Declining Imports - We heard on Tuesday that imports into the US fell 19%, declining for the first time in 19 months.
This could be good news for the upcoming GDP print, as imports take away from domestic GDP dollar-for-dollar.
What might that mean? Well, if GDP doesn't contract again this quarter, we're not technically in a recession.
But it's not that simple. There are many factors at play.
Ukraine. Inflation. Energy Prices. QT & rate hikes. Supply Chain. None of these challenges are quite yet solved. Some of it we think there is a solution to, but frankly, no one has a crystal ball.
While my base case is not that 8% inflation will stick around for years, I do think that inflation will be around at higher than "comfortable" levels for a good long while.
One challenge with policymakers is that it's usually hard for them to be correct. The same goes for our Fed. While the Treasury has walked back Joey B's former commitment to the word "transitory" because of, well, politics, you won't hear as strong of a mea culpa from Daddy JPow.
Sometimes the Fed gets it wrong. The hope is that mistakes are recognized early, and fixes are implemented in short order.
But that also isn't guaranteed. Just like a soft landing – there's no assurance that we won't plunge into recession, however deep, during this tightening cycle.
If this is on your radar, you might consider investing in places that hold up well in a recession. Lately, these would be utilities, non-cyclical names, big dividend payers, and energy names, to name a few.
I just hope I don't have to dust off my recession investing playbook anytime soon.