A warning from Wile E. Coyote

Market Ethos.
23 January 2023.

One of the most iconic Looney Tunes’ misadventures was the relationship between the Road Runner and Wile E. Coyote. The way the Road Runner always gets the better of the hapless coyote with his classic “Beep Beep” just as Wile E. happens to run off an unforeseen cliff into a deep gorge. Of course, with the delayed suspension midair before gravity suddenly decides to take over. Markets, like Wile E., can be so singularly focused on one thing (inflation) that they can for better or worse be oblivious to approaching danger (recession).

Markets are forward looking; they bottom well before the negative impacts of a recession ripple through the economy. At this point, the hope has been that cooling inflation is all that’s needed for markets to catch a bid. However, with all the focus on inflation (i.e., the Road Runner), markets may be overlooking the real risk of an economic slowdown. We touched on this in our recent Market Outlook.

Related articles

Market Ethos

Valuations leave little room to stumble

June 30, 2025. Market Ethos. Will the months of uncertainty which is starting to show up in some pockets of economic data also show up…

2 minute read

Market Ethos

The hedge debate

June 23, 2025. Market Ethos. After the U.S. dollar (USD) lost about 5% of its value relative to the Canadian dollar (CAD) so far this…

2 minute read

Market Ethos

Mind the cap

June 16, 2025. Market Ethos. We have largely avoided discussing small or mid caps, but thought this would be a good time to dive back…

2 minute read