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
MAY 5, 2024 – It’s been awhile since I posted about stocks and bonds. It takes time for the waves to play out. Back on January 8th I posted the following:
There are two target options so I will simply label them 1 and 2. They are both bullish so I am not saying the market may go up, but it may go down:) Just saying that there are a few ways it can play out statistically. So here goes the impossible….
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.
TARGET 2 – The current rally peaks out around 41,906. This is followed by a decline to the 38,392-39,734 range. Then a final rally to the 44,256-47,819 range with possible targets within the range being 44,256 and 45,598.
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.
===================================
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 has been underway for 5 weeks and we are right in the 37,000 to 38,500 range.
As I have noted in the past, as the waves unfold I can update the targets. I would say the low end of the range needs to be lowered to 36,000. I do not think the low for this correction is in place, yet.
INTEREST RATES – There is a good chance the bond decline finally ended on April 25th. This was a 4-month decline. From here bonds should rally at least through the Summer and interest rates should decline at least 100bp.
I will post a stock update when I believe this correction has ended.
Shalom,
The Mann
NOVEMBER 25, 2023 – The markets instantly reversed a month ago. Just like they did last October when the Bear Market bottomed.
STOCK MARKET – Although the S&P 500 and NASDAQ went into a Bear Market, the Dow 30 avoided such. Since the October bottom, the Dow is up 9.5% and over 3,000 points. The NASDAQ is up over 15% and the S&P 500 over 11%. NASDAQ is at a new Bull Market high. The Dow and S&P 500 are within 1% of new Bull Market highs.
REGIONAL BANKS – The regional bank index ETF (KRE) is up 18% in the past month. But, still 11% below its Summer peak.
HOUSING – The housing ETF (XHB) is up 19% over the past month and within 3% of its Bull Market high.
Market action since August suggests we will have some economic trouble in the first quarter of 2024 followed by a continuation of the economic expansion that started in the Summer of 2022. 4th Quarter GDP is forecast to be just under +2%.
INTEREST RATES – Bonds also appeared to have bottomed on October 23rd. A strong rally appears ready to have a minor correction. Interest rates should continue to decline for the next 3 to 6 months. The decline will be significant.
Shalom,
The Mann
APRIL 29, 2023 – 1st Quarter came in at +1.1%. It continues to slow. But, another positive quarter. Early forecasts show 2nd Quarter GDP being slightly positive. However, with ample time for adjustments, there is a chance it could end up being negative.
Quick note, I received an email from the Fed last week showing it was expecting 1st Quarter GDP to be +1.13%. They appear to be the only one to get the forecast right. Of course, they have access to all of the data that goes into the GDP.
Regardless, it will be around Halloween before a recession can be in the books. And if the 2nd Quarter GDP does end up being positive, a recession cannot be official until late January 2024.
So far, the stock market says a recession will not occur this year. We shall see who is right – the stock market and the smart money or everyone else that is all but guaranteeing a recession will occur in 2023.
Will the Leading Economic Indicator that has declined for 10+ months and has been signaling a recession for many months be right?
Will the fact that bank credit tightening leads to a recession be right?
There are numerous other indicators signaling a recession will occur this year. The only problem they have is they are not the stock market.
My bet is, and always has been, on the stock market being correct. As always, we shall see.
BANKS – Still no new bank failures. First Republic Bank was part of this original crisis that occurred with the SVB and SNBY and Credit Suisse failures. The only other bank that is walking on thin ice is Deutsche Bank. Beyond this initial list, no banks have failed. The count remains 0 versus the 176-200 predicted by many people. (UPDATE – In 1907, JP Morgan the person came to the rescue of the banking system and in 2023 the company with his name did the same.))
The Regional Bank Index remains about 2% above the low set during the SVB/SBNY crisis with the drawdown to date being 3%. Money is not being made on these stocks. But, they sure have not fallen apart. Friday was a classic day that fools the public. The headline news was First Republic Bank heading towards failure. Instead of being down, both the Regional Bank Index and the Dow were up. The Dow is now above 34,000 again. Remember, a Bull Market climbs a wall of worry. The more negative news we have this year, the higher stocks should go. And it looks like all we will hear from the pundits is negative news. When the news turns positive, the stock market will have already topped.
Happy trading and investing.
Shalom,
The Mann
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
