UPDATE JULY 29, 2025 – It’s the day before the Fed announcement. As noted below, interest rates have not changed in the past 2 weeks. The market still has the Fed Funds Rate priced at 4.3%-4.4%. Right in the middle of the current 4.25%-4.5% range. The rate should remain unchanged and Trump should still be mad at Powell. The market is pricing in a reduction in September. I will see where we stand in two months.
JULY 15, 2025 – The June report came in at 2.7%, a tick above the range that the data predicted. The 3-month annualized inflation rate is 3.5%. The 6-month annualized inflation rate is 4.4%. These figures are above the annualized rate (2.7%) and thus indicate the annual CPI should increase over the next few months. The data is predicting a reading of 2.8%-2.9% next month. I think that will be spot on. Please note, the CPI increases this Summer will be because inflation was around 0.1% per month last Summer. The increases will not be due to tariffs. On July 30th at 2pm Eastern, the Fed will announce its decision on the Fed Funds Rate. The market has the Fed Funds Rate priced at 4.3%-4.4%. It is currently 4.25%-4.5%. The market is telling Mr. Powell not to cut the rate. Things can change in two weeks. But, that is doubtful as rates have been steady for awhile. A sure bet is President Trump will tweet soon thereafter condemning Powell again:) Shalom, The Mann
JULY 2, 2025 – The next FOMC meeting is July 29th and 30th. I believe the rate decision is announced on the second day – i.e. July 30th. As I have informed you for years, the market dictates the Fed Funds Rate. The Fed simply follows with an announcement moving it towards where the market says it should be. Currently, the Fed Funds Rate ranges from 4.25% to 4.5% with the effective rate being 4.33%. The market has the Fed Funds Rate set at 4.1%-4.3%. The market says there is a 25% chance of a rate reduction. Based on the above, there is no need for the Fed to reduce the rate. Maybe a 1/8% reduction can be justified. But, I believe it has only been moving the FFR in 1/4% increments. Due to the extreme pressure from the outside, and Trump supporters on the FOMC, I would not be surprised to see a 1/4% reduction. A range of 4.0%-4.25% would fit the current market range well. The market’s 25% expectation is probably right on target. This likely comes down to Powell saying hey the Fed is independent and I will not bow to this pressure. Or him saying what the heck, let’s appease the world and lower the FFR 25 basis points. I have no opinion to offer. I let the market make the decision for Powell. With 4 weeks to go, the market could easily bring the rate range down another 10 or 20bp and make the 1/4% reduction a slam dunk. Or raise rates and make no change the slam dunk. Let the market tell us. Ignore the pundits who are just guessing. Shalom, The Mann
JUNE 12, 2025 – The May report came in at 2.4%, at the lower end of the range that the data predicted. The most ridiculous forecast was from Goldman Sachs that expected a 2.9% reading. They could pay me half of what they pay their CPI staff and save lots of money and be more accurate with their forecasts. LOL The 3-month annualized inflation rate is 3.0%. The 6-month annualized inflation rate is 3.8%. These figures are above the annualized rate (2.4%) and thus indicate the annual CPI should increase slightly. The data is predicting a reading of 2.6% next month. I think that will be in the ballpark. There is a chance it could go as high as 2.8%. The one thing today’s reading showed us is tariffs do not cause inflation. The market has the Fed Funds Rate priced at 4.3-4.4%. It was recently cut to 4.25%-4.5%. The Fed doesn’t have any catching up to do. There will not be a reduction in this rate at next week’s Fed meeting. Also, President Trump will tweet soon thereafter condemning Powell again:) Shalom, The Mann
MAY 14, 2025 – The April report came in at 2.3%, right in the middle of the range that the data predicted. The 3-month annualized inflation rate is 3.9%. The 6-month annualized inflation rate is 3.3%. These figures are above the annualized rate (2.3%) and thus indicate the annual CPI should increase slightly. The data is predicting a reading of 2.4%-2.5% next month. I think that will be in the ballpark. There is a chance it may stay at 2.3%. The market has the Fed Funds Rate priced at 4.1-4.3%. It was recently cut to 4.25%-4.5%. The Fed doesn’t have any catching up to do. Shalom, The Mann
MARCH 12, 2025 – The February report came in at 2.8%, below my estimate at 3.0%. The 3-month annualized inflation rate is 4.6%. The 6-month annualized inflation rate is 2.7%. These figures are at or above the annualized rate (2.8%) and thus indicate the annual CPI should remain steady. The data is predicting a reading of 2.4%-2.6% next month. Inflation is at its highest at the beginning of the year. So, I am thinking 2.6%-2.8%. The market has the Fed Funds Rate priced at 4.1%-4.2%, down from 4.3%-4.4% the past few months. It was recently cut to 4.75%. The Fed doesn’t have much catching up to do. But, it seems, the market has given the Fed the go ahead to cut it 25bp next week. Shalom, The Mann PS – I said I would not post stock market forecasts. However, with the current correction being the talk of the town, I might post something soon. Especially since the market forecasts the economy’s future and everyone has the ‘R’ word on their mind.
