The Past 11 Times This Has Happened, We've Had A Recession | Michael Kantrowitz
ฝัง
- เผยแพร่เมื่อ 29 ส.ค. 2024
- WORRIED ABOUT THE MARKET? SCHEDULE YOUR FREE PORTFOLIO REVIEW with Thoughtful Money's endorsed financial advisors at www.thoughtful...
Despite the Federal Reserve's efforts to tame inflation by cooling the economy with its aggressive "higher for longer" interest rates and Quantitative Tightening, the US has managed to avoid recession.
Consumer spending has held up, largely due to the "strong" jobs market.
But is that likely to remain the case going forward?
And if not, if unemployment starts to rise significantly, what should we expect? Mass layoffs? A recession? A correction in the financial markets or home prices?
Or none of these?
To find out, we have the good fortune to speak today with Michael Kantrowitz, chief investment strategist & managing director at Piper Sandler. He's created the HOPE framework, which provides a way for us to track recession risk, and gives us the ability to project what's likely to happen next for the economy.
Michael's forecast is surprisingly nuanced and contains elements both bulls & bears should heed.
#unemployment #employment #recession
_____________________________________________
Thoughtful Money LLC is a Registered Investment Advisor Solicitor.
We produce educational content geared for the individual investor. It’s important to note that this content is NOT investment advice, individual or otherwise, nor should be construed as such.
We recommend that most investors, especially if inexperienced, should consider benefiting from the direction and guidance of a qualified financial advisor in good standing with the Financial Industry Regulatory Authority (FINRA) who can develop & implement a personalized financial plan based on a customer’s unique goals, needs & risk tolerance.
IMPORTANT NOTE: There are risks associated with investing in securities.
Investing in stocks, bonds, exchange traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible. Some high risk investments may use leverage, which will accentuate gains & losses. Foreign investing involves special risks, including a greater volatility and political, economic and currency risks and differences in accounting methods.
A security’s or a firm’s past investment performance is not a guarantee or predictor of future investment performance.
SUBSCRIBE TO OUR FREE NEWSLETTER at adamtaggart.substack.com (or upgrade to premium to receive our "Adam's Notes" summaries to this interview & all others on this channel, plus the new MacroPass service)
I've been thinking a lot about financial planning and retirement strategies lately. With all the economic uncertainty, it feels like I need to be extra cautious.
The current economic instability is causing a lot of concern. With factors like trade tensions and fluctuating markets, it's hard to predict what's coming next.
The massive government stimulus packages implemented to combat the pandemic's economic impact could have long-term consequences, like inflation.
One of my major problems with a decentralized system is that governments did not want it. Not that it's was not possible but it was just unlikely, I personally believe the government began to bring the hammer down on Bitcoin, because it attacks their ability to mismanage the currency, now it's a different story.
Most times it comes down to proper financial planning cause most people don’t realize how important financial planners are until they messed up. Staying productive with the latest strategies and analysis really pays off. With professional help I turned $220k into $880k despite the market ups and downs.
That would be NELSON MAYNARD FISHER
He is a CFA whose approach combines technical and fundamentally essential analysis.
It was the best of times, it was the worst of times. A tale of the two halves of the society. The haves and the have-nots.
It was a season of light, it was a season of darkness. Because the haves didn't get their electricity shut off.
Kudos to Mr. Kantrowitz for acknowledging how wrong he was last year. It's rare to hear a guest acknowledge misjudgments, and it's rare to hear a host mention them either. Whether he or anyone else will be right about the next 12 months, who knows? Humans are notoriously bad at predicting the future. Recognizing this is essential in not getting sucked into anyone's framework.
A nice contrarian signal as well. When the bears of last year all capitulate... one has to wonder.
He’s too young to understand what really happens in a bear market. He was dead wrong last year. He probably almost lost his job so he pivoted now he’s going to be dead wrong again then he’ll get fired and hopefully he’ll figure it out and learn to stick with his process or change careers definitely a contrarian indicator our guys that were born in 1981 and haven’t really been through hard times just cashing those nice paychecks from the wire houses to try to sell more and more product to their institutional customers who were also born in 1981 kind of makes me laugh
Two words - deficit spending. Only thing keeping this buble inflated.
Great point
My God my friends, Stop equating unrealized gains to real wealth.
No one except a statistically insignificant few are going to sell, and lock in thus making the gains REAL, anywhere near the top of the market.
Yes, imaginary nominal wealth verses real value. The financialization mindset instead of real values of quality of life.
