Despite the fact that the yen is massively undervalued, traders remain short the yen. A huge short-covering yen rally is coming.

For all the hyperventilating about how Japan is experiencing a currency crisis, the yen has basically just tracked the spread in bond yields with the US.

Quantum mechanics says that information in our universe can never be truly lost. However, it can be badly scrambled, such as when you throw a book into a fire. Massive amounts of wisdom is effectively lost when people die. It doesn’t have to be this way.

I’ve been saying this for the past 12 months: Multifamily is next.

Chinese home prices are dropping faster than in Japan after its own bubble burst.

BCA is the world’s leading provider of macroeconomic research for a reason. We used our kinked Phillips curve framework to predict the surge of inflation in 2022, the immaculate disinflation of 2023, and are now predicting that a US recession will start by early 2025.

US consumers are in such great shape that credit card rates are at record highs and delinquencies are back up to where they were in 2012 when the unemployment rate was 8%.

Remember, anyone betting on a soft landing is betting that the unemployment rate will simply move sideways from very low levels.

It’s never happened before.

Stocks rallied after the FOMC statement and then sold off. Not that surprising. As our MacroQuant model has been flagging since late March, stocks have entered a phase where you want to sell on strength rather than buy on weakness.

BCA clients can read yesterday’s report here:…

To drop in job openings in today’s JOLTS release is no blip. Private-sector sources on job openings such as Indeed and LinkUp have been flagging it for a while.

The labor market is cooling and will freeze over by late this year or early 2025.

A recession is coming.

Peter Berezin says “relax”, leading indicators for the ECI are pointing down not up.

Multivariate Core Trend PCE inflation decreased in March, though it remains above pre-pandemic levels.

Cooling water also looks stable until it freezes over.

The gap between labor demand and supply is steadily shrinking. At the current pace, labor supply will exceed demand by early next year, at which point the unemployment rate will rise rapidly.

A phase transition is coming.

The world’s second biggest economy is experiencing outright deflation.

Wage growth drives services inflation, which is what the Fed cares most about.

Wage growth is going down, not up.

This ain’t 2021.

Outside of shelter, healthcare, and auto insurance, inflation is running well under 2%,

OK, before you say, “gee, that’s great, as long as you’re happy to be homeless, don’t drive, and don’t need any healthcare”.

But that’s not the reason to exclude those three categories.

The…

Gold bulls beware: China has generally been price-sensitive in its strategic accumulation of natural resources. The fact that the PBOC’s holdings of gold rose by just 0.2% in March – the smallest increase since November 2022 – is evidence of that.

Indices of existing home prices are plunging in China.

The Chinese GDP deflator declined again in Q1.

China is exporting deflation to the rest of the world.

For now, that is making the Fed’s job easier, not harder.

MacroQuant’s equity score plunged in the first week of April, just days before the S&P 500 began its swoon below 5000. The model sees stocks as being 43% overpriced relative to their net present value. Careful!