JULY 1, 2025 – The first half of the year is over. And what a 6 months it was!
Of course, most analysts are predicting a recession this year due to the tariffs. Do tariffs have anything to do with a recession? You know my answer – NO! What is the sole indicator to watch for a future recession – the stock market. Let’s look at some numbers to see what the future holds.
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%.
As I mentioned in my last economy post, 1st Quarter GDP was artificially low by 2% due to extreme import trade. This will be reversed in the 2nd Quarter GDP. So, this cancels out and that is why the average of the first two quarters is the best indicator of GDP for the year-to-date.
For a recession to occur this year, the 3rd and 4th Quarters will need to have negative GDP readings. Based on the stock market (the Dow 30 is within about 1% of a new high, while most other indices have new all-time highs), the economy should be very strong as the year end. The March/April downturn does suggest a negative surprise will occur in September/October. But, the odds of two consecutive negative GDP quarterly readings is very low. Thus, an ‘official’ recession is unlikely at this point.
Shalom,
The Mann
Tag Archives: recession
ECONOMY UPDATE
MAY 2, 2025 – It is really difficult to write anything about the economy after the passing of KC Conway, CRE, MAI this week. KC was a great guy. Brilliant mind. The last 20+ years of his career he turned his focus to being an economist. Everyone liked KC. A rare individual. He will be missed by our industry and obviously his family and friends. RIP my friend.
Very briefly, 1st Quarter GDP came in at a -0.3%. As I mentioned in my April 5th post, and last August, the stock market was forecasting a huge negative surprise for this quarter. 99%+ of us had no clue what would cause it. That doesn’t matter. The stock market just says it will happen.
My last email to KC went unanswered. I now know why. I was wondering how much of the GDP reading was attributed to the extreme import trade as companies rushed to beat the tariffs. KC never replied. I have since heard it was probably around 2.0%. So, the actual GDP would have been around +1.7%.
As the import trade will be the reverse in the 2nd Quarter and companies will have stopped ordering from overseas, this will ‘falsely’ inflate the GDP by a similar amount. Early indications are around +2%. This might fall as the economy will definitely be weakening into the Summer. But, the odds of two consecutive negative GDP quarterly readings is very low. Thus, an ‘official’ recession is unlikely at this point.
That said, the market has forecast significant weakness at the beginning of the Fall. Things should be much clearer by then.
As an aside, the DOW Industrials never did trigger a Bear Market. They came close like last August.
That’s enough. Remember, to enjoy EVERY day of your life. We do not know when it will be our last.
Shalom,
The Mann
Very briefly, 1st Quarter GDP came in at a -0.3%. As I mentioned in my April 5th post, and last August, the stock market was forecasting a huge negative surprise for this quarter. 99%+ of us had no clue what would cause it. That doesn’t matter. The stock market just says it will happen.
My last email to KC went unanswered. I now know why. I was wondering how much of the GDP reading was attributed to the extreme import trade as companies rushed to beat the tariffs. KC never replied. I have since heard it was probably around 2.0%. So, the actual GDP would have been around +1.7%.
As the import trade will be the reverse in the 2nd Quarter and companies will have stopped ordering from overseas, this will ‘falsely’ inflate the GDP by a similar amount. Early indications are around +2%. This might fall as the economy will definitely be weakening into the Summer. But, the odds of two consecutive negative GDP quarterly readings is very low. Thus, an ‘official’ recession is unlikely at this point.
That said, the market has forecast significant weakness at the beginning of the Fall. Things should be much clearer by then.
As an aside, the DOW Industrials never did trigger a Bear Market. They came close like last August.
That’s enough. Remember, to enjoy EVERY day of your life. We do not know when it will be our last.
Shalom,
The Mann
INFLATION UPDATE
APRIL 11, 2025 – The March report came in at 2.4%, at the low end of what the data predicted. The 3-month annualized inflation rate is 5.3%. The 6-month annualized inflation rate is 2.9%. These figures are above the annualized rate (2.4%) and thus indicate the annual CPI should increase. The data is predicting a reading of 2.2%-2.4% next month. I think that will be in the ballpark.
The market has the Fed Funds Rate priced at 4.2-4.3%. It was recently cut to 4.25%-4.5%. The Fed doesn’t have any catching up to do. But, it seems, the market is now predicting rates could be cut numerous times until they are down to 3.5%. However, this is only given a 33% chance. So, not significant, yet.
