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

Monetary Policy & Economic Outlook - Ironside's macroeconomics director of research has been advocating for 100 basis points (1%) of rate cuts this year, anticipating an economic downturn [1] - The market views a 0.25% rate cut as a bonus, while Ironside believes more significant action is needed to address the real economy [2] - The Fed's tightening policy, primarily through rate hikes, has created tight financial conditions, especially for small businesses with floating rate loans [3] Regional Banks & Small Businesses - The spread between the return on equity of regional banks and large banks is near historic wides, approximately 4% [3] - Small banks are struggling to earn their cost of capital, hindering credit creation and lending activities [4] - The Fed's tightening policy has disproportionately impacted the small business sector, reflected in the underperformance of the Russell 2000 [4] Impact on Specific Sectors - A steeper yield curve, facilitated by rate cuts, is crucial for reviving the housing market and lowering financing rates for floating rate borrowers [5] - Labor market data may be overestimating monthly job growth by nearly 80,000 jobs per month, potentially indicating zero employment growth or even a recession in the labor market [6] - While financial conditions remain relatively loose for those financing out the curve, Main Street businesses are facing tough conditions [7]