Is it Time to Throw in the (Recession) Towel? With Tony Greer

0:00Hi, everyone. Today's Real Vision Daily Briefing is sponsored by Crane Shares. Learn about their KCCAETF at CraneShares.com. forward slash KCCA forward slash Real Vision. Now to the top analysis of today's markets.

0:24Is it time to throw in the recession towel? Hi, everyone. Welcome to the Real Vision Daily Briefing. Just in time with me is Tony Greer, editor of the Morning Navigator Newsletter. Hi, Tony. You had some company, so you had to go clear the decks, huh? Yeah, my dog wanted to be involved. Beckham wanted to be involved with the Real Vision Daily Briefing today, but we just sorted that out. Thank you. How are you doing today, Maggie? I'm doing well. I'm doing well. So our question that we started with is a riff on your tweet from earlier today. So what do you think? Is it time to give up those recession calls after that hotter than expected retail sales reading?

0:59It certainly seemed to take people by surprise. Yeah, well, it took the bond market a bit by surprise. I think you can tell by the reaction. But let's talk about the economic side first. We got hotter CPI, hotter PPI than expected last week. Today, we got better retail sales, better ex-autos, better ex-autos and gas, better than expected industrial production, better than expected capacity utilization at almost 80%. I mean, the recession bros are getting hit with so many rights, they're begging for a left at this point, right? So they're going to have to adjust that idea because there's just not manifestation on the tape.

1:34And then we have the bond market come and tell us that the sell-off isn't just over just yet, right? We have a two sigma spill in 10-year futures. 10-year yields spike from 458 on the close two sessions ago to a peak of almost five and a quarter today, right? Which is a reversal of that flight to safety that we saw at the beginning of the Middle Eastern conflict. We actually saw an outside reversal in yields higher. And that's the move that's still going. So what happened today was even more interesting. We've got the rates flying, but we've got the dollar trading back off because that's also a reversal of the flight to safety trade.

2:16With the dollar trading off, we had some Aussie strength, Aussie yen strength, great tailwind for the commodity sector. All the natural resources sectors perk up today. On the top of the leaderboard, we've got metals and mining, oil services, uranium, solar, gold miners, all the crapola that's down on the year, essentially, aside from oil services, I suppose. Cannabis up 5%, beautiful bounce off of moving averages. And the downside is all the rate-sensitive stuff. Big tech is on the downside. You know, we had the semiconductors trading off a percent with the new export rule headline, a two and a half sigma, four percent sell off in NVIDIA.

2:58So, you know, it was an interesting rotation day. Natural Reese's on top, on top, race sensitive tech, you know, selling off. And, you know, the S &P is kind of dealing with it just fine, you know, settling right around 4 ,400 again with largely negative sentiment and the fear and greed index leaning in the fear sector around 34, 35 still. So there's a lot of reasons to kind of take the trades that you're given. You can remain bullish on the S &P, if you ask me. I don't think we're in danger of a breakdown. And the recession idea, in my opinion, is out the window, Maggie. Yeah. So that's really interesting, Tony, because I think some people were looking at those yields.

3:34And it's been staggering. We've seen this over and over, right? Everyone gets ahead thinking that that turn's coming. And then they get blown out and yields move higher again. These are big moves in a short amount of time for bonds. Everything is rate of change in the markets, right? So that's why you're finally seeing the sector that's become religion, AI, NVIDIA, finally succumb to a sell-off today. What did it take? It took a two sigma spill in the 10-year futures, right? It took a real move higher in yields, but they are still rate sensitive. it's going to be interesting to see how the yield move trajectory pans out, right?

4:17If it stays this steep and we see another lurch higher, you can probably expect a steeper rotation like we've seen today. And if they manage to sort of consolidate and not make a new high in yield, so kind of maybe giving us an indication that this is a good level to buy bonds for a little bit of a trade, that'll be really interesting because that's still something that could happen. We could kind of have a double bottom here in bonds and kind of a double top in rates and then move lower in yields and higher in bonds. So it's been yet to be determined. And I'm literally on the edge of my seat waiting to see how it pans out.

