Defining Recession - FED 105

Hosts: Ansel Lindner and Christian Keroles

Guests: Q_liketheletter and Chris Alaimo

Listen To This Episode:  Apple / Spotify / Google / Libsyn / Overcast / RSS

Fed Watch is a macro podcast with a true rebellious bitcoin nature. Each episode we question mainstream and bitcoin narratives by examining current events in macro from across the globe, with an emphasis on central banks and currencies.

In this episode, I’m joined by Q and Chris of the live stream crew to talk about the recession vs not-a-recession vs depression debate. I also dive into understanding the temporary effects of fiscal spending by governments and the brick wall facing the global economy, demonstrated through yield curves. We finish up with a Q & Ansel (Q&A) with questions from the guys and my community.

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Recession Debate

In recent days, many people have started to notice the National Bureau of Economic Research (NBER) has changed the definition of what constitutes a recession. Outrage at the blatant sleight of hand has come to a fever pitch. Common sentiment is, ‘how dare they change the definition to save the reputation of an unpopular President?’

Few people realize that the definition had already changed back in 2020 with the Covid recession. It was the shortest recession on record, only lasting for March and April 2020. The definition changed to be more subjective, in order to narrow what a recession is, and to place one on the previous President’s record. Now, this more subjective measure is being used to broaden the definition to keep a recession off this President’s record.

The danger of letting political interests control supposedly neutral data and science, once again, is plainly obvious.

Leading us into a discussion of the US consumer and the weak state of the economy, I read from a Walmart financial release, important because they are the largest retailer in the world by a long margin.

“Operating income for the second-quarter and full-year is expected to decline 13 to 14% and 11 to 13%, respectively.”

Lance Roberts put together some excellent charts to refute the apparatchiks’ new party line, that there is no recession. First up is deficit spending. On the podcast I used this chart to show how fiscal spending is not money printing, it simply pulls demand forward. If it is not sustained, there is a gaping hole of demand coming behind it.

Source: Lance Roberts

We can see the economy racing toward this gaping hole, or as I put it in the podcast, brick wall, in the yield curves. The first chart below, from Lance, goes all the way back to the 1981-2 recession, showing many selected yield curves. Notice the steady cascade toward inversion (negative on the chart) that usually characterizes the march into recession. However, today on the far right, shows an almost immediate dive into inversion, as if hitting a brick wall.

Source: Lance Roberts

Here is a zoomed in chart we looked at on the podcast as well. I selected a few yield curves for the 10Y and 5Y Treasuries. Again, the abrupt nature of the current crash is like hitting a brick wall.


At this point in the podcast, I felt like I was being a little bit alarmist, and I did just write a blog post condemning the Fear Hustlers and Alarmist Pimps. So, I used the next chart from Jeff Snider, in which he shows we haven’t returned back to previous growth trends and possible outcomes of this recession, I say I expect the outcome of this recession in the US to be generally light, similar to the dotcom type recession.

Behind all this controversy about the word recession, we are left with the realization that it doesn’t matter anyway. We are going to have a slight downturn and return to the post-GFC normal of low growth and low inflation.

Source: Jeff Snider

Bitcoin, the Dollar and Rate Hikes

Next, we talk about bitcoin and rate hikes. I think it is very interesting that at the June Federal Reserve Open Market Committee (FOMC) policy announcement of a 75 bps hike, bitcoin is at very nearly the same level as today.

To be exact, at 2 pm ET on June 15, 2022 the bitcoin price was $21,505. As I write this, at 11am ET on July 27th, the price is $21,440. Very interesting that despite the negative news around Bitcoin, and the hawkishness from the Federal Reserve, the bitcoin price remains extremely strong.


The last image for this week, was the CME’s Fedwatch Tool, which took our podcast’s name! At the time of recording it was showing a 75% chance of a 75 bps hike, and a 25% chance of a 100 bps hike.

Source: CME

That does it for this week. Thanks to the watchers and listeners. If you enjoy this content please SUBSCRIBE, REVIEW on iTunes, and SHARE!