Shalom,
The Mann
The market has the Fed Funds Rate priced at 4.2-4.3%. It was recently cut to 4.25%-4.5%. The Fed doesn’t have any catching up to do. But, it seems, the market is now predicting rates could be cut numerous times until they are down to 3.5%. However, this is only given a 33% chance. So, not significant, yet.
Shalom,
The Mann
STOCK MARKET & ECONOMY UPDATE
APRIL 4, 2025 – OK, it is tough for me to stay away when a nice bear market is going on:) It is almost exactly 5 years to the last time we saw a falling knife market. Back then, I believe I was the first and only person to predict well in advance that we would see the first ever 2,000- and 3,000-point down days in the Dow 30. Today, we had another 2,000-point down day. I have constantly explained that the market predicts things 6 months into the future. So, let’s see what it has been saying about the economy.
Last August, the market told us that in the 1st Quarter of 2025 we would see a huge hiccup. What it would be, I had no clue. We now know it was tariffs. The Dow did not enter a bear market last August and rebounded to peak on December 4th at just over 45,000. After this week, most people wouldn’t believe it but the Dow needs to go down another 3,000 points to enter a bear market.
That said, the decline since December is telling us that the economy will be pretty weak in the 3rd Quarter of this year. That probably seems obvious to everyone by now. But, did anyone see this coming in December? Very few did.
In my July 30, 2023 post I stated the following:
“I will 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.” This is an indicator that forecasts a few years out. It appears to be on track for a good call.
HOUSING – As with banks (see below), I spent the last 3 years telling you to be bullish while all of the economists were bearish. The S&P Homebuilders ETF (XHB) went from a low of 51.23 in June 2022 (the end of the George Mann-called Recession) to a high of 126.09 in November 2024. A 146% bull run that those wonderful economists kept people from participating in. The index has declined 26% since the all-time high. With a record number of spec new homes on the market, the market looks to be right about forecasting a weakening house market. Oh, and don’t forget to let the Housing Shortage Hoaxers know there are a ton of vacant new homes out there. It is so funny when I see them state we are short 4 or 5 or 6 million housing units. Keep drinking that kool-aid:)
BANKS – In the 2 years since the SVP implosion have you just been stunned by the hundreds and hundreds of bank failures? Oh wait, we can still count on one hand the number of failures. Maybe those broken-record bank naysayers are once again shouting out ludicrous bank failure numbers as a weakening economy upon us. I can see a few more. But, I just don’t see the Fed letting it get out of hand.
As for the S&P Regional Banking ETF (KRE), let’s see what the economists cost you. The index bottomed at 34.52 on May 1, 2023. It peaked at 70.25 on the same day as the Homebuilders ETF in November 2024. That was a nice 103.5% advance those economists told you to stay away from. The index has declined 30%. Both the Homebuilders and Regional Banking ETF are solidly in bear markets.
FED FUNDS RATE – The market has it set at about 4.2%. This leaves no room for a reduction from the current 4.25%-4.5% range. That is interesting as the market is giving a 50% chance of 5 rate reductions this year! Also, the 10-year Treasury Bond Yield dropped below 4%. It will probably take another few weeks for the bond and stock markets to settle down from the recent chaos. A lot to figure out as to how the worldwide tariff war will play out.
In conclusion, 2022-2024 was easy to forecast re everything being bullish. 95%+ of economists calling for a recession during that timeframe made it extra easy to be bullish. During a 2-week period from Thanksgiving to the first week in December, the market changed its forecast to a rough 2025. It is easy to look at things now and say yep this is going to be a rough year. The problem is the market forecast this 5 months ago. Just now as the public throws in the towel they are already down 15%-30%+ in their portfolios. The Smart Money thanks them for buying strongly after the Election – someone had to buy everything the Smart Money was selling:)
If you wonder if this bear market (again not for the Dow, yet, which is the sole indicator of such) is over, the public bought a record $4.7 Billion of stocks on Thursday. Who knows how much more they bought today with the market down 2200 points. The bottom will occur when the public is selling record amounts of stock. Capitulation is needed. It has always happened. It will again.
Shalom,
The Mann
Last August, the market told us that in the 1st Quarter of 2025 we would see a huge hiccup. What it would be, I had no clue. We now know it was tariffs. The Dow did not enter a bear market last August and rebounded to peak on December 4th at just over 45,000. After this week, most people wouldn’t believe it but the Dow needs to go down another 3,000 points to enter a bear market.
That said, the decline since December is telling us that the economy will be pretty weak in the 3rd Quarter of this year. That probably seems obvious to everyone by now. But, did anyone see this coming in December? Very few did.
