The Daily Feather — Dueling Banjos

Lauded by critics as one of 1972’s best movies, the American thriller Deliverance, starring Jon Voight, Burt Reynolds, and Ned Beatty, earned three Academy Award nominations and five Golden Globe Award nominations, including Best Original Song for “Dueling Banjos.” The ‘country versus city’ music scene near the beginning of the picture features Billy Redden playing banjo opposite Ronny Cox on guitar. At a local gas station, Cox (who played Drew), with his guitar, engages Redden, the young banjo-playing boy (Lonnie) in a musical duel. Such is the delight to the ear, the locals break into dance at the sound of it. The thing is, Redden could not play the banjo and the director worried his hand movements looked unconvincing. A local musician, Mike Addis, was brought in to depict the movement of the boy’s left hand. Like a musical stuntman, Addis hid behind Redden, with his left arm in Redden’s shirt sleeve. Careful camera angles kept Addis out of frame and completed the illusion.

‘Smoke and mirrors’ is one way to describe the U.S. stock market’s performance in 2023. In the context of a key fundamental gauge, the Institute for Supply Management’s (ISM) manufacturing New Orders-Inventories spread, there’s been no sleight of hand. As the spread emerged from a 13-month inversion in June, the S&P 500 index flipped into the green. This stands to reason given the rolling three-year correlation between the spread and stocks’ year-over-year (YoY) performance clocked a record high .89 from 2021 to 2023. Smooth the picture to a quarterly basis with the Dallas Fed’s version of the ISM spread, though, and you’re back to a dueling banjo analogy.

The Dallas Fed gauge was instrumental in gauging the 2007-09 Great Recession, the 2015-16 Industrial Recession and 2020’s flash recession. Unlike its ISM counterpart, Texas’ New Orders-Inventories spread has been inverted for a record seven consecutive quarters through 2023’s fourth quarter (orange line).