4:52Some people were looking at that big move up in yields. And sometimes when you see that, you see the stock market sell off. You saw that, but then you've had this sort of mixed close. It did come back a little bit. I guess it's because of that rotation that you're talking about, because although tech got hit, you saw people moving into other areas. And when you're talking about cannabis, I mean, talk about some beat up names that we haven't even bothered to discuss here because they were so dead in the water. In fact, you know, that's a sentiment we haven't even been asked about cannabis in the questions of the chats in a long time, because everybody seems to have given up on that.

5:29People have headline exhaustion in cannabis, right? We're waiting for safe banking where they're listening to the saga going on in the Senate and the stories that go back and forth. And it's at this point not worth listening to until safe banking is actually passed and they have access to capital and then there'll be mutual funds trading in the names and it'll be a whole different animal. But until then, we can trip over our beard waiting for that to happen, as we know. So we focus on what's strong today, metals and mining, uranium, gold miners, retail, a big bounce back with the retail sales number after everybody just got washed out of retail in the last several weeks.

6:06So that's an interesting trade that's kind of lined up for me. Large magnitude move higher in stocks like Whirlpool, Bank of America. So there was some good and bad on the street today. It was a little back and forth. The S &P is still really comfortably within this kind of 43, 50, 4500 range. But I think the S &P is a little bit more resilient than people want to give it credit for, is my opinion. I think a little bit of that has to do with the fact that we're not spilling into a recession. We just have this inflation issue right now. So we're going to see how the bond market takes us forward.

6:42Yeah. I mean, the bond market has been driving. So Paul asking an interesting question. Sorry, not Paul. I'll get to yours in a minute, Paul. AJ asking a question. Do you think the strong economy means a sell-off in equities? It would appear not necessarily based on what we saw today, but - The way that I think about that is the way economic data relates to rates, relates to the stock market, that kind of triad there. If yields are kind of forcibly rising now because inflation is really, really sticky and isn't going away and starting to kind of chooch higher, yields are going higher. If the economic data remains firm, the stock market can bear it, right?

7:30If yields are ticking higher and data is going into the shitter, and I know that we've got a lot of crazy debt and credit limit data out there, that's definitely catching my eye. But in terms of the economic data, in terms of sort of manufacturing and gasoline demand and things like that, there's no slowdown to be had. I was just in Las Vegas and I couldn't have gotten a breakfast table to play blackjack at Planet Hollywood at 10 o 'clock in the morning if I wanted to. That's how crowded the world is. So I'm just saying not the entire world thinks that we're heading into recession. There's bull markets and economic booms everywhere.

8:07So that's how I look at that. That's really important that if rates are going to go higher, it needs strong economic data for the stock market to bear it. And I think that's a fair way to looking at it that will keep you out of trouble for the most part. Yeah. How was how was the concert at the Sphere? You went to see you, too, right? It's next level, Maggie. It's next level for rock and roll fans. I mean, it's clear from the moment that you walk into the place that you're in a venue that was built specifically for concert production. Yeah. You know, you don't you don't feel in any way like you're in a sports arena or anything like that.

8:40It feels more like walking into a planetarium and the effects are as spectacular in person. Oh, cool. That's good to hear. Yeah, I know a lot of people are making the trek out. It's going to be really interesting. Presumably, we're going to see more of them pop up. Yeah. Everyone's putting it on their bucket list as word goes around. And now that a trip to Vegas comes with a potential NHL hockey game, an NFL football game, a formula race, if you time it right. I mean, the place is booming like I've never seen it before. It's really exhilarating. And I love that town more than anything. Yeah, that's amazing.

9:13I wonder if some urban developers who are looking at some cities that are hurting right now are gonna think about roping some of that in because it's all about experience. And if you can bring people with that kind of, Mayor Adams, if you're listening. Yeah, right. Oh, one is being built in New York. I think that's in the plans of Sphere. You know, Sphere Entertainment is a publicly traded stock. There you go. Yeah, you can get all that information. And I know there are plans for one in the New York area and there's a third one that is being built. I don't think that they announced the location yet, and I could be wrong on that.

