James Totton

@jamestotton

Former Educator. Financial Literacy Educator and Author of 'The Money Making Crew' series. Cancer Survivor. Opinions are my own.

Joined November 2008

186 Following

182 Followers

1.6K Posts

James Totton @jamestotton

7 months ago

@elonmusk Steven Bannon arrested twice?

James Totton @jamestotton

9 months ago

https://t.co/OuW6i6icgt

115

James Totton @jamestotton

9 months ago

@iamdieforyouuu Sprite

James Totton @jamestotton

11 months ago

@RaoulGMI 100 percent agree

Who to follow

All opinions expressed are of my own responsibility.

Mike Horning

@MikeHorning1

Listener, Ally, Helper, Guide, Resource, Role Model, Advocate, Mediator, Facilitator, Comforter, Analyst, Challenger, Educator, Counselor, Husband and Father

jamestotton retweeted

Julien Bittel, CFA

@BittelJulien

11 months ago

I’ve been seeing a lot of chatter on X about “peak cycle” and how the economy looks late-cycle. So I wanted to tackle this head on and share a few thoughts of my own... This is from the August 21st MIT publication: A classic late-cycle economy typically has all the following ingredients: ✅ Manufacturing sentiment is extreme (think ISM ~60) ✅ Services sentiment is extreme ✅ Homebuilder sentiment is extreme ✅ Consumer confidence is high ✅ Worker confidence is high (JOLTS quits rate rising sharply) ✅ Investor sentiment is very bullish ✅ Small business confidence is high ✅ Job openings and hiring plans are rising ✅ Wage data and surveys show accelerating pay increases ✅ CEO confidence is strong and capex is booming Now, I could add more to this, but when you score all of these inputs and turn them into a single timeseries, here’s what you get (chart 1). Using data from ISM, NAHB, NFIB, BLS, AAII, The Conference Board, etc., US sentiment, when viewed as a complete picture, remains very subdued. We’re just not even close to the euphoric levels we see late in the business cycle, when everything listed above is stretched to extremes. Peak cycle is when the ISM rolls over from 60+ to sub-50, inventories unwind, and demand cools. Supply and demand reset, inflation pressures ease, and the cycle eventually recovers out of the slowdown or recession – mostly depending on the extent to which financial conditions tightened during the cycle, particularly late on as central banks hike rates and drain liquidity. However, based on this full set of indicators, the data is pointing to something very different. This does not look like an above-trend late-cycle economy. It looks much more like an early-cycle economy trying to build momentum. Another really important factor, and a key reason we believe both the ISM and this sentiment composite will grind higher this year and into 2026, is the sheer scale of central bank easing via rate cuts. Right now, nearly 90% of central banks are cutting rates. That is extraordinary, and on a forward-looking basis, it is a massive tailwind for the business cycle (chart 2). By my playbook, the time to start talking late-cycle is when the teal line rolls over and begins to drop, as central banks turn to hiking rates to slow growth. Even then, there’s usually a nine-month lag before higher rates hit the real economy. Right now, we’re just nowhere near that... in fact, the opposite is true. To my earlier point, slowdown or recession is largely a function of how much financial conditions tighten late in the cycle. Oil prices are a big part of this equation. When oil runs 50% above trend, that represents a massive tightening and has almost always signaled recession, looking back to the early 1970s. However, right now, we are nearly 20% below trend and still falling, which shows this component of financial conditions is still easing (chart 3). Also, as I’ve pointed out many times in previous reports, when you look at Temporary Help Services, it has early-cycle vibes written all over it (chart 4). Rising growth from deeply negative levels is an early-cycle dynamic. It tells you the economy is in recovery mode, not rolling over. Late-cycle is the opposite: positive year-on-year growth that’s slowing, which reflects an overheated economy losing steam. Why is unemployment still rising? Because it lags the cycle. Jobs data is a six-month look in the rear-view mirror. Here’s the thing: full-time hires are expensive. Benefits, pensions, overhead… So what do businesses do first? They typically increase overtime hours and bring in temp workers. Only when they feel confident do they finally lock in full-time staff. That way, they can scale without locking themselves into long-term payroll commitments. So, this isn’t late-cycle. It’s early-cycle (growth up + inflation down = Macro Spring), soon transitioning to mid-cycle (growth up + inflation up = Macro Summer). That’s how I see it, anyway...

BittelJulien's tweet photo. I’ve been seeing a lot of chatter on X about “peak cycle” and how the economy looks late-cycle. So I wanted to tackle this head on and share a few thoughts of my own...