JANUARY 17, 2025 – The December report came in at 2.9%, exactly where the data indicated and above my estimate at 2.6%-2.7%. The 3-month annualized inflation rate is 0.4%. The 6-month annualized inflation rate is 0.9%. These figures are well below the annualized rate (2.9%) and thus indicate the annual CPI should decline slightly. In fact, the data is predicting a reading of 2.4%-2.5% next month. Inflation is at its highest at the beginning of the year. So, I think it will be 2.7%-2.9%. As a side note, the monthly CPI has been at 0.20% or lower for 8 straight months. There are many areas of deflation out there. The market has the Fed Funds Rate priced at 4.3%-4.4%. It was recently cut to 4.75%. The Fed doesn’t have much catching up to do. Til next month. Shalom, The Mann
NOVEMBER 15, 2024 – The October report came in at 2.6%, in line with my estimate at 2.6%. ((NOTE: Per the way CPI was calculated in 1980, inflation is actually 10.3%)). The 3-month annualized inflation rate is 1.1%. The 6-month annualized inflation rate is 1.0%. These figures are well below the annualized rate (2.6%) and thus indicate the annual CPI should decline slightly. However, the data is predicting a reading of 2.9% next month. I think it will be between 2.8% and 3.0% over the next two months. Then in the 1st Quarter of 2025 we may see a significant decline. As a side note, the monthly CPI has been at 0.20% or lower for 6 straight months. There are many areas of deflation out there. The market has the Fed Funds Rate priced at 4.4%. It was recently cut to 4.75%. The Fed doesn’t have much some catching up to do. And Powell confirmed such this week when he said they are in no rush to cut rates. Til next month. Shalom, The Mann
JANUARY 13, 2024 – No one took me up on my offer to ask me to forecast something…anything. However, I have found a web site that holds forecasting contests on an ongoing basis. The main contest for this year has 36 questions. I won’t bore you with all of them. But, I will list my initial forecasts for a few questions you might find pertinent. I will likely change my %’s weekly or monthly. Here goes….The percentage after the question is my forecast. Will the S&P 500 Index go up over 2024? 90% Will annual US Core Inflation be above 3% in December 2024? 32% Will the Fed Funds Rate on December 31, 2024 be below 4%? 4% Will the US unemployment rate be above 4% in November 2024? 54%…this one is a tossup. A key word is ABOVE 4%. If it included 4%, I would be much higher on my %. There are several questions Re Trump and the Election and other political issues. I will just stick with economic questions here. We shall see how I do. It is nice to finally be measured on how accurate my forecasts will be. I will let you know the results when the contest is over – I believe that will be early next year. Shalom, The Mann
SEPTEMBER 25, 2023 – Most importantly, only 3 months to Christmas:) And I am sure you have seen all of the Christmas stuff in the stores already. Next year it will be out in July. Ridiculous. Two more recession indicators are wrong this time around. The (Mis)Leading Economic Indicator has declined for 17 straight months. I assume its purpose is to forecast a recession to occur within a few months after several negative readings. It has been wrong for over a year. Maybe this is where the broken record (look it up youngsters) recession mongers get their reasoning for thinking a recession is about to occur. Just fyi, the only other times it had this long of a streak was 1973-1975 and 2007-2009. The two worst recessions since The Great Depression. The third indicator that has been wrong is M-2 Money Supply. It is more negative than it was in The Great Depression! Yet, no recession. In fact, it is looking like 3rd Quarter GDP may show an acceleration in growth to over 2%. However, I will say that is not a lock as I have seen forecasts from 0.5% to over 5.5% (Fed Atlanta). This quarter will be very unpredictable. But, it should definitely be positive and thus we can officially close the case on there being no recession in 2023. Let me bring something up for the first time. I think I will be harping on this for the next few years. I believe the reason many prominent indicators are wrong this