9:42Very cool. We'll have to dig in on that. We'll see if we can get them on. OK, we digress. Earnings, but you're bringing up the strength of the economy and stocks can bear it. We are at the start of earnings season. And so far, it seems like some of the reports coming out are exceeding expectations. I haven't been following that closely, Matt. Yeah, I've been really kind of stuck in a little bit of the macro story, especially what's going on in the Middle East. And I'm spending an inordinate amount of time giving myself headline fatigue from that, when I should probably be putting a little bit more of a noise cancellation policy on it, because the bond market told us that it doesn't really bother by this event over there.

10:25So I want to make sure that I'm focusing on the things that the market's focusing on. And I've kind of been a little bit wrong footed. And maybe that's why I missed a lot of the earnings headlines. But the tape seems to be reacting. I know Bank of America and Goldman just reported. Yeah, coming the early financials out, looking pretty good. Well, no blowups, let's put it that way. Except Jamie Dimon somewhere saying that this is maybe the most dangerous time that any of us have been in. So the fact that you have headline fatigue, I think you speak for all of us when everyone's trying to keep a handle on what's going on and so difficult.

10:59And you're right, the markets for now are sort of putting it off to the side. But I think everyone's got a worried eye on that. By the way, we are going to, as I've been giving you guys a heads up on, we are going to be releasing Raul caught up with Dee Smith for a really long, interesting conversation. And I am talking to Peter Zahan tomorrow at 11 o 'clock Eastern, I believe, live. Yeah, so that should be interesting. So roll up if you can with your questions. otherwise, send them to me, DM me on the platform, and I will try to look over them and put them to him ahead of time, because there's an awful lot to discuss on that front.

11:42So I wanted to circle back. You were talking about some of the other issue for the bond market, and it's so important right now, because bonds are really leading a lot of what happens across the other assets. And we're talking about the economy, we're talking about earnings, which are super important. But as you mentioned, everyone also trying to figure in this supply issue. And we've seen at times the bond market kind of decoupling from what's going on in the economy and really struggling to digest all this issuance that's coming and a pipeline of it, you know, that just stretches till who knows when with so much debt that has to be underwritten.

12:18Andres talked about this in his latest Steno Signals update that just dropped on our platform digging into sort of that issue of supply. Let's have a listen and we'll talk on the other side. If you look at the marketable treasury issuance for the fourth quarter using the so-called T-back Q4 recommendations, we'll move to basically uncharted territory for the issuance of US treasuries. I know it's relatively old news. We already got the confirmation of that after the summer. But still, it seems like the market rates will continue to react to this story. Since right now, we struggle to find buyers for bonds simply.

13:03There is a reason why all banks try to say to clients, buy bonds, buy bonds, buy bonds. It's because they want someone to buy them. And right now, I struggle to see who are the net buyers outside of US households. Maybe a few hedge funds included in that number. But it simply means that households currently carry the back in the fixed income space. And it's basically sad to watch, in my opinion. So I basically consider the current ongoing events as triggers for renewed turbulence in fixed income space. I'm not sure that we've seen the highs yet in long-run deals in the U.S., given that we simply lack the bias outside of U.S.

13:47households. Hey, everyone, we're going to take a quick break right now to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

14:17your account is approved. And the great thing is that in addition to crypto, Plus500 gives you access to a wide range of instruments, S &P 500, NASDAQ, gas, and much more. Explore equity indices, energy, metals, Forex, and beyond. With a simple and intuitive platform, you could trade anytime, anywhere. Experience the fast, accessible futures trading you've been waiting for with Plus500. With over 20 years of experience, Plus500 is your gateway to the markets. Visit us.plus500.com to learn more. Trading in futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify.

14:51Plus 500. It's trading with a plus.

