Tag Archives: stock market

Mann Overboard

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

Mann Overboard

STOCK MARKET AND INTEREST RATES

MAY 15, 2024 – It has only been ten days since I posted an update about stocks and bonds. But, when things change, you need to note it. It looks like the recent correction ended in my target range and the final leg of this Bull Market is underway. We are dealing with TARGET 1 from my January 8th post which stated the following:
TARGET 1 – The current rally peaks out around 40,522. This is followed by a decline to the 37,008-38,350 range. Then a final rally to the 42,872-45,640 range with possible targets within the range being 44,214 and 44,298.
Obviously, it would be best to round the numbers and use general ranges. Based on the above, I would say the current rally should take us above 40,000 and up to 42,000 at the high end. A small decline should end in the 37,000 to 39,000 range. And the last big move in this Bull Market should end between 43,000 and 47,000.
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In late March, the DOW peaked at about 40,300. Since then, a data correction has been made and the top is listed at just under 40,000. I haven’t seen that happen before. Regardless, the top was close enough to the Target 1 projection of 40,522. The subsequent correction was a short 5 weeks (ended April 17th) and bottomed in the 37,000 to 38,500 range at precisely 37,612.
As noted in the January 8th forecast above, the final target range is in the 43,000 to 45,500 range. It is crazy to be precise (albeit the past 5 months have been spot on), but I really am liking 44,000 to 44,300 for a final top. As this final leg plays out, a more precise target can be made.
Remember, a Bull Market climbs a wall of worries. And for 18+ months it has fed on the world predicting a recession. Regardless of where we go from here, ALL of those economists and pundits have been 100% wrong. The case is closed on them.
INTEREST RATES – As noted ten days ago, it appears the bond decline ended on April 25th. Bonds have rallied strongly since then. Albeit, the first wave of the 5-wave move has probably ended and a small decline should start immediately. A much larger rally lies ahead – which means interest rates will resume their decline at that time.
I will post updates as the stock and bond rallies unfold.
Shalom,
The Mann
P.S. If I told you that sometime in the 2030’s we may have +100% annual GDP growth, what would you say?
Mann Overboard

INFLATION FORECAST, BANKS & HOUSING

UPDATE – JUNE 20, 2023 – I saw a few items of data today in regard to housing. Here they are. No need to add any commentary.

Construction on new American homes surged 21.7% in May, as homebuilders ramp up building single-family homes to meet strong demand from buyers. Housing starts rose to a 1.63 million annual pace last month from 1.34 million in April.

Builder confidence in the market for newly built single-family homes in June rose five points to 55, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the sixth straight month that builder confidence has increased and is the first time that sentiment levels have surpassed the midpoint of 50 since July 2022.

I saw a chart of this index going back to 1985. Every time the index crossed back above 50 it went up to about the 70 level before putting in a major top. The thing is it took about 1-5 years to get to that new top. Slow, but steady it goes. If it follows history, that means we are in for an extended period of positive sentiment by home builders for at least the next few years. As a side note, there is at least a 50/50 chance of the index dipping back below 50 before resuming its upward trend. This would be a great head fake to keep the recession screamers pessimistic.

