The market's expectation of a "soft landing" for the US economy in 2024 is becoming increasingly strong, but Faxing Bank seems to disagree.
Albert Edwards, global strategist at Soci é t é G é n é rale SA, emphasized in his latest report that two leading employment indicators recently foreshadowed an economic recession.
He added that these evidence should help convince skeptics that the recession that Wall Street has been waiting for since early 2022 is still possible.
Firstly, according to his statement, due to the continuous excess demand for goods related to the pandemic, the number of employment in logistics work such as truck transportation has significantly decreased this year.
The logistics industry happens to be one of the best cyclical canaries. Our previous research has shown that job losses in the truck transportation industry typically occur before an economic recession, "he wrote.
But if this is not convincing enough, Edwards pointed out that temporary workers employed in the service industry have also signaled a decisive recession this year, reflecting the patterns before the economic downturns of 2001 and 2007.
Before the economic recession in 2001 and 2007, temporary workers decisively declined around 12 months before the recession. Therefore, advocates of a soft landing should be concerned that this indicator has been mercilessly sliding since October 2022. Plus, for about 12 months, well, it's almost now, "he said.
As for the US stock market, strategists at Faxing Bank predict that the S&P 500 index will rise to a historic high early next year, decline in the middle of the year, and then rebound to a high by the end of the year.
The bank believes that the S&P 500 index will jump to 4750 points in the first quarter and then drop to 4200 points in the middle of the year as a mild economic recession occurs.
But don't be nervous. The bank stated that the 12% decline will be a buying opportunity as the Federal Reserve will cut interest rates, stimulating a mild economic recovery and driving the index back to 4750 points in the last three months of next year.