People have now forgotten about a recession

But that doesn’t mean it’s not coming

This chart shows the time lag between an inversion and a recession since 1920

Today, we’re at +511 days, making a H2 2024 recession still very likely

Buckle up

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A key factor that’s driving the long-term breakdown in Treasury bonds is the decline in labor force participation rate

Which has correlated strongly with rising US government debt since 1999

The decreasing labor force and increasing government debt indicate economic strain as…

China was one of our most contrarian trades in the beginning of 2024

Valuations had fallen to levels unseen since 2018

And were significantly cheaper than the US

We highlighted this opportunity to our members at bit.ly/3JfDbUX

Buying fear in the markets tends to have the best risk-reward

That’s exactly what China has shown after breaking above a key downtrend line

After declining by more than 60% since its peak in 2021

BREAKING: Japanese Yen just hit 160 against the USD

This is the highest level since 1990

Despite ongoing geopolitical tensions and an upmove in USD

BTC has held up very well above the rising channel

In our opinion, this is setting up for another leg up near the critical resistance

Next stop could be 80k

This is shocking:

Treasury bond issuance in 2024 is expected to hit $1.9 TRILLION

Surpassing levels seen even during the 2008 financial crisis

One big market risk we’re keeping a close eye on is oil

Rising oil prices due to geopolitical tensions could lead to a larger market correction

Similar to instances from 2022 and 2023

But this is NOT our base case for now

There is nothing today that tells us the Fed has successfully achieved a soft landing

Experts are much too early calling for that scenario

The yield curve steepening is when we’ll see the real damage that was done from the tightening

Probability of a recession later this year…

The real stock market turning point will be a recession

Which would be signaled by rising unemployment and an un-inverting yield curve

As seen during the recessionary bear markets of:

1. Dot Com bubble
2. Financial Crisis

These conditions have not been met yet

This is a very concerning chart

Bonds have broken down from a 40+ year uptrend

While a bounce is very likely based on technicals + potential Fed rate cuts

High levels of debt and high inflation are going to lead to much deeper downside this decade

Probability of a 2024 recession is still over 50%

While we believe that short-term market structure is bullish

Once the labor market and economy weakens, it’s game over