The ISM manufacturing index has been below the 48 level for eight consecutive months, a pattern that has only occurred during all previous hard landings in the last 55 years.
While investors often have short memories, there is substantial evidence pointing towards a possible repetition of this trend:
▪️Severe yield curve inversions ▪️The potential lagging effect of the steepest monetary tightening in decades ▪️The narrow leadership in the stock market ▪️A significant rise in the cost of debt ▪️Oil prices nearing $90 per barrel ▪️Corporate fundamentals already contracting
In the meantime, financial markets remain excessively complacent, with credit spreads at historically low levels and exorbitantly high valuations in the overall stock market.
