On a seasonally adjusted basis, the US economy created 517,000 jobs in January, and the leading indicator by the Institute for Supply Management for the services sector rose sharply into positive territory. US unemployment is at its lowest level since 1969 (see chart 1). If we are in a recession, it will be a new kind — a full-employment recession.
After the year-end rally stalled in December, investors entered 2023 with negative sentiment and cautious positioning. January then turned out to be one of the best months on record, much to the surprise of most observers who believe that we are still in a bear market. Our view has stayed the same since we proclaimed the end of the decline last October: We have entered a new bull cycle that will last for many months.
In 2022, we found it challenging to navigate the markets, as the technical indicators were giving a cautious signal, while our fundamental reading of the US economy — and, to a lower extent, the European economy – gave us no clear signal of an imminent recession. The latest US economic data seems to be confirming the US expansion scenario.
