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Recession Called In Sick Again: Nasdaq Hits 9,000!

For the first time ever today the Nasdaq hit 9,000, which is the perfect way to end out this year and get the public believing there is no recession.

This is yet another milestone and thing that probably shouldn’t be happening if we are to have this recession in 2020. Remember according to CFOs 52% still see it happening in 2020, along with many economists and of course MSM.

There are quite a few things going against that narrative though, higher highs on an almost weekly basis for starters, the repo term market finally starting to cool down after a $500 billion FED injection, new home sales looking like they are rebounding and of course holiday sales numbers, lets start there.

Amazon Sales Machine

As expected Amazon had an amazing year and amazing holiday season as just today they published a press release touting they had a “record-breaking” holiday season!

First, Amazon said 5 million new customers started Prime free trials or began paid memberships worldwide. Let’s assume that all 5 million of those customers end up being paid Prime members — that’s $595 million in annual run rate recurring sales assuming the service’s $119 annual fee. 

With a result like that is helps justify the $1.5 billion Q4 investment into same-day delivery.

At the time of publishing this $AMZN is up over 4% on the news from the early morning PR. Now that’s how you do it!

Next, and I mentioned this in todays Empire macro email but when the economy is good, people are spending more on Amazon, Apple, Coca Cola etc as discretionary spending is usually up because of market optimism.

When the market is down trending Walmart tends to trend up, this isn’t a sole indicator to be used by itself but when measuring GDP its a great tool to look at and shows if there is a recession or not.

YoY data showing Walmart isn’t breaking out, in fact its down
QoQ (quarter over quarter) showing that spending on AMZN and APPL are up

Lastly, it would appear the repo market subscriptions are starting to cool down with today filling just $18 billion out of $35 billion for only the third time since starting in September, signaling either that banks have enough liquidity now or that they have hit limitations on the balance sheet.

The above is just a small sampling of an optimistic bias you could have right now, and I completely understand and see the bear scenario as well, personally I would love to be wrong about the 2020 recession call.

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