Money Manager Reiterates Recession and Deflation Stance

Bob Stokes on December 19, 2022

You don’t have to skim the financial pages too long before running across a CEO, economist or fund manager who believes the U.S. is headed for a recession.

However, a well-known money manager just said that you don’t have to wait for a recession’s arrival. Here’s a quote from a Dec. 13 article from The Street:

Celebrity money manager Cathie Wood reiterated two of her most important views Dec. 13 – that we’re already in a recession and that we’re suffering from deflation. … The drop in commodity prices during recent months … represents a recessionary sign, Wood said.

A commodity that Wood specifically mentioned was crude oil.

Elliott Wave International’s Global Market Perspective called attention to the “deflationary” significance of crude oil’s price back in July – when the price was already down from a high:

Crude Oil futures made an intraday high on March 7 and a closing high on March 8. … The significant price declines since March 7-8 suggest a burgeoning slowdown in world economic activity and may mark a tipping point from inflationary pressures to deflationary ones. [emphasis added]

Here’s another sign of economic contraction from the December Global Market Perspective:

In October, existing home sales declined 28.4% year-over-year. As previously noted, another hallmark of the latest housing boom was record high purchases by non-occupants. According to Redfin, these so-called “investors” continue to abandon the market. In the third quarter, investor purchases of U.S. homes fell 30.2% from the third quarter of 2021. As we’ve discussed, home prices invariably follow the trend of sales, and that’s happening now. According to the National Association of Realtors, on the heels of slipping sales, the median price of an existing U.S. home fell 1.5% from September to October. As in the stock market, the leaders on the way up are now leading on the way down. According to S&P Case-Shiller, the biggest monthly declines as of August were in San Francisco (4.3%), Seattle (3.9%), San Diego (2.8%), Denver (2.3%) and Los Angeles (2.3%), all of which were red hot until the middle of 2022.