Tag Archives: Inflation

INFLATION AND ECONOMY UPDATES

FEBRUARY 12, 2024 – The January report came in at 3.1%, just below my forecast of 3.2%-3.3%. and above the consensus estimate of 2.9%.
The 3-month annualized inflation rate is 1.0%. The 6-month annualized inflation rate is 1.8%. These figures are lower than the annualized rate (3.1%) and thus indicate the annual CPI should drift lower.
The data is predicting a reading between 2.6% and 2.7% next month. Like last month, I think this will be way off. Inflation is historically high in January and February. I am going to forecast 3.0%-3.1% for next month’s figure.
ECONOMY – We have had 6 straight quarters of above 2% GDP growth since the recession in the first half of 2022 ended. The last two quarters have been above 3% (!) and some forecasts expect another 3%+ figure for the First Quarter of 2024. With annual population growth around 0.7%, any GDP growth above that amount is exceptional. The chance of a recession occurring this year remains slim to nil. It certainly won’t occur in the first half of this year.
STOCKS – The Dow 30 continues its march towards 40,000. I never did see anyone else predict 40,000 this year. I suspect there are a few others like me out there somewhere. As they saay, never count your chickens before they hatch. 38k+ is not 40k. But, the stock market is saying the economy this Summer should be extremely strong.
The recession mongers couldn’t have been more wrong for the past 20 months. They will continue to be wrong into the foreseeable future.
Shalom,
The Mann

VARIOUS FORECASTS FOR 2024

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

INFLATION UPDATE

JANUARY 12, 2024 – The December report came in at 3.4%, below my forecast of 3.6%. and above the consensus estimate of 3.2%. Annual inflation of 3.4% was well below the double-digits many people were predicting at the beginning of the year and about double what I had forecast it would be.
The 3-month annualized inflation rate is -1.4%. The 6-month annualized inflation rate is 1.1%. These figures are lower than the annualized rate (3.4%) and thus indicate the annual CPI should drift lower.
The data is predicting a reading between 2.4% and 2.7% next month. However, I think this will be way off. Inflation is historically high in January and February. I am going to forecast 3.2%-3.3% for next month’s figure.
Shalom,
The Mann

R.I.P. RECESSION PREDICTORS – YOU WERE DEAD WRONG!

DECEMBER 15, 2023 – First off, happy birthday to my dear wife.
Back in April and June, I mentioned that the wave theory I follow showed a strong rally ahead. It would require us breaking through the all-time highs by a wide margin. This week the Dow 30 achieved new highs and is above 37,000 for the first time ever. 40k and possibly 44k in 2024 are on the table. They have been for over 6 months.
With the information below it is time to 100% emphatically declare anyone that has forecast a recession for the past 18 months and into 2024 dead wrong. Their analysis is totally in error. Just fess up and admit with hat in hand you have no clue what you were talking about. You will feel better:) On to where the data stands and what it is telling us.
BANKS – To date, we have had two bank closures that I am aware of. One was strange as it was not FDIC-insured. We will be ending the year much closer to my forecast of 0-10 closures than the 176-200 closures forecast by many people. I think we will be able to say the same next December.
As for CRE loan defaults, I have dealt with about 5 bad loans. There has been no consistency as to why the loans went south. I am seeing nothing that indicates a lot of foreclosures nor anything specific to a property type.
Amazingly, the Regional Bank Index (KRE) is up 58% from its yearly low and is back above where it was before the SVB/SBNY closings. Remember, buy when there is blood in the streets. It worked again.
To reiterate, the market is saying that it does not believe there will be a CRE loan debacle for banks. Either not many CRE loans will default and/or banks are well prepared and capitalized to handle the defaults.
HOUSING – Home prices have been up all year and the rate of appreciation is increasing. It isn’t much. That is a good sign as it can be sustained into 2024.
The Homebuilders Stock Index was up over 5% one day this week and is now up an incredible 62% (!)from last year’s lows. On top of that, this is an all-time high.
Those who forecast a crash in the housing market continue to be way off the mark. As I said all along, 7% interest rates are nothing to worry about.
INTEREST RATES – Bonds bottomed on October 23rd. A strong rally has dropped rates by about 100bp already. A minor correction should start soon. Then after the new year, we will continue the decline in interest rates. The target is about 25-125bp lower than we are today.
INFLATION – The December report came in at 3.1%, well below my forecast of 3.6%. The 3-month annualized inflation rate is 0.0%. The 6-month annualized inflation rate is 1.9%. These figures are lower than the annualized rate (3.1%) and thus indicate the annual CPI should drift lower. However, continue reading.
Based on the data, my prediction for next month’s figure is 3.5%-3.6%. The January report should show annual CPI for 2023 to be around 3.5%. Then from the February report on into the Summer, the CPI should crumble towards 2%.
SUMMARY – With the Dow 30, bank, and housing stocks at their highs, the markets are saying all should be well through the first half of 2024. The economy is supposed to be looking good in an Election Year. That looks to be the case again.
I will reprint this statement from a post a few months ago: I put this hidden little sentence out there to refer back to in 12-18 months – The chance of a recession occurring looks to be 4th Quarter 2024 into 2025. The first year of the president cycle often sees an economic downturn. I suspect that a year from now the broken-clock recession mongers will have given up and admitted the economy is strong, et al. Just in time to be wrong again:)
Happy Hannukah, Merry Christmas, and Happy New Year!
Shalom,
The Mann

