David Rosenberg: Why the so-called soft landing is just the calm before the storm

financialpost.com:

As we exit 2023, all I can think of is how it was a year replete with dichotomies and divergences. An unprecedented gap emerged between real gross domestic product growth, which signalled a soft landing had been successfully engineered by the United States Federal Reserve, and real gross domestic income growth, which provided support to the minority view that a recession had arrived.

The stock market was on opposing tracks, too, with the cap-weighted S&P 500 posting impressive gains for much of the year at a time when the average and median stock represented in the S&P 500 equal-weighted index lagged way behind — the Magnificent Seven is up 100 per cent for the year to date, smashing the rest of the index by more than a factor of seven times.

Even in the bond market there are mixed signals. Until recently, U.S. Treasury note and bond yields had soared yet again, not because of investor-based inflation expectations, which receded this past year, but because of a surge in real interest rates, which reflected the reset to the extended Fed tightening cycle and the promise of “higher for longer.”

All this from a central bank that at the end of 2021 had published a median prediction for the policy rate of 1.6 per cent at the end of 2023 instead of the 5.5 per cent we ended up at (with Jay Powell playing the role of Lucy and the rest of us taking on the role of good ol’ Charlie Brown).

This past year was also filled with economist after economist dropping their recession call and embracing the soft-landing or even no-landing economic narrative.

For 2024, I sense that all this confusion will be resolved. We will realize that we were, indeed, in a soft landing, but then also recognize what soft landings really are: the bridge, or