Happy Sunday, everyone!

If you can’t show it in a meme, then it’s not true. That’s my modus operandi in the research business, and I stumbled upon this tremendous meme of the business cycle and how JPoww and his ilk respond to it.

This has been the Fed’s operating model for a while: exaggerating the business cycle in both directions. The cycle itself is mostly dead—if we set aside the credit markets, which have been the main drivers of growth, especially when China was also firing on all credit cylinders.

The issue with this cycle is that it hasn’t followed the typical playbook. We’ve kind of lacked a recession. 2022 felt like a recession in many ways, but we didn’t get one. Now Powell and his team are lowering rates into what appears to be an economy already rebounding, something we’ve alluded to throughout the year.

Does this wreak havoc with the QE playbook, which is typically the next step in the Fed-fueled business cycle? It’s certainly not as straightforward to assess as we’ve otherwise gotten accustomed to.

Meme of the week: The wheel of the Fed-fuelled business cycle