US Recession Monitor – 12.31.2019


Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.


  • Any narrative about a US Recession at this point is complacent and confident about its absence as a risk to equity markets.
  • The sentiment of articles has risen sharply – as cohesion and attention have fallen – to pre-Summer levels before recession concerns had become a somewhat mainstream media topic.
  • Even more than in prior periods, focus of even US markets commentary relating to recession has instead focused on recession risks in foreign markets, where the narrative is not quite as complacent.
  • The result is a muddled narrative structure with some lingering concern about German manufacturing, scattered emerging markets worries and articles asserting that the risk of American recession has passed.
  • We have no fundamental view on recession risks but believe the complacency may create asymmetric opportunities for investors and allocators with more substantive concerns about the US economy.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Sentiment Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment

US Recession Monitor – 11.30.2019


Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.


  • There is little cohesion or attention to a US Recession narrative at this point – not because there is major disagreement per se, but because (we think) most commentators have moved on from it as a topic.
  • It is, for lack of a better description, simply not part of the Zeitgeist anymore.
  • Sentiment has begun its rise as more stories have focused on the fading of recession fears, aided in part by an increase in Fiat News from news outlets with an interest in promoting that as Common Knowledge more quickly.
  • If we had a view (and we do not) that indicators of a recession in the United States might rear their head again in the near future, we think it would represent a shock to presently complacent Common Knowledge.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Sentiment Map

Source: Quid, Epsilon Theory

Narrative Attention

Source: Quid, Epsilon Theory

Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

S&P 500 earnings swoon now seen extending to fourth quarter [Reuters]

Reuters poll: Trade truce unlikely in 2020 but U.S. recession fears recede [Reuters]

CLOs Cracked Like No Other Credit Market. So Now What? [Bloomberg]

If you offer good value in retail, you’re winning. Everyone else is in trouble [CNBC]

The lagging manufacturing sector may be about to rebound, according to a reliable indicator [CNBC]

US Recession Monitor – 10.31.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.


  • US recession commentary drifted downward in both cohesion and attention in October.
  • As with other narratives, we believe this took place in part because of general distraction on multiple macro risks. Still, it is our judgment that this is also in part a result of growing Common Knowledge that the recession bullet (in the US anyway) that recession risks have largely been dodged (or will be addressed in market space through aggressive CB policy).
  • Also similar to other topics, recession coverage is intensely intertwined with Trade/Tariffs (the common knowledge proximate cause) and broad common knowledge of the need for, inevitability of and market efficacy of stimulus.
  • Everyone knows that everyone knows that the Fed and tariff tweets will determine asset prices for now, not economic fundamentals.
  • Sentiment is still negative enough to highlight that the economy remains a political talking point, so we wouldn’t call this a complacent narrative structure.
  • Still, we believe rapidly falling attention is often accompanied by increased magnitude of surprise to any negative events.

Narrative Map


Narrative Attention Map


Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

Trump May Abandon Toughest China Trade Demands, Says Private Equity Chief [Bloomberg]

Fed to cut rates again, but other economic concerns are emerging ahead of election [CNBC]

Markets drop another week on signs of economic weakness [Washington Post]

Trump and China Have a “Phase One Deal” The World Economy Is Still at Risk. [NY Times]

Federal government has dramatically expanded exposure to risky mortgages [Washington Post]

US Recession Monitor – 9.30.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.


  • US recession commentary – which is invariably influenced by discussion of global recession, remained at a high level of attention throughout most of September.
  • As with other topics, recession coverage is intensely intertwined with Trade/Tariffs (the common knowledge proximate cause) and broad common knowledge of the need for, inevitability of and market efficacy of stimulus.
  • Our views expressed in September remain the same this month:
    • If there is a recession narrative in the US, it is that the China trade war is would be the proximate cause, and that central bank action would be the remedy.
    • Whatever narrative exists, however, is not cohesive, and it is becoming less so. There is no agreement or common knowledge about a US recession.
    • Furthermore, the narrative structure is only moderately high attention, and certainly takes a back seat to direct trade and Fed coverage.
  • Whether they prove to be correct or not, everyone knows that everyone knows that the Fed and tariff tweets will determine asset prices for now, not economic fundamentals.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

After Breakneck Expansion, WeWork Stumbles as It Nears I.P.O. [NY Times]

Stocks are poised to hit a new record this week, yet investor mood has darkened [CNBC]

Souring Bets on Apocalypse Were at Center of Quant Stock Storm [Bloomberg]

Concerns for Recession Fuel a Search for Economic Villains [NY Times]

Upbeat data suggest U.S. economy still on moderate growth path [Reuters]

US Recession Monitor – 8.31.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.


  • Given the amount of related commentary we have observed anecdotally in financial news coverage, this month we began explicitly tracking narratives about US recessions. We have produced historical values through January of this year.
  • As you might imagine, recession narratives are caught up amid other narratives, such as central bank policy and trade and tariff narratives.
  • Understanding their relative attention, however, can help a great deal toward understanding the nature of each respective narrative structure.
  • From our initial analysis we have come to believe a few things:
    • If there is a recession narrative in the US, it is that the China trade war is would be the proximate cause, and that central bank action would be the remedy.
    • Whatever narrative exists, however, is not cohesive. There is no agreement or common knowledge about a US recession.
    • Furthermore, the narrative structure is only moderately high attention, and certainly takes a back seat to direct trade and Fed coverage.
  • Whether they prove to be correct or not, everyone knows that everyone knows that the Fed and tariff tweets will determine asset prices for now, not economic fundamentals.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

EOG Resources profit misses on weaker commodities prices [Reuters]

Kudlow Pushes Back on Recession, Says U.S.-China Calls Positive [Bloomberg]

New recession warning: The rich aren’t spending [CNBC]

Trade woes are slowing U.S. economy, U.S. budget experts say [Reuters]

Trump’s tax cut isn’t giving the US economy the boost it needs [CNBC]