Animal Spirits: The Pandemic Broke the Economy

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On today’s show we discuss:

• The worst 6 months ever for financial markets
• After the stock market’s worst start in 50 years, some see more pain ahead 
• What’s priced into the stock market?
• Predicting the next recession 
• Recession measures and NBER
• Calibrating the polycrisis
• The Atlanta Fed says we’re in a recession 
• If we’re in a recession, it’s a very weird one
• Delivery times are down 
• Americans taping into savings to cope with inflation 
• RH earnings
• BBBY earnings
• More crypto meltdowns coming thanks to the Fed according to Pantera’s CEO
• Three Arrows Capital bankruptcy
• Celebrities are deleting their profile picture NFTs
• Grayscale sues the SEC
• Probability of a recession increases as inflation worsens
• Is Netflix getting disrupted?
• Why Netflix made you wait a month to watch Stranger Things

Future Proof Festival

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Recommendations:

• Russian Doll
• Cha Cha Real Smooth 
• Parenthood
• The Talented Mr. Ripley
• Minions
• Ambulance 
• Deep Water 

Charts

 Tweets

Market volatility over the past 5 weeks is at its highest since 1928, causing a lot of negative sentiment. Over the past 80 years, similar instability coincided with the ends of bear markets, @JasonGoepfert writes.

1/2 pic.twitter.com/QyFnixTXlH

— SentimenTrader (@sentimentrader) June 29, 2022

Because @awealthofcs and @michaelbatnick asked in today's "Animal Spirits" pod, here's a look at how ETF flows have followed recent performance (proxied by $DBC) in the commodities space.

The pattern is…familiar. pic.twitter.com/hx1TlUPqAV

— Ben Johnson, CFA (@MstarBenJohnson) June 29, 2022

The US recession/peak inflation trade is intensifying dramatically now. This morning, SOFR rate futures imply:

Collapse in terminal rate to 3.15%

>60 bps of easing next year

Two 25 bps cuts fully priced, nearly 50-50 chance of a third

First cut in Q2 almost fully priced pic.twitter.com/lUAlfov1nh

— Jamie McGeever (@ReutersJamie) July 1, 2022

"Bed Bath & Beyond said it would work aggressively' to clear out excess inventory (which means a ton of price cuts – remember the $AMZN Prime day kicks off in a couple of weeks, and a slew of other retailers will hold competing sales extravaganzas)." – @knowledge_vital $BBBY

— Carl Quintanilla (@carlquintanilla) June 29, 2022

Ouch. Inflation is far too important a problem for the White House to keep making statements like this. It’s either straight ahead misdirection or a deep misunderstanding of basic market dynamics. https://t.co/XgKfEICZpk

— Jeff Bezos (@JeffBezos) July 3, 2022

https://twitter.com/zachweinberg/status/1542889274915315716?s=12&t=ASMQ6vpMKd174uqWZsrf1g

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