By Bas van Geffen, Senior Macro Strategist at Rabobank

As inflation continues to bite, households are increasingly reassessing what to spend their money on.

According to a YouGov poll, Britons are more likely to spend less on new clothes than they are to cut their gym memberships and TV subscriptions.

“Workouts win out”, as Bloomberg headlined this morning. However, isn’t this just demonstrating the fallacy of gyms? People sign up as a New Year’s resolution, only to be stuck with a membership for the remainder of the year.

Consumers’ spending cuts were clearly visible in UK’s Q3 GDP. The economy shrank 0.2% q/q. Although that is better than the expected decline, the GDP data gives a deceivingly positive picture. The more recent monthly GDP indicator shows a 0.6% m/m decline for September, pointing to a sharper decline in the underlying pace. And, as our UK strategist notes, the drop in GDP is predominantly driven by a fall in private consumption (0.5%). In fact, the output in consumer-facing services is now 10% lower than it was prior to the pandemic. On top of that, business investment fell by 0.5% q/q. So the two key components of domestic demand are weakening.

On the other hand, there have been increases in government spending, particularly for public administration and defence, and government investment.

If we look at external trade: export volumes increased by 8.0% q/q, though much of this was driven by an increase in non-monetary gold.

Import volumes fell by 3.2% in the latest quarter, driven by falls in chemicals, manufactures and other goods. So net trade adds to GDP, but for completely wrong reasons.

Whereas inflation is still a major headache for consumers, US CPI was a reason for markets to rally yesterday. Inflation euphoria struck traders as the US CPI print for October came in at ‘just’ 7.7%. That is a solid drop compared to September’s 8.2%. Moreover, the rate of core inflation decelerated to 6.3% y/y from the prior month’s 6.6%. Did anyone say ‘pivot’? Markets certainly seemed to think so – at least in terms of the implied expectations for the Fed’s next rate hike. Odds of a 75bp hike vanished from Fed funds futures, long-dated yields dropped, and equities rallied.

This renewed ‘pivot’-optimism was not contained to the US. European fixed income and equities rallied alongside their US counterparts, despite quite hawkish comments from Isabel Schnabel.

The ECB executive board member presented a slide deck with the ominous title “Persistence of inflation in the euro area”, in which she noted that “the risk of inflation persistence has risen further” and that “only a deep recession with a sharp rise in unemployment would dampen inflation, but this is unlikely now.”

Ms. Schnabel concluded that the ECB cannot afford to pause and that their policy will have to move into restrictive territory. Is this the central bank fearing the start of a wage-price spiral?

Wage demands are increasing as households feel inflation squeeze their disposable incomes. And, thanks to a relatively tight labour market, some bargaining power seems to have shifted from employers to employees. Earlier this week, Bloomberg reported on the latest trend this earnings season: large European firms warning for increased wage pressures next year – and the risk of strikes if these demands aren’t met.

Higher wage bills add to the price pressures companies were already facing, and many companies –particularly SMEs– will only have limited room to increase pay.

After all, productivity has hardly increased, so higher wages will erode profit margins. So any wage increases will probably come out of employees’ own pockets: Bloomberg continues that many of these European firms warn that they may have to raise prices again next year, but this time as a direct result of higher wages.

Even if wage demands are not met fully, this dynamic could still lead to a wage-price spiral that delays the return of inflation to the ECB’s 2% target.

In her slides, Schnabel referred to a new ‘wage tracker’ that has been developed by Indeed and the Central Bank of Ireland. It determines wage developments based on the texts of job advertisements, and the data is therefore much more timely than the ECB’s current indicators. Although the index is still new and could overstate wage dynamics as it only reports on ‘job changers’, it suggests that wage pressures have accelerated markedly in recent months.

So, while we are reluctant to call this a wage-price spiral yet, the ECB must be careful that the economy is not drawn into one. That could be as difficult to get out of as it is to get out of an annual gym membership.

Bill, Bill, Bill…what are you thinking?

Things have been going good enough for billionaire Bill Ackman of late. His fund has been weathering the storm and performing decently enough to stay out of the news, and the torrid saga that was once Herbalife is now a far off distance in the rearview mirror.

