Turbulence Is No Match For Knowledge
Each holiday season, Kathy and I spend time in New Buffalo, Mich. with family. My sister-in-law and her husband have a beautiful house just one block from Lake Michigan. I like to take daily walks along the shore. I leave my phone at home and try to find space to mull a problem or get creative about how MSCI can continue to evolve to better serve its members.
On my treks this past December, I was struck by how the water changed from day to day. One day, it was placid. The next, there were serious whitecaps.
The shift was jarring. It was not unlike watching the global market turbulence over the last year.
The turmoil has continued into 2023. In early January, the World Bank warned the global economy is barreling toward a recession. But the same month, U.S. employers added more than half a million jobs and the federal government reported American companies added a half a million jobs more than originally thought in 2022. Canada also produced a strong jobs report last month.
Who should you believe? How should you prepare?
MSCI does not tell our industrial metals community what to think — but we do give our members access to top economic experts and, through our industry intelligence products, provide thousands of data points that identify trends.
If you were at our 2023 Steel Conference last month, for example, you heard from former CNBC Chief Economist and SQUAWK BOX Co-Host Marci Rossell. Rossell is a world-renowned financial expert who spoke candidly about what she sees on the horizon and the factors that can lead to a recession — including Washington policymaking.
Rossell thinks the U.S. economy is in for a soft landing, and unequivocally said it is impossible for the United States to have a recession while being at full employment. (For context: Any unemployment number around four percent is fundamentally full employment. Right now, after the mammoth jobs growth I mentioned above, the country is at 3.4 percent unemployment.) Incidentally, we will have more subject matter experts like Rossell at our 2023 Economic Summit, set for Sept. 10-11, 2023 outside of Chicago. Mark your calendars!
If you listened to our December 2022 free CEO Huddle webinar you know Steel Dynamics CEO Mark Millett also sees relative calm ahead. He said customers are buying and he is optimistic about what 2023 will bring for the industry. (Click here to rewatch that session on demand and here to find information for all our future CEO Huddles.)
We certainly hope 2023 will bring only placid waters, but it is our duty to outline all the possibilities and probabilities.
Our newly enhanced Economic Pulse provides a snapshot of where the U.S. economy currently stands based on high-frequency and alternative indicators of economic activity. And, as of January 2023, this tool includes the latest reading from the Keybridge Recession Monitor, which has a proven track record of signaling turning points in the U.S. business cycle. The Economic Pulse replaces our Economic Opportunity and Risk Tracker, but keeps several of the most-anticipated elements from that product, including a grid with seven easy-to-follow, top-level indicators that provides a quick visual of their status.
Like our weekly on-demand webinars, Economic Pulse is available free to every member company employee. So are our Momentum Monitors and Metals Tendencies Reports. MSCI’s Metals Activity Reports are free for member companies that participate and can be purchased by companies that do not provide data to inform the reports.
Out of the 12 recession leading indicators on the latest edition of the Keybridge Recession Tracker, five are “flashing red” while one is “gray.” Typical lead times for the “red” indicators suggest a relatively low probability that the U.S. economy will enter a recession in the next few months, but the risks of a recession are greater in later 2023.
According to Keybridge, the risks of a downturn should be taken seriously at this stage.
If you want to interrogate this data, MSCI also is one of the only industrial metals trade associations that offers every single member company employee free access to a quarterly webinar with an economist. Every spring, summer, fall, and winter, Keybridge Research Founder and President Rob Wescott joins our team to provide a macro overview of where the economy is going and to discuss topics that affect our community like infrastructure investment, supply chain backlogs, and talent related challenges. Keybridge’s mission is MSCI’s mission: to help decisionmakers think strategically and make data-driven choices.
President Kennedy also said, “Time and the world do not stand still. Change is the law of life. And those who look only to the past or present are certain to miss the future.”
When the economic current is calm, business leaders look for new opportunities for growth. In times of turbulence, they need hard facts to navigate choppy waters. MSCI prepares its industrial metals community to do both and to chart a better future for their companies, their employees, and their customers.