I think the odds are definitely higher than usually for a surprise on the downside. When everybody thinks things will keep growing and the worst case might be flat to little growth I get somewhat nervous. There’s definitely some signs of a coming recession and I don’t see many people paying attention to them. China is slowing, Europe is in recession, Japan is in recession, and I don’t think we remain uncoupled or unscathed forever. I think we will follow the rest of the world into recession and nobody seems prepared for it so I expect some serious volatility once people finally realize it.
That said I’m still inclined to believe a euphoric blow off top in the markets before we see a big time correction. Maybe this fall is when it shows up.