Even Ackman’s famous “hell is coming” CNBC moment that marked the bottom of the pandemic sell off has mostly been forgotten about. But we guess you just can’t keep a good man down…

Like everybody else in the industry, Ackman made his way over to Twitter earlier this week to weigh in with his opinion on the FTX blowup. Except, instead of criticizing Sam Bankman-Fried, Ackman decided it would be a great time to congratulate him. 

“You have to give [Bankman-Fried] credit for his accountability here,” Ackman wrote. “I don’t know any of the facts, but I have never before seen a CEO take responsibility as he does here. It reflects well on him and the possibility of a more favorable outcome for [FTX]”. 

We’re guessing it was only shortly thereafter, as Ackman was being mercilessly ratioed by nearly everyone on FinTwit, that he eventually learned some of the “facts” of what had taken place with FTX.

He deleted his Tweet shortly thereafter. 

“The problem with [Twitter] is that it is too easy to tweet,” he wrote after deleting his original Tweet. “The good news is that you can recall the missile before it causes too much collateral damage,” Ackman later lamented. 

Just spitballing here, Bill, but maybe get a grasp on “the facts” first next time…

Authored by Lance Roberts via RealInvestmentAdvice.com,

Since June, the market rallied on hopes of a “policy pivot” by the Federal Reserve. However, those hopes got dashed each time as Jerome Powell clarified that the “inflation fight” remained the primary focus. Mr. Powell made that point very clear following the latest FOMC announcement.

“The question of when to moderate the pace of increases is now much less important than the question of how high to raise rates and how long to keep monetary policy restrictive.”

Before the pandemic, the Fed’s storyline was to let inflation run hot rather than allow inflation to stay too low for too long. Such makes sense as inflation is easy to deal with by hiking rates and slowing the economy. Deflation is a far different story, as it becomes an entrenched psychological impact that becomes difficult to dislodge.

Today, Powell says the Fed’s concern is entrenched inflation which causes pain to the economy.

The reality is that inflation is not the problem.

If the Fed did nothing, “high prices will cure high prices.” The real risk remains a “deflationary” spiral that depresses economic activity and prosperity. Deflation is a far more insidious problem than inflation longer term.

Such is why, over the past decade, the Fed flooded the economy with liquidity and zero interest rates to boost economic activity. The chart below shows the periods inflation ran above or below the average inflation rate from 1982. Since the “Great Financial Crisis,” inflation has run consistently well below that average and even the Fed’s 2% target rate.

While monetary interventions and zero interest rates failed to generate organic growth above 2% annually, they increased asset prices, inflated asset bubbles, and expanded wealth inequality.

What is important to note is that since the turn of the century, the outcomes have not been positive each time the Federal Reserve has started an aggressive rate hiking campaign. Notably, the Fed is well aware of this but no longer fears creating economic havoc. As Powell recently stated,

“If we overtighten, we can support economic activity.”

In other words, for the bulls hoping for a “pivot,” Powell made it clear that a “policy pivot” is coming. It is only the function of time until it is evident that something breaks in the economy and bailouts are required.

The Policy Pivot Is Coming

One of the interesting comments by Jerome Powell was the “window for a soft landing in the economy was narrowing.” Such confirms what we already know that the Fed is starting to realize the risk of a “hard landing” is becoming increasingly elevated.

Such leaves only two trajectories for monetary policy. The first option is for central banks to pause rates and allow inflation to run its course. Such would potentially lead to a softer landing in the economy but theoretically anchor inflation at higher levels. The second option, and the one chosen, is to hike rates until the economy slips into a deeper recession. Both trajectories are bad for equities. The latter is substantially riskier as it creates an economic or financial “event” with more severe outcomes.

While the U.S. economy has absorbed tighter financial conditions so far, it doesn’t mean it will continue to do so. History is pretty clear about the outcomes of higher rates, combined with a surging dollar and inflationary pressures.