In my July 30, 2023 post I stated the following:
“I will 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.” This is an indicator that forecasts a few years out. It appears to be on track for a good call.
HOUSING – As with banks (see below), I spent the last 3 years telling you to be bullish while all of the economists were bearish. The S&P Homebuilders ETF (XHB) went from a low of 51.23 in June 2022 (the end of the George Mann-called Recession) to a high of 126.09 in November 2024. A 146% bull run that those wonderful economists kept people from participating in. The index has declined 26% since the all-time high. With a record number of spec new homes on the market, the market looks to be right about forecasting a weakening house market. Oh, and don’t forget to let the Housing Shortage Hoaxers know there are a ton of vacant new homes out there. It is so funny when I see them state we are short 4 or 5 or 6 million housing units. Keep drinking that kool-aid:)
BANKS – In the 2 years since the SVP implosion have you just been stunned by the hundreds and hundreds of bank failures? Oh wait, we can still count on one hand the number of failures. Maybe those broken-record bank naysayers are once again shouting out ludicrous bank failure numbers as a weakening economy upon us. I can see a few more. But, I just don’t see the Fed letting it get out of hand.
As for the S&P Regional Banking ETF (KRE), let’s see what the economists cost you. The index bottomed at 34.52 on May 1, 2023. It peaked at 70.25 on the same day as the Homebuilders ETF in November 2024. That was a nice 103.5% advance those economists told you to stay away from. The index has declined 30%. Both the Homebuilders and Regional Banking ETF are solidly in bear markets.
FED FUNDS RATE – The market has it set at about 4.2%. This leaves no room for a reduction from the current 4.25%-4.5% range. That is interesting as the market is giving a 50% chance of 5 rate reductions this year! Also, the 10-year Treasury Bond Yield dropped below 4%. It will probably take another few weeks for the bond and stock markets to settle down from the recent chaos. A lot to figure out as to how the worldwide tariff war will play out.
In conclusion, 2022-2024 was easy to forecast re everything being bullish. 95%+ of economists calling for a recession during that timeframe made it extra easy to be bullish. During a 2-week period from Thanksgiving to the first week in December, the market changed its forecast to a rough 2025. It is easy to look at things now and say yep this is going to be a rough year. The problem is the market forecast this 5 months ago. Just now as the public throws in the towel they are already down 15%-30%+ in their portfolios. The Smart Money thanks them for buying strongly after the Election – someone had to buy everything the Smart Money was selling:)
If you wonder if this bear market (again not for the Dow, yet, which is the sole indicator of such) is over, the public bought a record $4.7 Billion of stocks on Thursday. Who knows how much more they bought today with the market down 2200 points. The bottom will occur when the public is selling record amounts of stock. Capitulation is needed. It has always happened. It will again.
Shalom,
The Mann
INFLATION UPDATE
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.
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.
INTEREST RATES, BITCOIN, AND THE ECONOMY
JANUARY 11, 2025 – Regarding interest rates, the 30-year US Treasury Bond yield should easily surpass 5% (specifically, 5.18%) this year. I said over the past few months that the number of Fed Fund Rate cuts will be minimal. The market has said such and Powell is doing as the market instructs.
ECONOMY – I see that my November 8th post said no more economy updates. It provided the simple way to predict the economy 6 months into the future. With the DOW peaking in December, the economy has ZERO chance of being in a recession during the first half of this year. GDP forecasts are calling for continued growth over 2% during the first two quarters. For a recession to occur, we will need BOTH the 3rd and 4th Quarter GDP readings to be negative. The only way I see that happening is for a worldwide shutdown to occur like happened 5 years (!!! time flies eh!!!) ago. Otherwise, virtually no chance of a recession in 2025. We will see what the DOW says come June.
BITCOIN – My July 3rd post said the next up move would take Bitcoin over $100,000. Bitcoin closed at $57k that day. It peaked at $108k. That was a nice ride for us crypto investors. On November 8th, I said Bitcoin would hit $100k-$190k in 2025. We already got the lower end taken care of. I think $130-$150k will be the low end of this next up wave.
I said the following in my August 2nd post:
GOLD & SILVER – The gold target is still $2500-$2600. Silver looks extremely good with a move to the $34-$40 range likely.
Gold peaked over $2700 (I sold my high school ring when it was at that level…ironically when my parents bought it gold was at an all-time high over $800/ounce!) and silver over $35. I am waiting for the current corrections to finish before I take long positions again.
That’s all for 2025 forecasts. Best of luck to everyone.
