Our experience informs our beliefs. The last four US economic expansions have been unusually long, ranked by the NBER as the first, second, third and sixth longest among 34 business cycles over the last 164 years. We think that the current cycle could burn hotter and shorter, with important implications for investment strategy.
This discussion needs to start with an obvious question: Is this even a ‘new’ cycle? COVID-19 brought the global economy to a sudden stop, while an aggressive policy response drove a rapid recovery. Some investors argue that both were so fast that conditions never ‘reset’ in the way they usually do during recessions.
All cycles have their quirks. The last three US recessions were adjacent to: 1) The largest equity bubble in history; 2) The largest financial crisis since the Great Depression; and 3) A global pandemic. If you’re looking for a ‘normal’ recession, good luck! Read more…..
Chart of the Day
Alibaba Executive Chairman Jack Ma speaks candidly with Charlie Rose about the group’s past, present and future in front of an audience of 3,000 U.S. small business owners in Detroit.