The Past 11 Times This Has Happened, We've Had A Recession but the 12th time is different
Yea agree, title is misleading.
This interview was all over the map. He is saying october 2022 was the low. So he's calling for no landing ? But his hope framework points to ressession. He threw out his own framework because of the household networth chart (this is always high at the peak of the market) and the 4 ressessions that showed 10 year US bond peaking as the low for these 4 ressessions. I appreciate that he is 2nd guessing his own work and the Good news is bad new is 100% the market reality right now. But this will change after rate cuts are reality. Bad news will be bad new and good news good news
Piper Sandler is a wall st institution, and wall st cannot stay bearish for long even if deep down they believe it because it’s bad for business. Michael just wants to keep his job.
What I find insanely dishonest when it comes to tracking GDP growth is that most of the time these economists push nominal GDP vs real and also fail to discuss how sustainable the GDP growth is in the long term and how healthy the tailwinds behind it are. We have INSANE and completely unsustainable fiscal stimulus going on right now. I guess if the overarching hypothesis is that we will continue to trash the currencies at a rapidly accelerating rate relative to the amount of “growth” they’re generating, then of course it’s sustainable kind of like how Venezuela’s economy is sustainable until you needed a wheelbarrow for your fiat to buy a bushel of bananas. None of this is remotely healthy or sustainable especially the war spending or up here in Canada the social welfare spending. This isn’t productive debt and doesn’t generate real long term and sustainable growth/income.
Coming back to listen to the end of this, he doesn’t sound remotely sympathetic for those without assets getting crushed under the weight of policy that is juicing assets higher. To me, this is the actual problem with the system that seems like it will only correct when people have had enough and get violent. Hate to say it but it’s that selfish indifference that is detected in his response and that is sensed in the haves of society that has likely been conditioned due to people further disconnecting from community unlike past generations that is exacerbating it all. It’s really disconcerting to say the least and disappointing.
We may be experiencing another Gilded Age in the U.S. A Bifurcated Economy is reality and maybe reality for the next decade and beyond.
He is a smart guy, but if he was born in 1981 he hasn’t seen what happens when the wheels really come off during his career he might want to note that when the feds starts lowering interest rates that’s the time to get out of stocks young man will be wrong again as he was last year But he seems pretty smart so hopefully with a few bumps and bruises if he still has his job, he will learn not a time to play in the pool right now
‘’Winter is coming’’
13:15 - True, there was not much concern about home prices in the 80s. However, home prices skyrocketed upwards with interest rates at +10%.
Listening to this guy and others like him in 2023 caused me to miss out on a huge run
How dare he give his opinion and you blindly go all in on it while ignoring the fundamentals of investing.
@@putty360 the “fundamentals” have not held true in this crazy environment
blaming others for your investment mistakes makes perfect sense lol
HOPE Framework analysis explain best what was and is going to happen at the back door. Thank you both!!
We can see parallels in the Chinese economy. Housing was cooling off in 2023, Orders vaporized at the time of the Chinese reopening, January 2024, Chinese small business started going bankrupt shortly thereafter, and by January 2024 the government stopped including youth unemployment in official statistics. Some city dwellers are currently migrating to the countryside as jobs evaporate. From what I can tell, China's HOPE progression compressed compared to what the US is currently going through.
I for one refuse to believe that China could inflate the largest property bubble of all time, hit a brick wall....then resolve it in two years without any global impact whatsoever. I think we've only seen the first leg down for China.
Adams question at 53 minutes in shows that Adam cares about the people, the average person and the economic strength of the nation as a whole for future generations in regard to the wealth divide of the country. Michael pauses a bit and stammers slightly in his reply as a strategist investor. Adam clearly reveals his humanitarian side. Great interview as a whole I would say. Michael has a clear perspective on how the "soft vs hard landings" may possibly play out, if there is one at all.
Unfortunately, the data is manipulated for so many things. Unemployment doesn’t count those who didn’t find a job and ran out of benefits. Job growth doesn’t indicate net after layoffs. Stock prices are supported by stock buybacks using low- or no-interest loans, etc., so that we can’t know what’s really going on.
Excellent interview as always. Thanks, Adam.
Adam you’re the best interviewer out there I swear, keep it up you do great work!
Thank you!
The argument that low inventory is the problem of the driving force for home prices is a part of the story. And the reason I say that is in past housing crunches when mortgage rates increased and killed the market, people were not selling their homes and experienced the same lock-in effect between their current mortgage rate and the market rate. In otherwords, there was little inventory on the market during those downturns but that did not drive up prices higher because there were no buyers. However, in the market crash in 2008 there was another aspect which was foreclosure pushing houses onto the market. In this market, foreclosures are very low and the delta on interest rates is high. A large number of homes are purchased in the US are done through borrowed money either through traditional or non-traditional financial markets. What will stop this market, as what has stopped other similar markets such as in 1972, 1987, etc is the inability of buyers to get financing and thus purchase the homes.
It’s true that we don’t have high energy prices to hurt people this time. But we do have huge consumer price increases. Just go buy ANYTHING right now. That increase in prices is way more damaging than an oil price spike. We don’t have an energy price spike is because demand is so low.
best interview you have done, top 5
There seems to be little to no relationship between the real economy and the stock market. A number of restaurants and fast food chains will be closing their doors. Tech companies have laid off thousands since last fall along with banks. Some economies can be very regional in nature. In my part of the country, I see full parking lots at the restaurants while the local news tells me the food bank is usually broke and needs more donations.
That's because we're living in a truly Bifurcated economy now. And it's not healthy.
When the US was a manufacturing-based economy, most everyone's fortunes rose and fell together. Now, that credit, paper pushing and no-lose gambling/speculation and bailouts are the way many people thrive, it's always going to be the way you describe. I thought this type of phony economy couldn't go on very long, but it's been going on for 15,16 years now, so I was very wrong!
The past is a poor guide to the present and future given the massive distortions to monetary metrics by the Central banks and government Pandemic spending. Now the central banks won’t allow a price correction, preferring to keep the game going. Nobody alive has experienced this before in peacetime.
It's great to watch Michael's presentation on youtube and see the charts. Great interview and content Adam! One note on the new homebuilder stocks, today they have almost no net debt. Contrast this to 2007, when the Pulte's and Lennar's had 50 to 60% net debt. They have been using incentives via rate buydowns and closing cost contributions to keep sales prices elevated. As Michael pointed out, this will force existing homeowners to lower their prices.
its pretty simple, the monetary tightening was offset by ongoing massive fiscal deficits, so the economy keeps rolling. the HOPE framework simply failed to account for this. Time to go back to the drawing board.
Really interested to hear follow up on the Hope framework as the h for housing is showing some cracks, especially here in TX where I focus my content
Thank you, Adam! Great info as always!
Lots of inventory happening in Florida, both in houses and condos.
You always have the best analogies Adam. Michael had a lot of great info and insight.
Its too bad that jobs have to be terminated in order for housing to come down. The FED creates one problem after another. When will they ever get their stuff together? I feel for those that may lose their homes. Why not just create a bill to order builders to build affordable homes for buyers, and make it illegal for investors to own them?
This is one of the more silly if not foolish or ignorant replies I have read in a long time. Thanks for making me laugh so hard. You’re an idiot.
that is the FEDs role if you havent noticed, they create the problem to then solve that problem while creating another, its kicking the can down the road you see, the can is U.S. if the stop kicking it the actually wheels do fall off.
Not at all what I was expecting! Bear becomes bull… wow.
😂
I call BS. He got spanked and how ironic that he is hoping all his reasons why he missed it witth HOPE are the answer😮. When his framework for HOPE was out of order and did not work. Now he is towing the wall street line its different this time. No its not people losing their jobs still matters especially when consumer is tapped out. Business cycle has Not been repealed as Rosie says😅
When the bears start capitulating you know you're in trouble. The minute Adam says "well maybe we aren't going to get the hard landing" 💥💥😂
Great interview!
I'm lost....how can builders do 10xs better than all other parts of Cos attached to "housing" How are appliances, furniture, flooring etc. etc. all nose diving, then. Is this the Chinese model where you just build shells that are empty with no frig., stove, heating, flooring, carpet, fireplaces ????? How does this work???
Good and a bit different stuff. Thanks. Have to listen this twice
Thank you for another informative video!
Fantastic guest, thank you for having Mike back
Thank you both
I'm a manufacturer. We are in a recession now. Business is down 80% easy.
Can you explain more? Give an example you are currently experiencing?
Excellent interview. Michael should be a 'regular' on your channel. His model strikes me as both thorough and understandable.
I think the ultimate testimony to how insignificant the relatively poor have become will be an environment where unemployment increases and the stock market continues to rise.
What would the charts and your prognostications look like if you took away the data from the top 2% as being aberrant.