Shalom,
The Mann
MY LAST ECONOMY UPDATE
NOVEMBER 8, 2024 – As with my election forecast, I think this will be my final economy post. For different reasons though. I believe I have made the point clear that all you need to do to know where the economy is going is to watch the stock market. I believe that is still the Dow 30 Industrials. Albeit, I will watch over time to see if the NASDAQ 100 takes over as the better indicator. For now, I do not see that happening.
So, as I have said numerous times before, the stock market is forecasting 6 months into the future. Right now, the market is working in May 2025. With the Dow at an all-time high, we are assured that there will be no recession through the 2nd Quarter of 2025. And since it takes two consecutive negative GDP figures to get a recession, the odds of a recession next year are getting very slim.
3rd Quarter GDP came in at a super strong +2.8% (remember, anything above 0.5%-0.7% is incredible strong). 4th Quarter GDP is currently forecast to be above +2.0%.
Based on the early August downturn in the markets, we might have some kind of hiccup in the 1st Quarter of 2025. It won’t result in a negative GDP though.
So, I leave you with this last post on the economy as you now know how easy it is to forecast. The best part is you don’t need to watch a thousand indicators like ISM, M-2, PPI, CPI, Consumer Sentiment Index, yield curve blah blah blah. Economists follow all of that and, as my step-daughter says about weathermen, it must be nice to get paid to be right only 30% of the time. LOL They do all of this work and analysis only to be wrong.
For the past 2.5 years since the still not recognized Recession of early 2022, I have showed you what the stock market has said about the economy and it has been 100% correct. The vast majority of economists and pundits have been 100% wrong. I don’t try to take credit for being right the past 2.5 years. Why should I? I simply followed what the stock market said and it was the market that was right all along.
The one thing I will take credit for is I forecast that about a dozen recession predictors would fail this time around. Some of these indicators had perfect records for over 50+ years. So, I was out on a limb saying that one after another was going fail this time around. I still have yet to explain in detail how I knew that. Maybe one day. The point is not even those (still) very good indicators are worth following. The stock market does everything for you. It is that simple. As they say, KISS.
So, for FREE, you know all you need to know about future economic conditions for the remainder of your life. You do not need to waste your time reading or listening to economists and pundits or even doing your own research and analysis. Now that is a great deal for such an important forecast!
I am always here if you want to discuss anything. When someone asks me to look at something specific, I usually do it for them. As I have said, for some reason I was born to forecast the future. It is just what I love to do.
A stock market post is forthcoming.
As an aside, it has been fun to watch all of the pollsters make up excuses for being wrong. Truly pitiful to be honest. One pollster said ‘I think people….blah blah blah.’ I about jumped out of my chair yelling ‘you think’?!?!? Why in the heck didn’t you ask people why they did such and such!!!!!!! You have one job and you don’t do it? You are going to guess? It is a different era for sure. I was brought up in an era where when you said something you better have the proof to back it up. Oh well.
Thanks for the messages from millions of readers…ok dozens:)
Shalom,
The Mann
STOCK MARKET UPDATE
UPDATE AUGUST 12, 2024 – One of the reasons I have followed the Elliott Wave Theory for 44 years is it has predetermined points where you need to realize a market isn’t going where initially thought and you need to reverse course. Yesterday, the major market indices (except the Russell 2000) crossed lines that said the recent correction was actually part of the ongoing bull market and not the start of a new bear market. This suggests the economy will be strong thru the 1st Quarter of 2025 at a minimum. Right now, I am seeing +2.0%-2.9% estimated for 3rd Quarter GDP. I suspect the 4th Quarter will be equally strong. Too early to see where 1st Quarter 2025 will be. Albeit, I think the market says there will be a bit of a hiccup then.
Gold is at new all-time highs. Silver is struggling, but should go up into the $30’s per ounce. I did take positions in Copper and Natural Gas as they are at lows that over the past 20 years have signal major bottoms. Cryptos have acted well since the downturn 10 days ago. CPI came in at +2.9% today. I will post about that tomorrow. Hope everyone has had a good Summer. – The Mann
AUGUST 2, 2024 – Wow, what a week this was. As everyone should know, I love Bear Markets way more than Bull Markets. It killed me to be all out bullish for the past 2 years. But, I rode the upturn to its fullest I think and sold all my stocks a week ago on Friday July 26th when the Dow was up about 700 points. And this week as 10-Year Treasury Notes and further out went below 4%, I locked in a 4.8% annuity for 3 years. Easier to sleep this weekend and beyond. Albeit, I did leave some play money to play the downside:) Bear markets are quicker and harsher than bull markets. Easy money to be made if the bear market is truly underway. On to some numbers and forecasts. This is going to be VERY LONG as I am going to layout a lot of specific targets for numerous markets. AGAIN NONE OF THIS INVESTMENT ADVICE. Just my hobby of forecasting the future.
