Meme stocks are back. The labor market remains strong, but fewer firms are planning to hire in the future. Where are we in the business cycle? The data points to a late cycle slowdown, which has historically led to weak stock returns. The yield curve concurs, as the 2-10 Year Treasury spread briefly inverted for the first time since 2019. Yield curve inversions are widely viewed as a harbinger of recessions. The market is now pricing in a 3.25% Federal Funds rate in 2023, see how this compares to past Fed hiking cycles. The tax deadline is right around the corner, if you’re getting a refund how do you plan to use it?
1. We had hoped to retire the term “meme stock” but unfortunately it will remain in our lexicon for now:

Source: The Daily Shot from 3/29/22
2. Job openings remain near record highs, but it seems the murky economic picture is putting a damper on future hiring plans:

Source: Wells Fargo Securities

Source: The Daily Shot from 3/29/22
3. While the hard economic data remains strong, market prices and sentiment are pointing towards a slowdown or contraction:

Source: KKR Global Institute
4. Neither a slowdown, nor a contraction, have historically been good periods to own equities:

Source: KKR Global Institute
5. An inverted yield curve implies that the Federal Reserve will be able to get inflation under control, likely slowing economic growth in the process:

Source: https://fred.stlouisfed.org/series/T10Y2Y
6. The market expects a relatively aggressive rate hike cycle:

Source: @VPatelFX
7. According to one survey, the majority of consumer tax refunds won’t be flowing back into the economy: