You’re the one calling for a 2008 style severe drop. If that happens, there’s no way GDP will be 0.5% positive next year.
There is a mis-understanding which I will try to explain here (even though it is beyond my scope).
I was quoting 2008 for lengthy recessional wave, it started Oct 2007 and ended in Mar 2009. I was quoting this recession is also like 2008 with that similarity.
Many think here Oct 2022 is bottom, but what I predict (it may be wrong) is Mar 2023 may be bottom. The length of the recessional wave is Nov 2021 and that may end Mar 2023.
Regarding drop, my prediction is appx SPX 3000 (again this is speculation, future prediction, no guarantee and it can be wrong).
Based on yield curve inversion, again inference, we are likely getting into recession which FED avoid confirming it (No sitting FED will agree/confirm openly). Even yesterday, Powell said “Future is unpredictable and he does not want to reply to hypothetical scenario”
If we are getting into a recession, then there’s no way next year’s GDP growth will be 0.5%.
This is future, no one can guarantee anything including FED members.
We need to assume something realistically and plan for our future.
Our returns depend on difference between our assumption and reality.
Personally, if I am prepared for worst, I think I am better covered.
I personally see lots of economic activity and spending. The labor shortage is acute. Restaurants, Heavenly and the rest of us can’t find employees. This Christmas season will have record growth. It’s only the stock market that’s full of gloom and doom. After 3 years of Covid we are all fed up. We want to spent money and enjoy life… even if we end up like Italy or Argentina. The good news is Powell will doom the Democrats. Hugely bullish for Republicans in 2024
BtW I been to Italy and even Argentina when inflation was a 1000%. Both are great places to live where people live for the moment…not a bad way to live and I remember thriving in 1981 when inflation was 18%. “This too will pass”
Yesterday, Powell said exactly this whatever you are telling above. Only inflation figured are changed, and tech lay off only started. Other than this all activities are high spending, and many companies are not laying off as they feel getting such skilled employee is tough etc. He said potentially inflation will come back like 1970s if we loosen the rate hikes now.
JPow would keep hiking till employees stop asking for pay rise and kneel down to employers for giving them a job. Message is f… clear.
2 Likes
There is no need to over interpret what JPow said. JPow said what he wants us to hear. He sure doesn’t want market over cheering and shoot up 1000 points right off the bat. He wants market condition to be tight for the next few months before the next FOMC meeting.
The best we can hope for is the Fed being data dependent, and not on some preset warpath. I think they are now fairly data dependent and open minded as much as one can hope for for a bunch of 60 year olds. This 50bps hike could very well be the last hike of this cycle and we just don’t know it yet.
1 Like
.
So optimistic 
It’s not the most likely scenario. I just want to put it out there to highlight the uncertainty. Personally I think we will see one more 25bps hike next year and that’s it.
The dot plot and whatnot is fairly meaningless. The Fed doesn’t know what will happen just like you and me. They just react to the reality when it manifests itself.
JPOW team won’t stop until they see Stock market routs to the bottom with Circuit Breaker.
No Circuit Breaker No Stop!
1 Like
All they’ve done for years is move rates up/down to match what’s priced into the market. I think we could eliminate them and nothing would change.
I lived the 70s. Stocks were shit and RE was king . Long live the 70s and early 80s. Time to bring back disco and party like the roaring 20s. Crapto is dead. Inflation is good for RE prices
2 Likes
No change in market expectations for nearly six months yet media keeps reporting changes now and then.
2 Likes
Inflation is a silent tax on all. Warren is pro-tax. Rest you can deduce…
.
I can’t because not familiar with American politics.