"We may never get to hard times." AHAHAHA!!! Thanks. I needed that laugh this morning. Sure, the 1% won't ever get to hard times. Pretty sure the general population always pays the bill at the end of dinner.
Is the 10% rule spike of the unemployment rate works also in canada and other countries? Only in the us?
Thank you very much...
The problem is looking back at charts, the correlation between inflation and unemployment have not failed. Every time they print butt loads of money people suffer in a later term, the problem is becoming now the "later" is turning into "sooner".
I have sneaky feeling that the FED - If truly concerned about Inflation via money printing - will not lower interest rates till it gets a better understanding of what Congress will do after the elections.
IF the FED lowers interest rates at the same time as massive deficit spending occurs, inflation is all but guaranteed to increase.
And a party that’s desperate to get re-elected has been known to do just that (duh!)
The HOPE frame might work in a standard business cycle, but since Covid we have had anything but. Gigantic fiscal stimulous and deficit spending have distorted all the organic signals macro models (such as HOPE) used to rely on. We live in a fiscal dominance world (soon to be fiscal repression), and investment models have to adapt to recognize that.
The scope of this analysis is data from within the USA. The Chinese people, not the government who is pulling money out of US treasuries, but the people are doing whatever it takes to get their money out of China. That money is seeking any asset available, by any means available, that will hold its value. Vast sums of this money are arriving in retail investments even as they refuse to pay their loans for homes that were never built in China. Likewise those who can flee from Russia, India or Iran, Venenzuala, Taiwan (?) are sending money to the USA, Canada, Britain, Australia and so on... no one is talking about this... and yet BTC is up. Why?
Pushback on the "Stockmarket to big to fail" concept. Government intervention is trending toward being a headwind for the market. The ideas of both Increasing capital gains tax AND tax on unrealized gains have both been gaining traction lately. Populism is BAD for the market
Ask him what happened to E in his HOPE? Did he ever in his wildest expectations think we would get this very very late in the game and the E is not really moving?
Oh, I ask him this
Not until interest rates uninvert.
When Michael reviews Profit indicators, if he uses P/E, does he take into consideration the amount of company buy-backs and how they impact the P/E in such a positive manner that may give an impression that profits are higher when all that is really going on is increase of supply of shares?
No one can predict the future. Just stay balanced to handle different outcomes.
Me thinketh the Lathe Cap could really be renamed the........Kneecap.
An offer you can refuse!@?🤪😉🤑
On average throughout the whole United States housing prices have fallen 8% they are not Rising anymore only and very isolated areas and I stress very
Economic investigator Frank G Melbourne Australia is still following this content cheers Frank
You can't relay on unemployment/inflation/stock market/yields performance charts from the 60's, 70's, 80's, 90's, 00's, or 10's. Demographics drove the market higher, because the economy inevitably had to grow as the Boomers (a much larger generation than any before it) entered adulthood and produced/demanded stuff during their much longer (vs any generation before them) working careers. The Boomers have mostly left adulthood and entered some form of retirement now, and by 2030 or so the vast majority of Boomers will be retired or mostly retired. On the whole they will soon be producing little to nothing, while also demanding less and less as the years go by. The economy at best will go sideways but more likely contract, and this will produce charts that will not resemble those charts from the 60's, 70's, etc.
Nice job yapping but you basically said "this time it's different" 🥱
@@prolific1518 I am not saying its different. Demographics drove the market then, and they'll drive the market this time. I guess reading comprehension is not your strong suit. Maybe we should all just hold shapes up and see if you can guess which one is which. 🤣🤣🤣
Why doesn’t Adam push back on his guests opinions to present the other side of the story for a rebuttal?
For instance, Michael says today isn’t the same bubble we saw in 2000 when speculation was in unprofitable names… The thing is, isn’t it just as bad or worse to be speculating that todays mag 7 companies are going to continue to grow at the same rate they grew over the past decade? At least the unprofitable names in 2000 had a chance to grow because they were starting at zero… the companies today have basically infiltrated 100% of their markets and really have no where left to go but down or flat.
The data is showing that the companies leading the stock market today are actually profitable. That is a fact. That's all they're saying. I do agree with you that there is a lot of downside, especially as competition comes on board to Nvidia. The downside vulnerability is different, but not necessarily less.
He does, just not all the time. He’s the interviewer, not the interviewee. Main stream media is where you’ll find the constant interruptions and narrative explanations from the “interviewers.” It’s about learning what the guest is trying to say.
