““You can’t have a recession if people still have their jobs and don’t have a problem finding their next job. So I don’t care what the NBER says. … If people aren’t fired, then it’s not a recession ”.“
It was Josh Brown, CEO of Ritholtz Wealth Management, on stage at MarketWatch’s Best New Ideas in Money festival on Thursday.
Brown, the CNBC personality whose New York City-based investment advisory firm manages over $ 2 billion, joined his investment podcast “Compound & Friends” co-host Michael Batnick to speak with the MarketWatch news editor Joy Wiltermuth at the festival. The three discussed whether a recession is underway, red flags in the US economy right now, and also why this is an opportunity for investors to buy in the market, even if it doesn’t seem like one.
“There seems to be a slow-motion recession that everyone knows is coming, but it hasn’t been shown in the data yet,” Batnick said.
Batnick, who is a managing partner of Ritholtz Wealth Management and runs the blog “The Irrelevant Investor”, added: “The consumer is in good shape.” He pulled out several graphs to illustrate that most Americans are still paying their bills on time and that for many people their personal budgets are better now than they were before the pandemic. Both men also noted that the employment numbers were strong. “The data says the consumer is in good shape,” Batnick repeated.
Brown joked that Fed Chairman Jerome Powell’s decision to go aggressive against inflation by raising the federal funds benchmark rate by 0.75 percentage points on Wednesday reminded him of a student trying to get extra credit after procrastinating. all the year.
“Jerome Powell is like the kid who skipped all his homework all year, and then as a gift to the teacher, the last day of school came and wrote a rock opera, and he’s going to play it,” he said. said, getting a big laugh from the crowd.
But on a more serious note, both men agreed that the housing market is “flashing bright red” right now. “If you’re worried about housing, you’re worried about the right thing,” Brown said.
This is because housing touches so many different parts of the US economy outside of real estate, including lending and financial institutions, construction and renovation, as well as legal work, he noted. “It has been said that between 15% and 18% of the US economy has something to do with housing,” she said.
““If you’re worried about housing, you’re worried about the right thing.” “
Brown added that the craziness of the housing market peaked with Zillow’s “Saturday Night Live” sketch that compared scrolling through real estate listings to watching porn. “It was a great skit,” Brown said. “I think they really put their finger on what the zeitgeist was [during the 2020 COVID shutdowns]when there was nothing to do but look at how much better your neighbor’s house was and fantasize about it, because we were trapped within these four walls.
On the other hand, Brown and Batnick have suggested that a recession could be bullish for commercial real estate, as worried employees, particularly those in the financial sector, may feel too insecure to continue “quietly quitting” or ask to continue being. able to work from anywhere. A recession could bring worried workers back to the office and return some leverage to employers.
“Last year there was an environment where you could raise the middle finger with your boss if you were in the financial industry. A lot of people said, ‘Hey, you know what, actually, I’m going to be in the Hamptons this summer. This is where I will do my job from now, ‘”Brown said.
“In a recession, it’s singing again for your dinner,” he continued. “And you want to face time with your boss and you want to be in the peripheral vision of executives. So, paradoxically, the best thing that could happen for a company, assuming its balance sheet is in place, is a recession, especially in the financial sector, because suddenly you will see the buildings filling up with employees again very quickly. ”
And Brown noted that while many investors and consumers are feeling “miserable” and scared of the headlines right now, it is actually the best time to invest in the market as many stocks are priced lower than they have been in the past. years. He called it the investment paradox.
““Just appreciate the moment you are. It’s not a good feeling, but the opportunities are presenting themselves now. ” “
“He will always feel the best at the worst possible time, and he will always feel the worst at the best time,” he said. “Just appreciate the moment you are. It’s not a good feeling, but the opportunities are presenting themselves now. ”
The Reformed Broker session with Brown and Batnick was one of the many events at MarketWatch’s inaugural Best New Ideas in Money Festival this week. MarketWatch’s top publishers hosted questions and answers with investment legends and entrepreneurs like Carl Icahn and Ray Dalio to listen to their financial advice. And there have been sessions covering hot industries like cryptocurrencies and cannabis, workshops to manage your money like a pro, and more.
Subscribe to the MW YouTube channel to see videos of the entire session of the Best New Ideas in Money Festival.