14:59Andres also talks about what his thoughts on the timing of this recession, if we're going to get it, when we're going to get it, and his outlook for energy. As you know, he's been super focused on that again as we head into winter in Europe. You can see that full episode on our website If you are not a member, go to realvision.com and sign up. You can just look in our chats for some of the links and trial deals that we have for you. So, Tony, how are you thinking about this massive amount of supply that needs to be digested? Is it going to continue to put upward pressure on Treasury yields? Yeah, I believe so.

15:34I love the way Andreas framed it as a definite kind of bid list scenario for the bond market. In fact, we know the data has shown that we're seeing huge foreign selling of bond market, of U.S. Treasury bonds. We're talking about it really, really calmly, but this is the biggest bear market in bond market history. We saw bonds off, broadly speaking, 7 % in 2021 right after the Fed doubled their balance sheet. Shocker, who would have guessed that? We saw them off another 22 % two years after the Fed balance sheet was doubled. shocker who would have ever thought that and we see them down 10 this year for the third consecutive negative uh you know three years negative in a row and i don't think that's even ever happened or if it happened i don't think the magnitude has been this bad and boy what a shocker that something like that would happen after the fed doubled their balance sheet in one print you know and that's something that just never gets tied together that's kind of frustrating for us you know smaller market guys and independent analysts when you know like that that's a post-it that i've had on my board for three years now, like, don't forget the Fed doubled their balance sheet in one print.

16:42And so what that's going to mean is inflation should run rampant and bonds should get slaughtered. Right. So we're in the middle of that. Where she stops, nobody knows. You know, I'm not I would not stand in the way of this. You know, it's been you know, we had them. We had bonds for years of, you know, people that have been in the markets for a while because it wasn't that long ago. But you remember, Maggie, we had rates pinned in negative territory overseas, is pinned at zero here for a long time. What is that? That's holding a beach ball underwater, right? It's very unnatural. And when the beach ball finally lets up, you don't want to be the one to limit how high the beach ball is going to go if you're a trend follower, right?

17:21So if you talk to guys like me, I get a little bit hysterical about the bond market and think terminally about it. I could see 10-year yields go to 10 % over time as inflation just persists and has periods of hyperventilating and getting terrible and then calming down again. I kind of feel like that's the scenario we're in for. So I remain a bond bear under these conditions where it's kind of technically broken with good reason and going lower. So that's how I kind of look at that, broadly speaking, and that kind of the nuance on that changes from day to day and how it affects other things. But very much right now, the bond market is in charge, and I listen to everything it has to tell me.

18:00Yeah. Yeah. Yeah, and this is the big change, right? We would always, especially in the US, we're very equity-centric, but this is when bonds and then to a certain extent, you know, currencies, you really have to understand what's happening there because bonds are in the driver's seat right now. And fantastic observations you just made there. And by the way, you know, we're going into an election period. So the idea that there would be any restraint or fiscal restraint or efforts to try to work down the deficit seem very unlikely. And we have a Congress that's non-functional right now. I mean, we're still trying to elect a Speaker of the House.

18:38I think that political turmoil would be more frightening to people if we didn't have all the headlines of a war impending potential, you know, very, very, a war in the Middle East that has potential to spread. Are many people worried about that? You might be getting more attention. We're hearing about the Speaker speaker trials and tribulations, but it seems like Washington's been broken for so long that people aren't paying attention to it. But I mean, we're not operating right now. So all of this not good for a situation where these high deficits are starting to have real market impacts. It does feel like risk, you know, the way I interpret what you're saying is to me, it feels like risk is kind of underpriced in a lot of, in a lot, in a couple of different areas.

19:21You know, I still think the oil market risk in the oil market is upside risk is dramatically underpriced, even though oil volatility has expanded to reflect that. In fact, it's just about doubled now, oil volatility from the teens to the high 30s. And now price has kind of backed off the highs. It's back in motion here with the conflict in the Middle East trading around 87. But it just seems to me like it's one headline away from being 95 bid and running again, given and what's going on in the Middle East and how things are, I don't know, I could be wrong because I am not a political analyst or a biologist.