One thing that annoys me most about most analysts are they make forecasts and don’t provide a point (aka as a stop-loss) where they say their forecast is wrong and has to be reconsidered. That leaves their followers not knowing what to do when the person they are following has missed a call. I never care when the market crosses a stop-loss point. Yes, it means my analysis was wrong and, if I traded it, I took a loss. But, if you take trades where your expected profit/loss ratio is at least 3-4/1, then the small losses are nothing compared to the large profits.
DOW 30 INDUSTRIALS – The DOW broke below the 39,411 level today that I mentioned would indicate the peak on July 18th was the Bull Market top. The only problem was this was a closing target, not an intraday figure. The DOW closed at 39,737. Also, the wave theory I follow does not clearly show a change in trend. With all other stock indices clearly in a Bear Market, I am going to assume the DOW is, too. If it gets back to 40,061-40,353, I will probably go short with a stop-loss around 41,000. If it is in a Bear Market, it should not see 41,000 again.
NASDAQ – The Bull Market top occurred at 20,691 on July 10. As I predicted a few weeks ago, the DOW has been much stronger than the NASDAQ. There have been several days recently where the DOW was up a few hundred points and the NASDAQ was down a few hundred. First support is around 17,000-17,500. It is very early, but I am thinking the Bear Market might bottom between 10,500 and 13,500. A 35%-49% decline would be moderate for the NASDAQ. In the past, major declines have been over 80%. Right now, it will take a move to a new high to end the Bear Market case. That isn’t ideal. But, sometimes that is all you have. Right now is not an ideal entry point to short the NASDAQ 100 or S&P 500. Although, I think some more carnage lies ahead next week, a rally after that back to anywhere around 19,000 on the NASDAQ 100 would give me a great place to short. I just am not sure it will ever get back to that level. Today’s close was 18,441. A Bear Market doesn’t like to give short-sellers an easy time either:)
RUSSELL 2000 – The Bull Market top actually occurred back in November 2021 at 2,459. The Bear Market rally topped at 2,300 on July 31. Today’s close was 2,109. If I can get a move back to about 2,172 to close a gap on the chart that occurred today, I will go short with a 2,300 stop-loss. My analysis suggests the high end of the Bear Market bottom range is 1,475 with 965 being the bottom end. Two separate wave relationships point to 965. So, I give that most weight. Thus, a short trade initiated at 2,172 would have an expected profit of 697-1,207 points with a stop-loss being at 128 points. That is a 5.5-9.4/1 profit/loss ratio. Those are the kind of trades I like:)
TREASURY BONDS – The rally I have called for continues and accelerated today. The US 30-Year Treasury Bond price closed at just over 125. Around a 4.1% yield. The main target is around 131 or about a 3.5% yield. The high-end price target is about 144 or about a 3.0% yield. I guess if I had to pick a stop-loss point it would be about 120.5.
ECONOMY – I have reiterated many times that economists waste their time trying to forecast the economy when the stock market tells us what is happening 6 months into the future. The market has correctly forecast the strong economy for the past 2 years and already said it will be strong through the end of the year. However, if the market is in a Bear Market, then it is telling us that next January and February will show us an economy in trouble. As I mentioned almost a year ago, a way early indicator was pointing towards a 2025 recession. The market is now pointing that way, too. And the market doesn’t get this wrong. My expectation is that the economists and pundits that have been dead wrong for two years about a recession occurring will start to say no chance of a recession in 2025 because the Federal Reserve starts lowering interest rates in September and interest rates fall significantly as I have forecast. Also, Trueflation is now down below 1.4%. The pundits will be overwhelming you with how great things are as inflation is tamed and mortgage rates are down, blah blah blah. I do hope they will be bullish right as the recession gets underway. As a reminder, when the yield curve (10-year minus 2-year Bonds) gets to +100bp we will be in a recession. It is down to about -20bp. The lowest I have seen in a year or two. We have lots of lead time to get from -20bp to +100bp. Could that lead time be 6-9 months as the market has indicated? Coincidence? 🙂
UNEMPLOYMENT – On July 1st, I posted it will be 4.4%-4.5% by year end. It went up to 4.3% in today’s report. The whole world now knows about the Sahm Rule (I will let you look it up to see what it is.). Supposedly, it was triggered today. I thought it already had been. I think there is a similar rule with a different name measured in a slightly different way. Everyone talks about its 100% perfect record predicting recessions since 1970 or such. What everyone doesn’t know apparently is that the rule has only a 50% accuracy rate when unemployment rates get adjusted after the initial announcement. A flip of the coin is definitely more accurate than economists and weather forecasters! But, it doesn’t help me in my analysis.
