Don't forget about the recession

Mid-week market update: Back on March 9, 2020, which seems like a lifetime ago, I declared a recession (see OK, I'm calling it). The call was based on the combination of a coronavirus epidemic in China that disrupted supply chains that began to spread to other countries, and tanking oil prices due to a Saudi-Russia price war. Since then, stock prices cratered, and recovered to stage a strong rally on the back of fiscal and monetary stimulus.

During this rally, what the market seems to have forgotten about is the recession, which has historically been bull market killers. Moreover, recessionary bear markets take a considerable amount of time to resolve themselves.

In the short run, a number of worrisome divergences and risks have begun to appear during the course of the latest stock market rally.

The full post can be found here.