go around is due to what has happened since the pandemic. Almost all indicators soared to extreme high readings never seen before. And many are falling to record lows. What I am seeing is if you draw a straight line from say 2010 or 2015 through 2023, these indicators are exactly where they should be. i.e. The lows are evening out the highs and overall we are reverting to the mean. I saw this recently in national retail sales. Adjusted for inflation, retail sales have been flat for the past 18-24 months. However, they increased significantly after the pandemic. If you apply the 2010-2019 compound annual growth rate to 2019 sales, you will be exactly where we are at in 2023. I will discuss more examples and provide more specific information as I encounter graphs showing this occurrence. FED FUND RATES – The Fed did what it was told to do and held rates the same in September. Also, they went ahead and said what the market has forecast for a long time and that is another rate hike lies ahead. The 100% trend of the Fed following the market continues. HOUSING – As I noted in a prior blog, the market is signaling weakness in the housing market after forecasting the strength we have seen all year. The homebuilder stock index has declined 10% from its July top. We need to continue to watch this play out. It is telling us we should see weakness next Spring. What will slow the accelerating strength in the housing market? Maybe 8%+ rates on 30-year mortgages? About the only thing I can think of. But, it doesn’t matter. The market just says it will happen. The price trend in the 4th Quarter will tell us if the Spring slowdown is just that or the start of a more significant downturn like we had in the second half of 2022. REGIONAL BANKS – These stocks have declined a significant 15% from their July highs. Basically, they declined some more after the SVP failure, then soared over 40%, and now down 15% – in the end, they have gone nowhere since the Monday after the SVP failure. What is the market telling us? It definitely says not to expect the 250-400+ bank failures that so many people are predicting. Those people expected such to occur by now, in fact. As far as I know, the number remains at one small bank in Kansas. In regard to CRE loans, banks have been refinancing these all year long at higher interest rates. I haven’t heard of any significant issues. The problems have occurred in the CMBS market – gotta hand it to the supposed smartest lenders and investors in real estate:) INTEREST RATES – Treasury Bonds have broken below last October’s low. This means interest rates are at new highs for this downturn. As I write this, I see a headline saying they are at the highest level since 2007. However, we are now on the clock to look for a final bottom in this multi-year downturn in prices (increases in yields). That doesn’t mean it will occur next week. I am thinking it is several months away. Maybe around the beginning of the year. Too early to give a reasonable forecast re timing and price (yield). The 4th Quarter price action will get us much closer to predicting when the bottom is in. What should follow will be a strong bond rally back to the range of the Summer 2022 and April 2023 highs (lows in yields). First things first. Let’s have the current downturn play out and get a bottom in place. Bottomline, mortgage rates will not be going down the remainder of the year. And they might head over 8% on the 30-year mortgage. Well, that was a lot to cover. I will probably post again once we get the October inflation reading. Til then, Happy Fall. Shalom, The Mann
AUGUST 31, 2023 – As we end August, a quick look at what the market is telling the Fed to do at its September 19-20th meeting. 3-month and 6-month Treasury Bills are yielding 5.56%-5.58%. The Fed Funds Rate is at 5.25%-5.5%. That is saying not to raise the rate. However, it wouldn’t take much for those rates to get to a point where the market says to raise rates by another 25bp. For awhile the market has said no change in September and a 25bp increase in December. That seems to still be the case. We will see if anything changes over the next few weeks. Have a great Labor Day weekend. And good riddance to July and August! Shalom, The Mann