This is from the August 21st MIT publication:

A classic late-cycle economy typically has all the following ingredients:

✅ Manufacturing sentiment is extreme (think ISM ~60)
✅ Services sentiment is extreme
✅ Homebuilder sentiment is extreme
✅ Consumer confidence is high
✅ Worker confidence is high (JOLTS quits rate rising sharply)
✅ Investor sentiment is very bullish
✅ Small business confidence is high
✅ Job openings and hiring plans are rising
✅ Wage data and surveys show accelerating pay increases
✅ CEO confidence is strong and capex is booming

Now, I could add more to this, but when you score all of these inputs and turn them into a single timeseries, here’s what you get (chart 1).

Using data from ISM, NAHB, NFIB, BLS, AAII, The Conference Board, etc., US sentiment, when viewed as a complete picture, remains very subdued. We’re just not even close to the euphoric levels we see late in the business cycle, when everything listed above is stretched to extremes.

Peak cycle is when the ISM rolls over from 60+ to sub-50, inventories unwind, and demand cools. Supply and demand reset, inflation pressures ease, and the cycle eventually recovers out of the slowdown or recession – mostly depending on the extent to which financial conditions tightened during the cycle, particularly late on as central banks hike rates and drain liquidity.

However, based on this full set of indicators, the data is pointing to something very different. This does not look like an above-trend late-cycle economy. It looks much more like an early-cycle economy trying to build momentum.

Another really important factor, and a key reason we believe both the ISM and this sentiment composite will grind higher this year and into 2026, is the sheer scale of central bank easing via rate cuts.

Right now, nearly 90% of central banks are cutting rates. That is extraordinary, and on a forward-looking basis, it is a massive tailwind for the business cycle (chart 2).

By my playbook, the time to start talking late-cycle is when the teal line rolls over and begins to drop, as central banks turn to hiking rates to slow growth. Even then, there’s usually a nine-month lag before higher rates hit the real economy.

Right now, we’re just nowhere near that... in fact, the opposite is true.

To my earlier point, slowdown or recession is largely a function of how much financial conditions tighten late in the cycle. Oil prices are a big part of this equation. When oil runs 50% above trend, that represents a massive tightening and has almost always signaled recession, looking back to the early 1970s.

However, right now, we are nearly 20% below trend and still falling, which shows this component of financial conditions is still easing (chart 3).

Also, as I’ve pointed out many times in previous reports, when you look at Temporary Help Services, it has early-cycle vibes written all over it (chart 4).

Rising growth from deeply negative levels is an early-cycle dynamic. It tells you the economy is in recovery mode, not rolling over.

Late-cycle is the opposite: positive year-on-year growth that’s slowing, which reflects an overheated economy losing steam.

Why is unemployment still rising?

Because it lags the cycle. Jobs data is a six-month look in the rear-view mirror.

Here’s the thing: full-time hires are expensive. Benefits, pensions, overhead…

So what do businesses do first?

They typically increase overtime hours and bring in temp workers. Only when they feel confident do they finally lock in full-time staff. That way, they can scale without locking themselves into long-term payroll commitments.

So, this isn’t late-cycle. It’s early-cycle (growth up + inflation down = Macro Spring), soon transitioning to mid-cycle (growth up + inflation up = Macro Summer).

That’s how I see it, anyway...

334

749

770K

James Totton @jamestotton

11 months ago

@NFLFrascella @Dawgs4Life95 Which is why it's vital to play well against top competition. You can't control the schedule but gamers ball out against the best on game day.

James Totton @jamestotton

12 months ago

Studying philosophy does make people better thinkers, according to new research on more than 600,000 college grads https://t.co/V6Ov3EuaOv

James Totton @jamestotton

12 months ago

@FightWithMemes Vermont and Delaware only have one seat each in Congress. By your logic, if you tried to apportion with single state delegations, you'd have to give up partial single seats in Alaska, Montana, Wyoming, and North and South Dakota.

James Totton @jamestotton

12 months ago

@HoopMixOnly Pippen vs Wage/Bosh or Irving/Love. Also Jordan played for one franchise winning titles, LeBron had to move around to cherry pick situations where he could build teams to win.

James Totton @jamestotton

12 months ago

@realspitfire Have you ever been to a war zone? Book a trip to Gaza and spend a week there. 50 bucks says you'd choose living on the streets in DC. Don't take my word for it though, get the real experience.

James Totton @jamestotton

12 months ago

@EndWokeness To distract from tariff induced supply chain issues? I'll be waiting by the Gatorade for the National Gaurd to restock the shelves!

James Totton @jamestotton

12 months ago

@JamesEastonUK @RaoulGMI @RealVision Soooo, number go up... Haha 🚀

James Totton @jamestotton

12 months ago

@DC_Draino How did Vermont gerrymander a single district. Has math changed and 1/1 is somehow more than one now? Maybe we should get that mathematician working on the Federal Debt. I bet with that new magic math we can get the debt to zero in no time!