GOLD & SILVER – I am getting tired. If you are still reading, I am sure you are, too:) The gold target is still $2500-$2600. Silver looks extremely good with a move to the $34-$40 range likely. I will probably hop on this trade Monday morning.
LASTLY – One last thing came to mind. Over a year ago when the SVB debacle occurred, I posted about buying when no one else wanted to. Everyone predicted 400+ banks to close up and the housing market to crash. Here is what those experts cost you if you didn’t invest in those sectors. Granted no one would be able to buy at the exact low and high. But, the bull moves were as follows – The S&P Regional Index (KRE) bottomed at 34.52 and the recent top was 59.59. A 72% move. Even if you just caught the middle part of the move for a 50% profit remember all of those pundits that told you banks were in trouble. The S&P Homebuilders ETF (XHB) was around 64 at the time of the SVB event. But, the bull move had started a year earlier at 51. The recent top was an ALL-TIME HIGH at 121.23. Over the past 15 months it went up a measly 89%. If you threw in the towel today, you would have made over 70%. Remember to thank all of those people that have been predicting a housing market crash. And seriously folks, look up on YouTube or wherever the videos from around the SVB event forward and find those analysts that were forecasting armageddon – and NEVER EVER listen to them again!!!
I might be back here sooner than later. I live for bear markets. I get very active when they are occurring. This bear doesn’t hibernate:)
Shalom,
The Mann
MID-YEAR UPDATE
JULY 3, 2024 – I forgot two items in post below. The next wave up should take gold to $2500-$2600 ounce and the next wave up should take Bitcoin well above $100,000. And most importantly, Happy 248th Birthday to the USA!
JULY 1, 2024 – As you get older, the years fly by quicker and quicker:) Here’s an update on a few items.
STOCK MARKET – The Dow has now put in two lows in the 37,500-39,000 that I had forecast for being a bottom. I think it will put in a third low around 38,500 before the Summer is over. Then we should see a strong rally to the final Bull Market top of 43,000+.
BONDS – Treasury Bonds are at a critical junction. I don’t like those because what it says is we may go up or we may go down. Anyone can say that lol. I am sticking with the bullish case and expect a turn up at any moment literally with interest rates declining for several months. Even if the weakness occurs, it just delays the up move in prices and thus downturn in interest rates.
UNEMPLOYMENT RATE – Simply put, I expect it to be 4.4%-4.5% by yearend.
RECESSION – Today is the 2nd anniversary of a very strong economic expansion. As I noted all along, it was missed by the vast majority of economists and pundits. Also remember, until the 2030’s when we see +100% annual GDP, we will not see annual rates of 3%+ anymore. Annual growth over 1% is good and over 2% is exceptional and cannot be sustained for long. As with interest rates, people need to adjust to the new normal. Is a recession finally the horizon. Yes, finally! I mentioned last year that a longer-term indicator was suggesting a recession might occur in 2025. First years of a presidential cycle are usually the weakest. Also, if the stock market does top out this Fall and turns down significantly, then it will be signally for a recession at the end of Spring into the Summer of 2025. As I mentioned awhile back, when the economists and pundits give up on a recession, then we know one is right around the corner:) Numerous articles like the following have come out this year:
https://www.reuters.com/markets/us/yield-curve-disinversion-is-recession-signal-watch-2024-06-04/
Although some argue this indicator has not been wrong since World War II, it was wrong in 1966. What is significant about that? That was the year the Dow first broke 1,000 and was at all-time highs. Similar to today.
In the above article and others, people start grasping at straws and say well maybe it isn’t wrong, yet. In the past recessions have started 13-22 months or whatever after the inversion occurs (fyi it was July 2022 when it occurred this time around). We are now passing 24 months and with a near zero chance of a recession occurring this year, we will be at 30+ months. Time to just admit this, and another dozen indicators I have mentioned in past blogs, indicator is simply wrong. Come on, admit it:)
Enjoy your Summer and an interesting Fall. Only 126 days til the 2024 Presidential Election. But, sadly, only 1,587 days til the 2028 Presidential Election and we know the campaigning begins after the 2024 election is settled (which no longer is the day or night of the election itself).