Naturally, once the Fed’s aggressive rate hike campaign “breaks” something, the “policy pivot” will occur. Such will occur as the realization that inflation has now become a “disinflationary” wave in the economy. As Michael Wilson recently noted:

“M2 is now growing at just 2.5%Y and falling fast. Given the leading properties of M2 for inflation, the seeds have been sown for a sharp fall next year. The implied fall in CPI outlined would be highly out of consensus, and while it won’t necessarily play out exactly, we believe it’s directionally correct. We’re closer today [to a ‘policy pivot’] because M2 growth is fast approaching zero, and the 3-month-10-year yield curve finally inverted last week, something Chair Powell has noted is important in determining if the Fed has done enough.“

Given the surge in inflation was caused by increased demand due to “stimmy checks” against a drastic drop in supply as the Government shuttered the economy, the reversal of those dynamics is disinflationary. Notably, inflation will fall in 2023 much faster than the Fed expects, leading to the rapid “policy pivot” the bulls continue to hope for.

However, the bulls may not like what they get.

The Bulls May Not Like The “Pivot”

The bullish expectation is that when the Fed finally makes a “policy pivot,” such will end the bear market. While that expectation is not wrong, it may not occur as quickly as the bulls expect.

Historically, when the Fed cuts interest rates, such is not the end of equity “bear markets,” but rather the beginning. Such is shown in the chart below of previous “Fed pivots.”

Notably, the majority of “bear markets” occur AFTER the Fed’s “policy pivot.”

The reason is that the policy pivot comes with the recognition that something has broken either economically (aka “recession”) or financially (aka “credit event”). When that event occurs, and the Fed initially takes action, the market reprices for lower economic and earnings growth rates.

Currently, forward estimates for earnings and profit margins remain elevated. The spread between the Producer Price and Consumer Price Indices remains problematic. Historically, this suggests that producers will absorb inflation, thereby eroding profit margins as consumer demand deteriorates from inflationary pressures.

Such is what Michael Wilson also concluded:

“Bottom line, inflation has peaked and is likely to fall faster than most expect, based on M2 growth. This could temporarily relieve stocks in the short term as rates fall in anticipation of the change. Combining this with the compelling technicals, we think the current rally in the S&P 500 has legs to 4000-4150 before reality sets in on how far 2023 EPS estimates need to come down.”

Once the reversion sets in, the Fed cuts rates to zero and restarts the next “Quantitative Easing” program, such will start the next bull market cycle.

We will certainly want to buy that opportunity when it comes.

Our warning is that bulls may be early trying to “buy” the initial “policy pivot.”

Oil jumped after China announced some easing of its strict Covid Zero measures, a move that could spark more local and international travel and lift commodity demand.

As reported earlier, China reduced the amount of time people entering the country must spend in quarantine and will scrap a system that penalizes airlines for bringing Covid cases into the nation, according to the National Health Commission. WTI advanced more than 4% to trade above $90 a barrel…

… and the more oil keeps rising, the faster the upswing in gas prices will be in the coming days, considering that there is still about 2.74 million b/d in refinery outages as of Nov. 10, according to data compiled by Bloomberg (outages in the US were at 165,000 b/d, while in Russia, they were at 67,000 b/d)…

… and certainly when Biden’s daily drain of the SPR comes to an end, and send the price of oil on its merry way to $150.

In other news, Saudi Arabia’s energy minister said OPEC+ will remain cautious on oil production, weeks after the group angered the US by lowering output. The 23-nation alliance, led by Riyadh and Russia, is set to meet on Dec. 4 to decide whether to cut production again, keep it stable or reverse course and pump more. Members are looking at the state of the global economy and seeing plenty of “uncertainties,” Prince Abdulaziz bin Salman said.

Authored by Jonathan Turley,

Below is my column in Fox.com on the impact of the likely GOP takeover of the House on the Hunter Biden scandal. Hunter Biden’s laptop is Washington’s Pandora’s Box. Opening up that laptop to greater public scrutiny could expose our local cottage industry of influence peddling.

Here is the column:

In the legend of Pandora’s box, the star-crossed Pandora releases a slew of evils upon the world. Notably, the only thing that she was able to trap in the box or jar was something that is likely to be at a premium in Washington this week: hope.

The likely Republican takeover of the House could yield a slew of investigations in the months to come. Washington is famous for managing scandals. Indeed, it is a virtual artform in the Beltway. However, there is one investigation that comes the closest to Pandora’s box for the Washington establishment. A serious investigation into the Hunter Biden scandal could put the political and media elite into an existential crisis.

