Macro analyst Roger Hirst in a RealVision conversation this evening speaks smartly about the risks the economy and markets face in the months to come:

“…it’s that reality, the reality of the real economy in three or four months time. Because it’s the consumer side this time; which had survived, even in 2008, while it was a massive hit to mortgages and housing and all the rest of it. And in 2000 it was really just the leverage in the equity market, while the consumer stayed pretty well throughout. This time around the consumer is really under pressure, and we haven’t seen that for a long time. I think that’s going to be very difficult because it’s the balance sheet, which is a solvency issue rather than a liquidity issue, that’s going to reverberate for months and months after this.”

When Hirst mentions “the balance sheet”, he’s referring to the hugely compromised financial position corporations virtually across the board leveraged themselves into over the years leading up to 2020. As I’ve been stressing of late, the Fed relieving the portfolios of private equity firms, hedge funds, etc., of the burden of the corporate debt they aggressively, and egregiously, funded the past few years doesn’t relieve the indebted companies themselves of the burden. Now, factor in the hugely compromised financial state of said indebted companies’ customers and you get a feel for why — aside from the data itself — we expect to remain notably hedged as things play out over the coming months.