The Market | 42 Macro: “Preparing for a Credit Cycle Downturn”
Discussion
This is scary good, very much in line with the Bridgewater commentary posted this weekend. Key quote at minute 40:20:
“I think that ‘we need the drugs’ moment is going to come in the second half of this year.”
Darius is referring to the “anti-Burns reaction function” so often discussed by The WOTE. The equity market is a liquidity junkie, and it’s going to revolt in a large-scale manner when Powell refuses to supply the “drugs” of rate cuts and QE until the unemployment rate is above 5%.
A big, big moment in the market is developing here, so The WOTE wants to share key pieces of the process in real time. Evidence is building quickly, hence the rapid fire posts. But apologies for the inbox bombing - it should slow down here soon as things begin to play out.