Shalom,
The Mann
RECESSION PREDICTORS THAT HAVE FAILED
UPDATE MAY 12, 2024 – Per below, I started this long list last December. With 1st Quarter GDP growth being +1.6%, we have now had 7 straight quarters of very strong economic expansion. All of the indicators and the one I am about to add have been way off base. As has been most economists.
The McKelvey Rule has (should say HAD) a PERFECT record of predicting recessions going back to 1970! That includes 7 recessions. As of October 2023, it says we are now in the 8th recession. The rule says that when the real-time 3-month moving average of the unemployment rate moves 0.3% above the lowest monthly reading in the past 12 months we are in a recession. It doesn’t actually forecast a recession. It says we are already in a recession. With 4th Quarter 2023 GDP growth at + 3.3% and 1st Quarter 2024 GDP growth at +1.6%, this indicator is now officially 7 of 8. Instead of admitting the rule is wrong this time, I have seen economists argue that a recession may have actually started last October. Never let facts get in the way of your opinion:)
UPDATE JANUARY 11, 2024 – The latest Bloomberg survey of economists shows 50% of them expect a recession this year. Based on the stock market being at all-time highs, it is saying there is zero chance of a recession in the next 6 months. I won’t use 0% in my forecasts. But, as part of my goal to provide precise measurable forecasts, I will say there is a 1% chance of a recession (Two consecutive negative GDP quarters) occurring in the first half of 2024. As the odds of the 2nd Quarter being negative are low, I place a chance of a recession starting by the end of the 3rd Quarter (would require negative GDP in 2nd and 3rd Quarters) at 5%. I just as well place a percentage on a recession occurring in 2024 as a whole. My estimate is that is only about 10% at this time. There is no doubt GDP growth in 2024 will be lower than 2023. But, that does not mean we will have a recession. We have had very strong economic growth for 6 quarters since the early 2022 recession ended. I will update these percentages as new information warrants such.
DECEMBER 19, 2023 – With so many recession indicators being wrong over the past 2 years, I thought it would be good to compile a list. Although they have failed, this doesn’t mean that in 20 years we won’t look back and say this indicator has predicted 4 of the last 5 recessions. But, for now, these indicators have simply been wrong. I will continue to update this list as I encounter such (erroneous) indicators. Many of these I have never followed or heard of. But, as I am made aware of them predicting a recession that hasn’t, and isn’t, going to occur, I will add them to this list.
1. The (Mis)Leading Economic Indicator turned negative in early 2022 and been consistently forecasting a recession for over 18+ months.
2. M-2 Money Supply is the most negative it has been since The Great Depression.
3. Inverted Yield Curve – The yield curve turned negative in July 2022. It forecasts a recession 11-13 months from that event – which was June to August 2023. This indicator had been a perfect 8-for-8 since WWII. Make that 8 out of 9 now.
4. Empire State Manufacturing Backlogs – The last two readings have been -23.2% and -24%. The only two times this has occurred was in 2001 and The Great Recession. It is doubtful the current decline will coincide with a recession.
5. The University of Michigan’s Consumer Sentiment Index has been below 75 for 29 consecutive months. That has surpassed the prior record from February 2008 to May 2010.
6. The National Association of Credit Management’s (NACM) Credit Manager’s Index (CMI) registered 54.6 and 54.2 in the 3rd and 4th Quarters of 2023, respectively. It did not fall below 55 during the 2010’s expansion and the last time it fell below 55 for two consecutive quarters was in 2008 (this excludes the spike low in the pandemic).
7. The American Institute of Architects Architecture Billings Index (ABI) has dropped to 44.8. Previous drops below 45 signaled a recession in 2001’s first quarter and 2008’s first quarter. HOWEVER, Architects have a lead time of 9-12 months on commercial building activity. Thus, this indicator might be signaling a recession at the very end of 2024 and into 2025 – which I have mentioned in prior posts as a possibility. Especially, since that occurs after the Presidential Election. So, I might move this indicator from this list to the small list of indicators that are still accurate in predicting recessions. But, I wanted to place it here in the interim so you could be aware of what it is saying.
8. Wholesale Sales excluding Autos and Oil turned negative (-2.8% YOY) in 2023. Besides the Pandemic, this indicator coincided with recessions in 2001 and 2007-2009. It also was negative in 2015-2016, which was termed an industrial recession.
9. Banks Reporting Stronger Demand for C&I Loans bottomed at around -60% at the end of the recessions in 2001 and 2007-2009. It bottomed at -54.5% in the 2nd Quarter of 2023 (one year after the recession I say occurred in the first half of 2022). At any rate, no recession occurred in 2023 and one is highly unlikely in 2024. The index has rebounded to -23.7% in the First Quarter of 2024. Still weak. But, improving.