Here are the “usual suspects” who could find themselves under a microscope for the first time as a result of a full investigation into Hunter Biden. 

The Bidens

The Biden family has long been associated with influence peddling to the degree that they could add an access key to their family crest. While they may be more aggressive than most families, influence peddling has long been a cottage industry in Washington. For decades, I have written about this loophole in bribery laws. It is illegal to give a member of Congress or a president even $100 to gain influence. However, you can literally give millions to their spouses or children in the forms of windfall contracts or cozy jobs.

President Joe Biden has faced repeated questions about influence peddling involving his family. (Getty Images)

James Biden has been remarkably (even refreshingly) open about marketing his access to his brother. Former Americore executive Tom Pritchard and others allege the Biden openly referenced his access to his brother and his family name in his pitch for clients. James has faced a wide array of litigation over allegedly fraudulent activities as well as a personal loan acquired through Americore before it went into bankruptcy.

Hunter worked with his uncle but also branched off on his own in the family business. While his father recently emphasized that his son was a hopeless addict, that defense stands in glaring contradiction to the fact that he maintained a multimillion-dollar influence-peddling scheme. The question is why foreign figures (including some associated with foreign intelligence) rushed to him international money transfers and complex deals worth millions from Moscow to Kyiv to Beijing.

However, the Biden most concerned may be the president himself. Joe Biden has repeatedly denied knowledge of Hunter Biden’s business entanglements despite numerous emails and pictures showing him meeting with Hunter associates. That includes at least 19 visits to the White House by Hunter’s partner, Eric Schwerin, alone between 2009 and 2015.

While emails on Hunter Biden’s laptop make repeated reference to his father as a possible recipient of funds derived from influence peddling. Indeed, in one email, Tony Bobulinski, then a business partner of Hunter, was instructed by Biden associate James Gilliar that the Bidens wanted to avoid such references: “Don’t mention Joe being involved, it’s only when u [sic] are face to face, I know u [sic] know that but they are paranoid.”

In discussing these deals, Joe Biden is referenced with code names such as “Celtic” or “the big guy.” In one, “the big guy” is discussed as possibly receiving a 10% cut on a deal with a Chinese energy firm. There are also references to Hunter paying off the bills of his father from shared accounts. From his board memberships to venture deals to legal fees to his art deals, Hunter Biden is a tour de force of alleged corrupt practices used in Washington. Indeed, while his skills as a painter and a lawyer have been questioned, Hunter’s remarkable skills at influence peddling could soon be the focus of Washington.

The Beltway Bandits

One of the things that most worries the establishment is that these emails threaten to pull the curtain away from the influence-peddling cottage industry. The emails contain an array of children connected to powerful Democratic and Republican leaders. For example, one of Hunter’s closest associates was John Kerry’s stepson, Chris Heinz. Like Joe Biden, Kerry is also accused of falsely denying knowledge of his son’s business dealings. Even the late mobster James “Whitey” Bulger’s nephew, Jim Bulger, was a business associate of Hunter Biden. The Bulgers were a powerful Democratic family in Massachusetts.

Surrounding these well-connected children are an array of insiders tied to the very top of the Democratic and Republican parties. An array of lawyers and political operatives quickly formed around the kinder of the powerful to cash in on these foreign dealings. An investigation of Hunter Biden could not spotlight his conduct without putting a floodlight on all of those who support the influence-peddling industry. 

The Media

The media is the final group that could be collateral damage in any investigation. This influence peddling could not have occurred without the assurance that the media had the back of the Bidens. Imagine what the media would have done with even one of these deals with foreign political or influence figures if a Trump child was the recipient. The genius of the Biden influence peddling operation was to make the media an early and active participant. The media and social media companies almost universally buried the Hunter Biden scandal before the 2020 election. They became invested in the denial over two years of belittling or dismissing the story.

The disclosure of the corrupt practices linked to the Bidens will erode what little trust remains for the media. Figures like Bobulinski and the underlying emails were available to the media before the 2020 election. However, the media showed strikingly little interest in pursuing the facts of the influence peddling. Bobulinski and others will now presumably have a chance to be heard. 

