Estimate recession risk with the presidential cycle

Estimating Recession Risk With Potential GDP

Says Capital Spectator, but I say there is a better method. Look at the grey bars, they occur every presidential cycle plus or minus one year. The risk of recession gets very high toward the end of this year. It happens with a regularity of about 3%.

Will the period be shorter this year? Good question. This regularity is the secstags, and it is increasingly priced in. So the more often that investors look at this chart, and have a clue, the more often they set aside reserves for the recession.  That causes a smooth down turn. So watch growth this year. If we keep it near or below 2%, then investors and state governments have the secstags priced in.

Watch Cynthia Wu's shadow policy rate, if that gets lower and lower then the secstags are not being priced in. The stock market is way up today, so the short shadow rate has dropped, as seen by the brokers.  Stocks are shifted into short term liquidity reserves, mainly being moved away from ten year liquidity. Fewer stocks held for ten years and more held for one year. The ten year rate is up, there are fewer ten year reserves today than yesterday. A steeper curve. Thus fewer reserves held against ten year events, like presidential cycles. Today we have discounted the secstags, tomorrow we will price them back in.