19:57So I really have no idea what I'm talking about, but this seems a little bit different to me and a little bit more, I don't know, it seems like the world is a little bit on a more precarious position because people are saying, yeah, the Middle East has been going on for years, but not with the US in such a weak position that we're in now, right? We've got a weak leadership position that's being broadcast around the world. We've got Strategic Petroleum Reserve down to tumbleweeds. And the military has gone LGBTQ. So it feels like we're extremely vulnerable while the Middle East is, and I think other nations are taking the opportunity to express their views, kind of knowing that there's not going to be an aircraft carrier in their backyard that's going to be firing any missiles.

20:43And even though we're moving aircraft carriers around the world right now, I am shocked that the bond market is saying, really, I care about the inflation problem. Yeah. Well, and we have still a ground war in Europe. That's still happening. I have no idea how I'm going to squeeze all this in with this conversation with Peter Zahob, by the way. The list of things to discuss is so long. I'm just giving a caveat right now. We're not even going to get through it all. But let's get to some questions here. And this one's related to oil. And this is another one. This is barely even making it punching through the noise.

21:16But Paul, thank you for bringing this up. What will be the impact of the sanctions being lifted from Venezuela? It's going to be, you know, a kind of attempt at a lower oil price, right? This is another political move by the administration where rather than asking Exxon Mobil to pump more, he's going to our enemies and saying, can we possibly enrich you a little bit by having you pump more and pay you money for that? You know, and we'll try to have that affect our, you know, election coming up and we'll try to use that to get the gas market lower and whatever they're going to try to do. But I mean, it's patently obvious, you know, it's kind of the administration is wearing that on their sleeve.

21:56I don't think that they're trying to hide the fact that it is a blatant attempt to stop gas prices from going berserk into the election. You know what I mean? They're just trying to keep pressure off of that hot button item if they can, because they're going to have enough hot button items to deal with as it is. you know i don't even want to go into them starting with migration etc etc but there's going to be a lot for that administration to deal with heading into the next um the next election which may be why we're going to war who knows yeah we there there is no shortage of of uh i don't want to call them conspiracy theories but i mean um we know it's all it's all valid speculation okay valid speculation no such thing as conspiracy all because we know that there are actual conspiracies going on.

22:37So let's throw the theory part out the window and go with constructive speculation. Yeah. We're going to take another quick break to hear a word from our partners. We'll be right back with more of the day's top analysis on the Real Vision Daily Briefing.

22:53Constructive speculation. By the way, we'll dig in and on that may be good to talk in terms of actual oil infrastructure and implications with Venezuela, because there's been massive underinvestment in their ability to pump oil because of the dire economic straits that country has been in. So all politics aside, the actual logistics of getting more oil out of there, there have been questions raised about that for years. I can only imagine they've gotten worse. I haven't spoken to anybody about it recently. So that's a whole another thing, Paul, also to take into consideration. There's the lifting sanctions, And then there's the reality of actually getting that underinvestment back up to speed.

23:37That's a longer process, I think. Yeah, but let's consider the market's view on it. The market traded from 88 to 86 and back to 87 on that headline. So the market, in my opinion, is in process of shrugging at it. Yeah, right. So we'll see how it goes. Probably for all of those reasons. So this one is from Follow the Science. Love to hear your opinion on coal today. Tony, massive buybacks. Yeah, I mean, it's a sector that we, you know, is going to, to me, it's kind of a fade, the ESG movement sector. And I just wanted to get a BTU chart up here in front of me. You know, when I look at coal, I see that it's had a massive pullback over the summer.

24:18You know, with the energy pullback, it's getting back on its feet here. in my opinion, like a stock like that has gone blue sky trading, where it is a name that's in an uptrend that dips within that trend to the moving averages, maybe trades through them, and then trades back up above all the moving averages and resumes the trend. That's what it looks like is going on to me in the coal markets. I think it kind of rhymes with what's going on in the oil and uranium markets, like the alternative energy to the ESG movement, which is falling apart. Alternative energy stocks are getting slaughtered.