Obviously, other groups are also worried about what sunshine will expose in this scandal. That includes the FBI which appears to have scuttled or slowed early efforts to investigate the Biden dealings. It also includes Attorney General Merrick Garland, who steadfastly refused to appoint a special counsel despite overwhelming support for such an appointment.

There is of course a difference between opening Hunter’s laptop as opposed to Pandora’s Box: few in the Beltway expected to find hope within its sorted contents. 

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

Cameras at the vote counting facility in a Nevada county still counting midterm election votes stopped broadcasting overnight, officials said on Nov. 10.

The livestream computer application that provides the feeds “lost connection with” the cameras at 11:24 p.m. on Wednesday, according to Bethany Drysdale, a spokesperson for Washoe County.

All staff members left for the night about an hour before the issue and none returned until 7 a.m. on Thursday morning, county officials said.

The connection was restored just before 8 a.m. on Nov. 10.

The Washoe County security administrator was said to have reviewed security cameras at the building, which run on a different system. The cameras showed that no person entered the ballot room or Registrar’s Office while the live feeds were cut off.

Security personnel are working to make that footage public.

A review of staff badges also indicated that no one entered the ballot room or office.

“In the future we will look for a solution that would prevent software disruptions or simply not offer a courtesy livestream feed,” Drysdale said in a statement. “Washoe County has been at the forefront of trying to innovate election transparency, but we have moved from an election night to a much longer election timeframe. The technology we are using to provide this livestream cannot keep up with these demands. We suggest enhancing transparency with security cameras rather than courtesy livestream cameras in future elections.”

Washoe County is among multiple counties in Nevada that have not yet completed tallying for the midterms, even though polls closed on Tuesday night.

Some 100,000 ballots, all cast by mail, remained uncounted as of Thursday afternoon, the Reno Gazette Journal reported. That included more than 50,000 ballots in Clark County.

State law requires election officials to count absentee ballots as long as they were postmarked by Election Day and received by Sunday.

In the latest tranche of votes, reported Thursday by Washoe County and other jurisdictions, Democrats Sen. Catherine Cortez Masto (D-Nev.) and Nevada Secretary of State hopeful Francisco Aguilar gained more votes than their rivals, former Nevada Attorney General Adam Laxalt and Republican Jim Marchant, according to KOLO-TV.

Laxalt still leads Cortez Masto by about 9,000 votes while Aguilar has about 5,350 more votes than Marchant, according to results posted by the office of the Nevada Secretary of State.

Laxalt and the senator have each said they’re confident they will be the winner when the vote count is finally done.

That race could end up determining which party controls the Senate, which is currently split 50–50. Democrats can break ties through Vice President Kamala Harris, the president of the upper chamber.

Two other races—Arizona and Georgia, the latter heading to a runoff—remain uncalled. The race in Alaska is uncalled but Republicans have the top two vote-getters.

As widely expected, FTX – which was clearly insolvent after the biggest fraud in crypto history – has filed for bankruptcy, and its soon-to-be incarcerated boss Sam Bankman-Fried, f/k/a “the JPMorgan of his generation”, has resigned as CEO. SBF is being replaced with John J. Ray, III – the lawyer who helped clean up Enron – as incoming CEO.

Here is a press release that will shortly be published by the main FTX twitter account. Sharing here in interest of time. pic.twitter.com/DxOZmy0aiu

— Ryne Miller (@_Ryne_Miller) November 11, 2022

Press release below:

FIX Group Companies Commence Voluntary Chapter 11 Proceedings in the United States Begin Orderly Process to Review and Monetize Assets for Benefit of Global Stakeholders John J. Ray III Appointed Chief Executive Officer; Sam Bankman-Fried Resigns

FTX Trading Ltd. (d.b.a. FTX.com), announced today that it, West Realm Shires Services Inc. (d.b.a. FTX US), Alameda Research Ltd. and approximately 130 additional affiliated companies (together, the “FTX Group”), have commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the District of Delaware in order to begin an orderly process to review and monetize assets for the benefit of all global stakeholders.

John J. Ray III has been appointed Chief Executive Officer of the FTX Group. Sam Bankman-Fried has resigned his role as Chief Executive Officer and will remain to assist in an orderly transition. Many employees of the FTX Group in various countries are expected to continue with the FTX Group and assist Mr. Ray and independent professionals in its operations during the Chapter 11 proceedings.

