“A hog in a silk waistcoat is still a hog.”

The American economy has been shrinking for two consecutive quarters, but president Biden denies that would mean that the United States is de facto in a recession. Altering the definition of a critical variable does not change the underlying reality, but changing descriptions and definitions nonetheless is something policymakers have been doing for a long time.

The arguments behind the President’s statement were signs of economic progress, including consumer spending and a strong labor market, but when analyzing the latter, it is clear that unemployment is never as low as right before a recession - or since we don’t use the R-word anymore: economic slowdown.

The economy is undeniably slowing down, and with unemployment at close to record low numbers, the road from here is expected to be bumpier than Powell’s first anticipated “soft landing” as the Fed will keep its tightening cycle into the not-a-recession-recession and several companies already have announced there will be layoffs later this year. 

It is, n other words, in our opinion, too early to load up on risk-on assets.