JUNE 14, 2023 – As forecast, inflation dropped about a full percentage point and will do so again next month.
The 3-month annualized inflation rate is 4.4%. The 6-month annualized inflation rate is also 4.4%. These figures are above the annualized rate (4.0%) and thus indicate the decline in the annual CPI is likely to reverse after next month’s figure is reported.
Based on the data, my prediction for next month’s figure is 3.0%-3.1%. I like the data and am confident the next reading will be in that range.
This will finally be the July 12th figure I forecast over 6 months ago. My original expectation of a sub 2% reading will be wrong. Albeit, 3% is alot closer than those that were predicting 10%+ this year.
As I mentioned last month, it looks like inflation will rebound in the second half of the year to 4%+. There are a few indicators that are pointing towards significant deflation (e.g. diesel prices down 30% yoy). If this occurs, there is a chance inflation can stay around 3%.
BANKS – Regarding banks, week after week goes by without any closures. At this point, we are much closer to my forecast of 0-10 closures than the 176-200 closures forecast by many people. I am lucky to have some incredible bank and credit union clients. Talking with them there has been almost no CRE loans going under. Even in good times, loans fail. So far, nothing significant has occurred. Yet, the world is predicting CRE loan defaults will be the next major shoe to drop. I just don’t see it. I will make a post with some numbers explaining why I don’t see the refi issue resulting in loan defaults.
The Regional Bank Index (KRE) has exploded and is about 7% above the low set the Monday after the SVB/SBNY closings. It is a full 27% (!) above its most recent low. And, you probably saw the headline that the stock market entered Bull Market territory (i.e. up 20%+ from its low) last week. I have been saying this was the case since just after the October lows.
HOUSING – The American Enterprise Institute’s (AEI) Home Price Appreciation (HPA) Index was up 0.7% month-over-month in April. It has been up every month this year. The Homebuilders Stock Index is up an incredible 50% (!)from last year’s lows. Those who forecast a crash in the housing market appear to be way off. As I forecast about a year ago, the housing market would slow way down and possibly go slightly negative (that has occurred in the hottest markets). A year later I am seeing a slightly improving market ahead.
SUMMARY – Sadly, if you have been waiting for the Recession of 2023 to occur (which as I have noted for 9+ months now, it was the Recession of 2022), you have already missed out on the stock market being up 20%, homebuilder stocks up 50%, and those dreaded bank stocks being up say 5%-25% from possible buying points. Even if a recession occurs later in the year (I still do not see two consecutive quarters of GDP being likely), the opportunity to make a large profit on your investments has already occurred. Plus, the stock market predicts the future 6 months out, and it is saying zero chance of a recession.
It seems like a longshot, but the wave theory I follow seems to indicate the possibility of a huge stock market rally directly in front of us. That is my interpretation. Regretfully, my idol who brought this theory to the forefront 44 years ago sees a huge leg down ahead. I hate disagreeing with him. We shall see how it turns out. The stock market has been in a boring trading range for several months now. It seems to be wrestling with the indicators that point up and those that point down at the same time. The future is never easy to predict:) Not even for the smart money.
Til next month.
Shalom,
The Mann

Mann Overboard

40-60 AND BUBBLES

JULY 18, 2022 – As a kid, the first thing I could read was the stock market page in the newspaper. Probably since I was 5 years old I have been analyzing markets.
Early on I recognized a 16-year pattern in the stock market. I lived thru the 1966-1982 sideways (down when adjusted for inflation) market. I noticed that the market went up significantly after WWII into 1966. And looking back, we can see that from 1982 to about 1998 (actually 1999/2000) the market soared again. It hasn’t been quite as clear since then.
However, in looking at bubbles I think a pattern exists. I recall an appraiser friend telling me that you make your ‘big bucks’ in your 40’s. I assume that continues thru your 50’s. That seems very logical. People from 40 years to 60 years old invest in stocks, buy real estate, buy boats and cars, on and on. This is when they have the most amount of money to invest.
So, let’s look back at the generation before the Baby Boomers. This generation was born from 1931 to 1947. Adding 60 years to the first people and 40 years to the last people, yields 1987 to 1991. Exactly when the S&L Crisis peaked and burst.
My fellow Baby Boomers were born from 1948 to 1964. Adding 60 and 40 years, yields 2004-2008. Again, right on target with the great housing bubble.
Generation X ranges from 1965 to 1980. Adding 60 and 40 years, yields 2020-2025. And here we sit in the middle of ‘The Everything Bubble.’ With the top already in place, I assume this means we bottom by 2025.
In the last crisis there was a funny bumper sticker going around – ‘Lord, give me just one more bubble!’ Sure enough, we got another one. So, for those that missed out on this one and are wondering when the next one will occur…..Generation Y (aka Millennials) ranges from 1981 to 1997. Adding 60 and 40 years, yields 2037 to 2041. A ways off for sure. And honestly, I don’t have a clue what will be in a bubble at that time. What is left? Maybe since cryptos came about after the last bubble, the next bubble will be something that has yet to be invented.
If you and I are around and remember this post, let’s have a chat in 2037:) Of course, let’s chat before that so we are invested early on in the bubble item(s).

Shalom,

The Mann