The McKelvey Rule has (should say HAD) a PERFECT record of predicting recessions going back to 1970! That includes 7 recessions. As of October 2023, it says we are now in the 8th recession. The rule says that when the real-time 3-month moving average of the unemployment rate moves 0.3% above the lowest monthly reading in the past 12 months we are in a recession. It doesn’t actually forecast a recession. It says we are already in a recession. With 4th Quarter 2023 GDP growth at + 3.3% and 1st Quarter 2024 GDP growth at +1.6%, this indicator is now officially 7 of 8. Instead of admitting the rule is wrong this time, I have seen economists argue that a recession may have actually started last October. Never let facts get in the way of your opinion:)
UPDATE JANUARY 11, 2024 – The latest Bloomberg survey of economists shows 50% of them expect a recession this year. Based on the stock market being at all-time highs, it is saying there is zero chance of a recession in the next 6 months. I won’t use 0% in my forecasts. But, as part of my goal to provide precise measurable forecasts, I will say there is a 1% chance of a recession (Two consecutive negative GDP quarters) occurring in the first half of 2024. As the odds of the 2nd Quarter being negative are low, I place a chance of a recession starting by the end of the 3rd Quarter (would require negative GDP in 2nd and 3rd Quarters) at 5%. I just as well place a percentage on a recession occurring in 2024 as a whole. My estimate is that is only about 10% at this time. There is no doubt GDP growth in 2024 will be lower than 2023. But, that does not mean we will have a recession. We have had very strong economic growth for 6 quarters since the early 2022 recession ended. I will update these percentages as new information warrants such.
DECEMBER 19, 2023 – With so many recession indicators being wrong over the past 2 years, I thought it would be good to compile a list. Although they have failed, this doesn’t mean that in 20 years we won’t look back and say this indicator has predicted 4 of the last 5 recessions. But, for now, these indicators have simply been wrong. I will continue to update this list as I encounter such (erroneous) indicators. Many of these I have never followed or heard of. But, as I am made aware of them predicting a recession that hasn’t, and isn’t, going to occur, I will add them to this list.
1. The (Mis)Leading Economic Indicator turned negative in early 2022 and been consistently forecasting a recession for over 18+ months.
2. M-2 Money Supply is the most negative it has been since The Great Depression.
3. Inverted Yield Curve – The yield curve turned negative in July 2022. It forecasts a recession 11-13 months from that event – which was June to August 2023. This indicator had been a perfect 8-for-8 since WWII. Make that 8 out of 9 now.
4. Empire State Manufacturing Backlogs – The last two readings have been -23.2% and -24%. The only two times this has occurred was in 2001 and The Great Recession. It is doubtful the current decline will coincide with a recession.
5. The University of Michigan’s Consumer Sentiment Index has been below 75 for 29 consecutive months. That has surpassed the prior record from February 2008 to May 2010.
6. The National Association of Credit Management’s (NACM) Credit Manager’s Index (CMI) registered 54.6 and 54.2 in the 3rd and 4th Quarters of 2023, respectively. It did not fall below 55 during the 2010’s expansion and the last time it fell below 55 for two consecutive quarters was in 2008 (this excludes the spike low in the pandemic).
7. The American Institute of Architects Architecture Billings Index (ABI) has dropped to 44.8. Previous drops below 45 signaled a recession in 2001’s first quarter and 2008’s first quarter. HOWEVER, Architects have a lead time of 9-12 months on commercial building activity. Thus, this indicator might be signaling a recession at the very end of 2024 and into 2025 – which I have mentioned in prior posts as a possibility. Especially, since that occurs after the Presidential Election. So, I might move this indicator from this list to the small list of indicators that are still accurate in predicting recessions. But, I wanted to place it here in the interim so you could be aware of what it is saying.
8. Wholesale Sales excluding Autos and Oil turned negative (-2.8% YOY) in 2023. Besides the Pandemic, this indicator coincided with recessions in 2001 and 2007-2009. It also was negative in 2015-2016, which was termed an industrial recession.
9. Banks Reporting Stronger Demand for C&I Loans bottomed at around -60% at the end of the recessions in 2001 and 2007-2009. It bottomed at -54.5% in the 2nd Quarter of 2023 (one year after the recession I say occurred in the first half of 2022). At any rate, no recession occurred in 2023 and one is highly unlikely in 2024. The index has rebounded to -23.7% in the First Quarter of 2024. Still weak. But, improving.