Tag Archives: 2nd Quarter

Mann Overboard

ECONOMY & FED FUNDS UPDATE

UPDATE AUGUST 4, 2025 – After the Job Report, the market adjusted the Fed Funds Rate to 4.0%-4.2%. This is getting the Fed set up to lower the rate 25bp in September. But, that is over 7 weeks away. The market can change its mind in the interim.

JULY 30, 2025 – You can go back to my July 1st post that says the following:
“1st Quarter GDP was adjusted to -0.5%. 2nd Quarter GDP should come in around 3% (2.5%-4.0% seems to be the consensus). The average for the first half of the year should be around 1.3%.”
2nd Quarter GDP came in at exactly 3.0%. I’ll take that, albeit just a lucky guess on my part. The consensus ended up being +2.3%.
The Tariff Mongers now have to start screaming about the rest of the year being doomsday. A stopped clock is right twice a day. Which is two more times than the Tariff Mongers will be:)
As noted, in my Fed Funds Rate posts, the Fed did as the market told them to do – no change in the rate. The Fed following the market 100% of the time continues.
It will be interesting to see if Powell’s successor lowers rates when the market is saying not to. That would be unprecedented and I think it will cause major market turmoil. We will revisit this when we get to that bridge.
My ad nauseum reminder to you is what actually predicted the above two items? The market. Not The Mann. I simply interpret what the market is saying. Six months in advance the stock market said the economy would have a hiccup in the 1st Quarter followed by strength in the 2nd Quarter. It is saying the same for the 3rd and 4th Quarters. So, any weakness in the 3rd Quarter (early estimates are above +2%) will let the Tariff Mongers say they are right. The 4th Quarter will show they were never right.
Remember, ignore all the pundits. Simply watch what the market is forecasting 6 months in advance. It is that easy. And it is free information:)
Shalom,
The Mann

Mann Overboard

ECONOMY UPDATE

JULY 29, 2024 – A quick note that the 2-year vs. 10-year Treasury spread is down to a -16bp. Probably the lowest it has been in a few years. If you have read my prior posts, I mentioned that a coincident indicator will be when this spread hits +100bp — at that point we will be in the middle of a recession. The good part is first it has to get back to par and then it has a long way to get to +100bp. So, we have ample time to know a recession is the light we see at the end of the tunnel. Just another item that is starting to increase the odds of a recession occurring in 2025. Probably the best indicator we will have is when we see the headline – ‘Economists do not see a recession occurring in 2025.’ 🙂

JULY 26, 2024 – Just to be transparent, I cashed in most of my holdings today. When the Dow is up 700 points it is a good day to sell:) We continue to see the Dow perform way better than the NASDAQ. My expectation of one more new high move by the Dow not being confirmed by the NASDAQ looks better and better.

JULY 25, 2024 – 2nd Quarter GDP came out above expectations at +2.8%. We have now completed 2 full years of strong economic growth. Something that 99% of the economists and pundits said would not occur.
I do some of my best thinking in my dreams. I have long thought of them as an alternate reality and am amazed at some of the things they come up with. As I dreamed about the economy, an analogy came to mind. A traffic stoplight.
For the past 2 years, the economy has been on solid Green. Economists and pundits kept calling for Yellow or full Red. We never had a chance of such and never came close.
However, for the first time in over 2 years, I am switching my signal from solid Green to that hard to see split second when Green starts to turn to Yellow. As I have mentioned many times, the stock market (Dow 30 for my analysis) is forecasting the economy 6 months into the future. Right now, that is the end of February 2025. Basically, next Spring.
The NASDAQ 100 has a good chance of having topped on July 10th. Thus, it would be in the first stages of a Bear Market. My analysis is calling for the Dow to make one more move to new highs peaking as low as 42,000. 43,000 still remains possible. The NASDAQ 100 would also rally. But, not to new highs. If the Dow does put in a final top over the next month, then it would be saying the economy will peak by the 1st Quarter of 2025 and start a downturn after that. I forget how long ago it was that I mentioned a long lead time indicator was suggesting a recession in 2025. Also, the first year of a Presidential cycle often sees a recession.
In summary, it looks like the economy’s Green light is just starting to change to Yellow. Using another analogy, the stock market appears to be the first car on a rollercoaster that has passed the top and started downward.
I will say that my 50+ years of experience says that stock market tops are tough to call as they stretch out over a period of time. Stock market bottoms are usually easy to see as they take a ‘V-formation.’ Interestingly, commodities do just the opposite.
Lastly, ALL sentiment indicators say almost all stock markets (NASDAQ, S&P 500, Dow, Russell, etc) are around a top.
We shall see how the next month or so plays out. There is a small chance the Dow has already topped, too. I will be watching closely.
Shalom,
The Mann