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"Recessions Don't Happen When Everyone Is Expecting Them"

I've seen this comment thrown around a lot on FinTwit (financial markets Twitter) recently...

Even Business Insider are in on the act ๐Ÿ‘‡

People are terrified about a recession โ€” and that means the economy is about to get a whole lot better
Google searches for โ€œhow to prepare for a recessionโ€ are spiking. But when the hysteria hits a fever pitch, it means thereโ€™s good news ahead.

Most people would know that things go up and down, even Joe Public, right?

If they didn't, we'd just have an infinite up only business cycle and everyone would be exorbitantly wealthy - absolutely no relativity theory of give and take at all.

I completely disagree with this notion that recessions don't happen if people are expecting them.

For one, if people are expecting it to happen, people turn defensive.

Secondly, Trichet (the ECB's President in 2009), when referring to the underpricing of risk said, 'Warnings by the authorities about the possibility of an abrupt correction in financial markets date back to 2006.'

So clearly there were people expecting a downturn before the Great Financial Crisis happened. Duh.

One of his solutions to preventing another crisis was, 'Finally, a third factor that, in my view, needs to be addressed is the excessive pro-cyclicality of the financial system in its entirety, i.e., the tendency of the financial system to accumulate too much risk and leverage in good times, and to shed risks hastily in a downturn.'

I mean, consider the last two years.

In Q1 2021, retail piled more into stocks than the previous TWELVE YEARS COMBINED, with margin debt hitting records through 2020 and 2021...

When people in the financial sphere make these bold claims of 'priced in', especially when referring to recessions, we must remember that recessions are painful to the REAL ECONOMY, not just asset prices that we gamble in day in & day out.

They hurt, and we are a very small sample size who are hyper focused on markets and economic data - we are not representative of the real economy, so what might seem priced in for us isn't necessarily by the 95% who experience recessions by living through them and forecasting (or not) them.

Iโ€™ve seen this comment thrown around a lot on FinTwit (financial markets Twitter) recently... Most people would know that things go up and down, even Joe Public, right? If they didnโ€™t, weโ€™d just have an infinite up only business cycle and everyone would be exorbitantly wealthy - absolutely no relaโ€ฆ

Follow The Light

There's never a shortage of innovation in the chip industry. Moore's Law keeps on delivering even though the absolute wizards behind this microtechnology have to dig deeper into their creative reserves to deliver progress. ย 

IBM & Samsung are developing a vertical chip to solve the size problem ย ๐Ÿ‘‡

What if your phone could last a whole week without charging? No battery upgrade. Just the latest innovation ๐Ÿ‘‡

Now we're onto the NEXT BIG THINGโ„ข

Yeah it sounds really geeky and boring, but it's pretty much fiberoptic technology in a chip, which sounds way better. ๐Ÿ‘‡

Light has been used to transmit data through fiber-optic cables, including undersea cables, for decades, but bringing it to the chip level was hard as devices used for creating light or controlling it have not been as easy to shrink as transistors.
PitchBookโ€™s senior emerging technology analyst Brendan Burke expects silicon photonics to become common hardware in data centers by 2025 and estimates the market will reach $3 billion by then, similar to the market size of the A.I. graphic chips market in 2020.
Beyond connecting transistor chips, startups using silicon photonics for building quantum computers, supercomputers, and chips for self-driving vehicles are also raising big funds.

It's a fast-developing sector, and investment's flowing in at a faster rate now too...

According to data firm PitchBook, last year silicon photonics startups raised over $750 million, doubling from 2020.
In 2016 that was about $18 million.

Who's investing? Just a couple of minor multinationals... ๐Ÿ‘‡

Ayar Labs, the leader in chip-to-chip optical connectivity, today announced that the company has secured $130 million in additional financing led by Boardman Bay Capital Management to drive the commercialization of its breakthrough optical I/O solution.
Hewlett Packard Enterprise and NVIDIA entered this investment round, joining existing strategic investors Applied Ventures LLC, GlobalFoundries, Intel Capital, and Lockheed Martin Ventures.

On the AI front ๐Ÿ‘‡

PsiQuantum raised about $665 million so far, although the promise of quantum computers changing the world is still years out.
Lightmatter, which builds processors using light to speed up AI workloads in the datacenter, raised a total of $113 million and will release its chips later this year and test with customers soon after.
Luminous Computing, a startup building an AI supercomputer using silicon photonics backed by Bill Gates, raised a total of $115 million.

Definitely something to keep an eye on as chips and data continue their exponential rise.

Here's a 2 minute explainer video of how it works ๐Ÿ‘‡

Dollar dominates, but for how long?

The dollar's on a rampage and hurting plenty who've tried to fade the trend.
It's very obviously 'overbought', and there are plenty of these types of charts doing the rounds ๐Ÿ‘‡

Sentiment is very much one way (wth good reason). Now though, dollar bulls are taking victory laps & euro bears are all "death to the euro".

Some people are taking it even further...


But the trend is your friend until it ENDS

Here's a chart of the euro with two crayon lines drawn on ๐Ÿ‘‡

Nothing about that looks bullish. The trend hasn't ended. But there could be some catalysts for relief from tomorrow ahead of the FOMC next week ๐Ÿ‘‡

We'll be running through them with Macrodesiac Premium members as the data drops.

Don't know what financial news stories are important and what's complete bullsh*t? Hop onto our filtered news channel.

It's completely free ๐Ÿ‘‡๐Ÿ‘‡๐Ÿ‘‡

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