“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” said Mr. Ray. “The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency. Stakeholders should understand that events have been fast-moving and the new team is engaged only recently. Stakeholders should review the materials filed on the docket of the proceedings over the coming days for more information.”

The news sparked the latest bout of selling in crypto which is back under $17,000 unable to stage even a modest bounce amid the relentless negative newsflow…

And the price FTX Token (FTT) is tumbling…

Authored by Matthew Vadum via The Epoch Times,

Supreme Court Justice Sonia Sotomayor turned away an emergency application on Nov. 10 to halt New York City’s COVID-19 vaccination mandate that applies to firefighters, police officers, and other government employees.

The appeal was from workers who were fired after the city refused their requests to be exempted on religious grounds. Many people object to the various COVID-19 vaccines for religious reasons because aborted human fetal cell lines were involved in their testing, development, or production.

The Alliance Defending Freedom (ADF), a public interest law firm specializing in religious freedom cases, argued in the application filed on Nov. 2 that it was unfair that unvaccinated adult entertainers and athletes were exempted from the mandate while other unvaccinated workers were forced into compliance, and were fired if they refused the jab.

While pandemic-era restrictions have been easing in recent months, some remain.

The Supreme Court threw out a major federal vaccination mandate in January.

The high court voted 6–3 on Jan. 13 in National Federation of Independent Business (NFIB) v. Department of Labor to block the Occupational Safety and Health Administration’s private-sector vaccination regime. On the same day, the court ruled the opposite way in Biden v. Missouri, voting 5-4 to uphold a U.S. Department of Health and Human Services rule requiring more than 10 million employees at health care facilities that participate in the Medicare and Medicaid programs to be vaccinated against COVID-19.

Sotomayor decided the matter on her own, without referring the case to the full Supreme Court, which is her prerogative as a justice after receiving an emergency application. She provided no reasons for her ruling. The case is New Yorkers for Religious Liberty v. City of New York, court file 22A389.

ADF had argued in a brief supporting the application that the employees urgently needed relief because they are “suffering the loss of First Amendment rights, are facing deadlines to move out of homes in foreclosure or with past-due rents, are suffering health problems due to loss of their city health insurance and the stress of having no regular income, and resorting to food stamps and Medicaid just to keep their families afloat.”

John Bursch, senior counsel and vice president of appellate advocacy at ADF, said when the application was filed that “these city heroes have dedicated their lives to serving their neighbors and keeping their city running safely and efficiently, yet New York City officials suspended and fired them because they cannot take the COVID-19 vaccine without violating their sincere religious beliefs.

“But for athletes, entertainers, and strippers, the city found a way to loosen its mandate.”

It’s not just tech giants and Wall Street firms any more. As FreightWaves reports, truck brokerage giant C.H. Robinson Worldwide Inc. is laying off between 1,000 and 1,200 employees, most of whom are at the vice president and general manager level, according to sources familiar with the situation. The move, as FreightWaves CEO Craig Fuller reports, “might be the largest layoff in the history of freight brokerages, not related to a bankruptcy or acquisition.“

This might be the largest layoff in the history of freight brokerages, not related to a bankruptcy or acquisition. https://t.co/NVfB20nMor

— Craig Fuller 🛩🚛🚂⚓️ (@FreightAlley) November 9, 2022

The move comes a week after the Eden Prairie, Minnesota-based company reported weaker-than-expected, third-quarter results and strongly hinted at impending labor cost reductions to combat the impact of slowing demand and increased costs.

“We got ahead of ourselves in terms of head count,” said Bob Biesterfeld, Robinson’s president and CEO, on a post-earnings call. Robinson employs nearly 17,000 people.

Biesterfeld said he did not forecast truckload demand declining as rapidly as it did, as well as spot market and contract rates deflating considerably.

In a statement Wednesday night, the company would not confirm the number of layoffs and disputed the number cited by sources, adding:

“As we said last week in our Q3 earnings, changes in market conditions, coupled with many successful endeavors on our digital roadmap directed at scaling our model to be more efficient, mean we are in a position to reduce our overall cost structure.

