Would You Have Welcomed the 2008/09 Recession If You Had Known…?
Let’s start with investor sentiment.
There are still more bears than bulls.
And 65% don't like the market, while only a third do:
Send in a week or two of market chop and red ink and we’ll see a quick drop in that 34% bullish stat.
The better news about the fear-driving themes in the markets is that it’s running deep, as the next graphic will show you.
The 8-week average is at levels rarely seen:
With 18 TRILLION dollars in cold hard cash sitting in the rainy decade fund (RDF) of the US consumer we can rest assured no one is feeling overzealous just now.
And the chatter about "the crowd chasing the market" is just as wrong as so many other things we’ve heard recently.
Now, does that erase volatility?
No, of course not.
In fact, it suggests nerves are so raw that choppiness may be the name of the game in several investment windows ahead.
And, if you think about it for a moment, would you have been excited about or even welcomed the 2008-2009 debacle if you KNEW that the following 10 years after the storm would provide a 500% return opportunity?
Of course you would have...
And when that’s a question we’ll be able to ask ourselves again in 10 years’ time, the answer will be the same.
I’m not talking about prices.
Data shows thawing is starting to slowly seep across the landscape ahead.
Let's look with the help of some of Scott Grannis – the Calafia Beach Pundit’s great data:
And so, the march begins...
The graph above shows an index of new US mortgage purchases.
These are actual mortgages taken out for an initial home purchase - not mortgage re-financings.
So, have faith my friends, as home sales are set to do quite well, despite the shutdowns.
Perhaps more important is how this might just be the tiny, front-edge of Generation Y starting to roll out of rentals and into their future life. Marriage spikes and then children will not be far behind.
Have a look at that spike above in conditions.
This is what the market sees, not the headlines and fear-based messaging.
The speed of the Fed stepping in to create an answer for the massive demand for cash was a great lesson learned from the Great Financial Crash in 2009.
And that speed will be later found as the "culprit" leading to the most rapid pace of financial healing after any other recession in history.
Oh, and yes, for those earning income above $200K or so a year you can be certain taxes will rise (estate and income) substantially.
But so too will opportunities for us all.
History books will likely show that the grey band we will place on this recession will be the thinnest on the chart above.
Don't lose sight of the fact that the chart above holds 23+ years of data.
And how much of that time has the vast crowd worried about the next recession?
Trust me, the answer is one helluva a lot longer than we’ve actually had recession conditions.