Good morning on Jackson Hole Day! This image is from the last 2019 Jackson Hole Economic Symposium Lars Toomre attended in person... Lars will not be present this year at the 2023 Economic Symposium due to some personal issues. However, Lars has the unsettled feeling that this again is a Central Bank meeting occurring ahead of a major economic storm.
The current calmness is likely to be disturbed by the Chinese economic crisis, the looming European recession led by Germany, and the American budget/deficit crisis, all coming to a head together. Plus there is a building Commercial Real Estate "problem" and a wall of junk debt maturing between now and 2025...
The period around the start of October 2023 is going to be a doozy. If Lars was still wearing his Bond Vigilante hat, he would be short 10 year and longer Tsy duration and adding to it in the next five weeks. The false illusion of everything being alright is about to be shattered within the next three months.
Lars also would not be surprised to see the equity Capital Markets correct substantially and the generative Artificial Intelligence darling NVIDIA sell off at least twenty percent. Where the US dollar moves to is a crap shoot but probably should be lower.