INFLATION UPDATE & WHAT SHOULD HAPPEN INTO THE SPRING

NOVEMBER 25, 2023 – The November report came in at 3.2%, well below my forecast of 3.6%. The 3-month annualized inflation rate is 2.6%. The 6-month annualized inflation rate is 2.8%. These figures are lower than the annualized rate (3.6%) and thus indicate the annual CPI could drift lower. However, continue reading.
Based on the data, my prediction for next month’s figure is 3.6%. The December and January reports should show annual CPI for 2023 to be just below 4%. Then from the February report on into the Summer, the CPI should be very steady at about 3% (say 2.8%-3.2%).
Shalom and Prayers to my Brothers and Sisters in Israel.
The Mann

INFLATION UPDATE

OCTOBER 13, 2023 – The October report came in at 3.7%, just below my forecast of 3.8%. The 3-month annualized inflation rate is 3.6%. The 6-month annualized inflation rate is 4.0%. These figures bracket the annualized rate (3.7%) and thus indicate the annual CPI should not change much.
Based on the data, my prediction for next month’s figure is 3.6%. I think this might be a tad low. But, it would surprise the market to see it tick down.
The December and January reports should show annual CPI for 2023 to be above 4%. That should not make the Fed happy. At least one more Fed Fund Rates hike seems certain.
Shalom and Prayers to my Brothers and Sisters in Israel.
The Mann

(MIS)LEADING ECONOMIC INDICATOR & MORE

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

INFLATION UPDATE & PLANTS ARE HAPPY

SEPTEMBER 13, 2023 – The September report came in at 3.7%, just below my forecast of 3.5%-3.6%. The 3-month annualized inflation rate is 3.9%. The 6-month annualized inflation rate is 4.1%. These figures are slightly above the annualized rate (3.7%) and thus indicate the annual CPI should not change much.
Based on the data, my prediction for next month’s figure is 3.8%. Due to oil prices steadily increasing, I do not think 3.9% can be ruled out.
I think the 3.8%-3.9% range will remain the same for the November report, also. Then watch out as the next two reports should show annual CPI for 2023 to be above 4%. That should not make the Fed happy.
OIL – A quick note for all of the happy plants on Earth. We are at a record level of 105 million (!) barrels of oil being used everyday. We have surpassed the prior record that occurred in 2019 before the Pandemic. The death of fossil fuels has been greatly exaggerated. In fact, there appears to be a direct correlation between more Electric Vehicles (EVs) and more oil consumption. This is not a surprise to anyone outside the misinformation environmentalist community. More electric usage means more fossil fuel usage. Which, of course, helps the planet’s plants as they live on CO2. As production is running at only 103 million barrels per day, the shortage will continue to drive oil prices higher. Which will contribute to inflation edging higher.
For a moment, you should sit and try to comprehend how much oil 105 millions barrels is. There are 42 gallons in a barrel. That is a mindboggling amount of oil being used everyday. For decades in the past and decades in the future. How much oil is/was in the Earth?!?!? Seems like the Earth is a giant oil ball. And if we use all that oil and it turns to CO2 or such, will the Earth become much lighter than it was? How many dinosaurs did it take to create all of this oil? Thankfully, humans saw the opportunity for sustainability and found a way to recycle all of the dinosaurs. We definitely have at least 30-50+ years more of recycling ahead of us. Environmentalists, you are embarrassing failures.
Til next month’s report.
Shalom,
The Mann

INFLATION UPDATE

AUGUST 11, 2023 – The August report came in at 3.3%, just below my forecast of 3.4%-3.5%. The 3-month annualized inflation rate is 3.1%. The 6-month annualized inflation rate is 4.4%. These figures bracket the annualized rate (3.3%) and thus indicate the annual CPI should be range bound for awhile.
Based on the data, my prediction for next month’s figure is 3.5%-3.6%. I like the data and am confident the next reading will be in that range or a tick lower like this month.
Through the October report, the annual CPI figure should be about as boring as a Miami weather forecast – 88 degrees/77 degrees, 88/77, 87/77, 88/76…I expect annual CPI to trend around 3.5% (plus or minus 0.1%-0.2%) through the October reading.
As an aside, the market is telling the Federal Reserve not to raise the Fed Fund Rate at its September meeting.
Til next month’s report.
Shalom,
The Mann

THE REMAINDER OF 2023 – INFLATION

JULY 19, 2023 – Looking back at my posts, 9 months ago with inflation above 8% we had a large contingent of economists predicting inflation would soar above 10% in 2023. You couldn’t be much more wrong than they were.
By January, I came out with my 6-months out forecast that the CPI would fall below 2% by the July 12th report that just occurred. As we went thru the Spring I admitted that was too aggressive and 3% was the likely figure. And 3.0% is where we ended up.
So, what am I seeing for the remainder of the year. Straight to the point – I think the current 3.0% figure is the low we will see for this year. I expect the August report will be 3.4%-3.5%. I see virtually no chance of inflation falling below 3.0% anytime by yearend. My prediction for the January 2024 report that will show what CPI was for the entire year of 2023 is in the 4.0%-4.5% range. It is WAY early, but there is a good chance we will see CPI go below 2% in the Spring of 2024. That will make Powell happy:)
I will say if there is any surprise to the above, it will be to the downside. Several indicators are forecasting disinflation, and even deflation, and thus a chance to see inflation drop. PPI is down to almost 0% and it leads CPI. Wage inflation is slowing. But it still above 4%. The significant factors of energy and transportation are down double-digit rates (!) year-over-year. Also, China is weaker than expected and their weakness gets reflected in our prices a quarter or two out. I hear those forecasting below 2% CPI by yearend. The data just seems impossible to me to have a decline below 3% occur.
As always, we shall see.
This is the first of several posts as I forecast the remainder of the year and into 2024. Banks, the economy, and housing are to follow.
Shalom,
The Mann