Happy Sunday from Sunny Copenhagen and welcome to our flagship editorial!

Is the business cycle dead? It is a fair question to ask after what seems like years of recession chasing once again ending in tears for the macro bears.

This sublime graphic created by the great Lee Coppock is exceptionally telling. Recessions are getting shorter and shorter and also rarer, so why do we keep talking about them all the time in an investment context?

The simple reason why recessions are fewer, is that we have shifted the composition of the economy away from cyclical sectors such as agriculture and Manufacturing towards Services, which is stickier in nature. It also means that the Manufacturing sector has weakened significantly as a recession bellwether, but yet all recession models are still heavily biased by the Manufacturing momentum, since it is cyclical and easier to forecast.

Chart 1: Months in recession in buckets of 30 years (chart by Lee Pollock)