Benjamin Cowen argues that business cycles can be visualized with a composite market/economy metric and says current conditions look late-cycle but not yet decisive. His base case is that investors should prepare for a possible hard landing over the next 1-3 years, while acknowledging a soft landing is still possible.
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This video is a solo macro lecture from Benjamin Cowen on how to visualize the business cycle. He starts with a historical S&P 500 chart going back to the 1870s to show that recessions used to be frequent, then less common, and that pattern-matching across long time spans can be misleading. He proposes a composite indicator—S&P 500 divided by unemployment rate squared, multiplied by inflation and interest rates—to better frame where the economy is in the cycle. In his view, this metric highlights that bubble-like conditions usually unwind via recessions, though not every correction or return to trend requires a catastrophic collapse. He then overlays the business-cycle idea onto several historical episodes: the 1970s, 1980s, the dot-com era, the 2008 crisis, and the post-2020 period. …
Immediate risk is that the market is still elevated but stalling, while labor data softens underneath. Near term, a sustained equity pullback would be the key trigger that turns this from cautionary to actionably bearish.
Over the next several weeks to months, the base case is a choppy late-cycle market with weakening breadth and increasing recession chatter, unless the Fed eases enough to extend the cycle. Confirmation would come from a durable break lower in equities and a sharper rise in unemployment.
Structurally, Cowen is arguing that the economy is still inside a broader late-cycle unwind that will eventually resolve in recession and then a new expansion. The lasting implication is that investors should assume cyclical resets will keep happening and maintain hedges and dry powder across regimes.
Business cycles can be visualized better using a composite of S&P 500 divided by unemployment rate squared, multiplied by inflation and interest rates.
This is his central proposed framework for the video.
Recessions used to be far more frequent in the 1800s and early 1900s, but they became less common over time.
He uses the long-term recession chart to support the idea that cycle frequency changed across eras.
The current stock market is near all-time highs, so this is an appropriate time to think about hedging before a hard landing materializes.
He explicitly says the warning is timely because the market is still near highs.
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