We have a recession in the labor market, says Ironsides' Barry Knapp

Core Viewpoint - The call for a 100 basis points cut in interest rates is seen as necessary to address underlying issues in the economy, particularly affecting small businesses and the housing market [1][2]. Economic Conditions - Current market conditions are perceived as favorable, with financial conditions being loose and credit spreads tight, leading to a misconception that the economy is performing well [2]. - The disparity in return on equity between regional banks and large banks is at a historic high of approximately 4%, indicating that small banks are struggling to earn their cost of capital [3][4]. Impact on Small Businesses - The tightening of monetary policy has adversely affected small businesses, as evidenced by the underperformance of the Russell 2000 index over the past couple of years [4]. - There is a significant need for a steep yield curve to support the housing market and provide lower financing rates for floating rate borrowers, which could stimulate economic activity [5]. Labor Market Analysis - There are indications of a recession in the labor market, with potential overestimations of job growth suggesting that actual employment growth may be zero [6][7]. - Small businesses are facing considerable challenges, and the Federal Reserve's policies need to address the tough conditions for Main Street, despite favorable conditions for the stock market [7].