the purchasing managers index positive that's inflected off below the same thing with the OCD leading indicators competent leading indicators for the thirty six countries countries. They follow. It's inflicting off the low you can't have the market is a negative when you hit the highest level of all time but the sequential data's rolled over so that's a sale and then you hit the worst level fall time and the squinched out is getting better and that's a sale to right so. I think that the data is going to get better. Give us the playbook then what does it. What does it look like offense. I I mean Kelly. This is offense this everybody's meaning consumer discretionary financials industrials the motorcycle parts attack and again. This was our call from a couple of weeks ago where you get this reflation trade as long as the. Fed stays ahead of the curve and what shut this whole game people to put this on before their decision Wednesday. That's a big call. You make a caller. You don't know you know the views of fast money. No I'm not the greatest of all times but but again and the whole key to this thing is the Fed has to get ahead of the curve. They have to convince the market that we're not going to become Europe and go into negative I so I asked a salesperson today. Who I begged literally bagged two weeks ago. I did it on their please. Refinance your debt. Please one point four percent refinance your loan right right so I went over to the desk today I said. Did you refinancial no my my husband wants me to wait for lower rates okay. That's what the Fed wants to avoid read. Stop waiting for lower rates as low as it's going to get. Let's get in there so you know this kind of churning. We're seeing in the market today. I think has more to do with got extremely overbought in two two weeks right so maybe oil is an excuse and the Fed meeting who's going to really take an offensive playbook into bed meeting and I don't want. I don't want to suggest to to the to the viewers that I'm GonNa be calling the next tick. I'm awful at it. That's why should refinance. I think I think they they should refinance. You could have a pullback in rates. You know what's going to be interesting is to see how Saudi Arabia response to the oil crisis. You know it's not a news item or they blow up their biggest thing and they're like okay. We're good so I'm kind of waiting and to see what the global response is to the whole attack and that may create a temporary law. You can take advantage of and get offense. Thanks thank you

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