CLIFFORD BENNETT
GLOBAL FORECASTER
USA
Currently see the US economy heading toward some degree of stability after a largely hidden tremendous economic stress period. Which has included a manufacturing depression, housing industry recession, consumer confidence at below covid and GFC levels, small business confidence at depression levels, and commercial property crashes in some major cities. Much of these stresses are showing stronger sentiment hopes now, but much needs to be delivered before real economic strength, beyond the public sector, can return sustainably.
Federal Reserve
The Fed is expected to cut rates a further 25 points this week, but this is really pushing it as PPI and Core inflation remain a little uncomfortable. This could be the last rate reduction for 2-3 meetings.
Also note there is a falsehood in markets today about the relationship of rates and stocks. They move in the same direction as often as being inverse.
GDP
The annual GDP growth rate is slightly on the modest side historically speaking. Q3 slowed from 3.0% to 2.7%.
As the wealth gap grows aggregate data becomes less and less reliable as a depiction of how most Americans are doing. For instance the average annual wage is said to be in the order of $60,000, but if you remove just the top 10%, the average wage drops to just $30,000.
Quick
Overview
The US economy is showing signs of fresh exuberance on the Trump election outcome. As correctly forecast here, Risks do remain however.
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You may have been told the US economy is strong. Inflated GDP numbers on the back of runaway massive government spending has been the cover story, As have strong aggregate retail sales numbers which include the spending of the equally runaway rich, while disguising the seizure of spending by the great majority. Now consider a housing industry recession, manufacturing depression of some two years, crashing commercial property values in many major cities, consumer confidence and small business confidence at recessionary and worse, covid lockdown levels. Not to mention the number one cause of death for Americans in their prime, both male and female aged 18-44 years, over-taking heart disease and cancer... is drug over-dose. How could anyone argue the economy is strong or the society healthy?
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Excess spending at all levels of government, plus massive inputs to the military industrial machine is all money that finds its way eventually to the stock market. Stocks have detached from all other fundamental realities.
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In the end, yes, I still see risk of a major top. But when? I called some major corrections well in recent years, but the major high that myself and other seasoned traders have forecast has proven elusive. We are in the midst of a frenzied, psychotic, easy money keep leveraging up market. Meaning both that it is lasting longer than anticipated, and that the eventual true correction could be quite frightening. We will continue to monitor the market for any signs of such an eventuality for you. So keep revisiting.
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Clifford Bennett
Dow Jones 1920 1940
The US rally continues to narrow. Which is a warning sign, but we are also witnessing a new technology era?
Remember, in the roaring 1920's, it was the advent of the radio and its revolutionary impact on marketing, making advertising instantaneous and national for the first time, that was said to create a rally that would go on forever?
Not suggesting a 1929 crash, but significant corrections are due. The Dow and Russel2000 have been falling sharply despite Nasdaq records. Something to think about going into 2025, consider protecting your hard won portfolio profits to some degree. (For Australians, even more so.)
