Quick note to follow up on my RECESSION risk is bigger than 60% call…… from the other week (Yes, I am yet to finish report….)
Recession risk is rising with big allocation implications – today’s ADP report is worst in three years!
Add to this that Fed broad based employment index (# 19 data points) is also making new lows and we have potential for dramatic change in MAIN MACRO concern: I.e: concern will be recession risk.
Classic economic theory reads that when labor market turns sour so does markets…..
Economic data was ALREADY weak in the US.. .the labor being the “exception”…..(and unlike EUR which is doing better….)
Actual vs. Expected Economic data in the US and Europe
If Non-farm payroll on Friday confirm today’s ADP number then we could start a big move towards NEW LOWS in US yields…. this would also help EURUSD and Gold higher, but main move would be in fixed income where the market in my opinion is net SHORT
Long JPY, GOLD vs. US Dollar..
Long energy & mining sector vs. short banks
Short US yield (Long 30Y US Treasury) and underweight S&P-500