“As a result, we’re eliminating some positions at C.H. Robinson. These are not easy decisions, because we recognize the significant contribution of the impacted employees. We have tried to approach this with as much respect and empathy for our former colleagues as possible and are providing transition assistance.”

In late February, Robinson entered into a cooperation agreement with Ancora Holdings Group LLC, an activist investor group. It also named Henry Maier, a former CEO of FedEx Ground, the U.S. ground delivery unit of FedEx Corp., (NYSE: FDX) and Jay Winship, a financial executive, as independent directors.

In addition, Robinson’s board formed a four-member capital allocation and planning committee, which the company said would recommend capital allocation, operations and strategies, including enhanced transparency and disclosures to shareholders. The panel is chaired by Winship and initially includes Scott Anderson, the company’s chairman, as well as Biesterfeld and Maier.

Authored by Simon White, Bloomberg macro strategist,

The longed-for Fed pivot may come quicker than expected — especially after this week’s very soft inflation data — but equities still face more downside if hopes for easier monetary conditions clash with the rising risk of a recession.

The Fed’s battle with inflation this year has pitched the stock market into one its most bearish cycles in decades. The expectation — or hope — is that once the Fed takes its foot off the brake, stocks will cast off their shackles and new a bull market will take flight.

That doesn’t look likely. And that’s despite the fact that evidence is mounting that the Fed is at, or at least very close to, peak hawkishness.

Central-bank rhetoric has begun to soften, the midterms are now behind us, and market expectations of where the Fed rate will peak now consistently exceed the high-point implied by its so-called “dot plot” projections. With the market now helping, not hindering, the Fed in its monetary objectives, the central bank shouldn’t have to keep sharpening its talons for much longer.

On top of that, the Fed pivot could come much sooner than most expect. The median length of time between the peak in inflation and the first rate cut is 22 weeks, according to US hiking cycles going back to 1972. June’s CPI print likely marks this cycle’s peak in headline inflation which, historically speaking, would put the first cut in as little as four to eight weeks.

This is not a prediction. But it does highlight how a Fed reversal could happen more quickly than the market expects. Either way, equity investors should treat it as the false dawn it is.

Firstly, financial conditions continue tightening for about five quarters after the first Fed hike. In the current cycle this would take us until the second half of 2023. Secondly, there’s a still greater squeeze in liquidity to come. The Global Real Policy Rate is still extremely negative and close to the all-time lows of -6% it reached in 1974, before it rose all the way to +3% by the early 1980s. Today it is at -4.4%, barely above its -5.6% nadir.

Overall, global financial conditions, as measured by the Global Financial Tightness Indicator, remain very restrictive, with no respite on the horizon. This will remain a poor environment for equities and other risk assets.

Even then, stocks might avoid the worst if the US dodges a recession, but the chances of that are rapidly diminishing as higher borrowing costs filter through the economy. As one of the most interest-rate sensitive sectors, housing is often first to feel the squeeze of those hawkish Fed claws.

As housing costs mount substantially, price growth is falling rapidly. Existing and pending home sales are declining fast. Mortgage rates have risen to 20-year highs, a trend that’s also contributing to the swift decline in growth of building permits. When residential building slows, it almost always leads to a weaker housing market and thus to a more fragile economy. The falling value of the homes they live in will also dent consumers’ confidence.

Used car prices, the poster-child of rapidly rising inflation last year, are collapsing in year-on-year terms as demand slumps. And credit conditions are deteriorating, leading to wider spreads, reduced liquidity and increased difficulty for borrowers in raising money.

Reliable leading indicators, such as the Philadelphia Fed State Diffusion Index and debit balances in customer margin accounts, are at levels that have always preceded recessions in the past. Even if the Fed were to start cutting rates tomorrow, an economic slump already looks to be baked in.

Have no fear you might say, with the market already down over 20% from its highs, a recession is already in the price. But that’s not what the past tells us.

Stocks are, in fact, pretty poor leading indicators, tending to sell off most once a recession has actually begun. Going back to 1960, the median sell-off of the S&P before the beginning of an NBER recession was 5%, but the market goes on to sell-off double that — 10% — in the months following the downturn.

Stocks may find themselves flipping from the inflation frying-pan into the recessionary fire, as the monetary easing the market has so desperately yearned for sets the stage for a new act, which promises to bring yet more misery.