Profitability is on a razors edge. Nvidia is making an extreme amount of margin being the first to the market with their GPUs. A company could undercut them with half the margin and still make good money. Meta is dependent on add revenue, which could evaporate in a downturn. Amazon's AWS server generates most of their profit. Apple sales are already down, and their profitable app store is constantly under attack by the EU. Microsoft will be impacted by falling business activities. All of them will be affected if AI isn't able to generate real profit.
Thank you. Yes, I see my job is to flesh out the guest experts POV, not try to insert my own.
@@adam.taggart Adam, I'm an avid follower and was looking forward to a new interview with Michael as the last one was so good but lately there's so many guests pivoting from their "recession" call and are now just waffling that their advice seems better suited for traders than investors. Thank god there's people like Dr Hunt and Rosenberg who not only clearly elaborate their convictions, but are willing to stand by them.
Welcome to the Bear channel. I am Mr. Doomberg and I can predict the future, but unfortunately I have been wrong the past 5 years 😂
The H should be on the end of the line as forced sellers bring down prices when they lose their jobs.
Thanks for your continued effort to have guests address the haves v. have nots in regard to the US economy (AKA The Market). As US continues to lose market share to China and other BRICS nations and as US continues to steal assets of other countries, I wonder how long The Market can ignore geopolitical events. Also I wonder how long before the financial problems of the US government and it's outlaw behavior will impact the performance of large cap stocks. Events in the 2020s are a helluva lot different than in 1990. Great show.
EXCELLENT QUALITY INFO.
THANKS!
THE MATERIAL PROBLEM for the USA economically speaking is ...
1. THE DROP IN FOREIGN INVESTMENT
2. THE DROP IN FOREIGN DEMAND FOR GOV'T BONDS (T-bills).
THE BRITS have THE VERY SAME PROBLEM. :D
Then, there's THE FISCAL PROBLEM of ...
1. BLOATED GOV'T
2. UNNECESSARY GOV'T SPENDING
(where THE BRIBES + KICKBACKS are "BUILT-IN".)
Ken, Toronto, CANADA
Graph axes are wrong. Months are independent and should be on the x axis.
The business cycle has not gone extinct, it just that bubble money from both the Treasury and the Fed will just not let it happen till after November 5th.
Interesting to compare to 2000 . Looking at the chart 2000s momentum looks more similar to the nifty fifty time .
So what I hear is, "Biden better keep manipulating oil prices lower or this is all going to go to $#!+!" 😂
Housing has held up because of all the Fanny/Freddy low arms and low money down requirements...more kicking the can down the road and it will explode big time in a couple years
The people are screwed
Can you do a show on how to avoid building a portfolio of mediocrity?
I'm in my 30's and I don't want to invest in such a way I end up getting the Kitchen sink.
I want like 8 investments that compose a moonshot effort and potential in each of the eight investments.
Any suggestions?
@50:28, isn't that "wealth effect" that is causing some of the softi-locks landing - all in potentially volatile holdings? I.e., residential real-estate and stock holdings.. which could be very suddenly marked-to-market, correct?
Have a $1.2Million where your neighbor in a comparable home loses their job, and because they have a ton of credit card debt - suddenly has to sell the house they didn't want to sell because of their 30-year 2.5% APR and held on long past when they should have cashed out - suddenly that house sells for $650k because that was what a person how could get a loan could afford. That $1.2Million loses 1/2 of its value overnight due to comps.
It still doesn't feel like the argument here holds a ton of water for soft-ish landing. The reason that "all at once" things happens is due to the volatility of those asset types - when everyone (the juicy center of the normal distribution) notices they have risk, is when the upper bell-end of the curve has already moved out of those assets, and that sets the trajectory downwards.
That sounds written by 2023 "Pig in Python" Adam Taggart. In reality, theres like 10 homes for sale where there were 100, so even if only 10% of people can buy compared to before, they have no relative demand problem selling the 1.2 million home, it may get bid up.
@@handler8838 At the same time there is the shadow inventory and sales - I'm reading about entire developments being at wholesale sold off market, developments using "Sold!" signs to increase buyer urgency, all of which doesn't show up in MLS - this and other party-to-party sales that are all-cash and off-list... mostly done that way specifically to prevent local re-pricing.
To your point of that lower "for-sale" inventory being met by the current demand... That kind of makes my point a bit too, if as you say there's only 10% the historic trend demand available right now - that's fine as long as there's only 10% of the historic inventory. Supply and demand is a two variable equation to arrive at pricing. If supply increases and demand doesn't (and/or can't, or falls - wanting to buy a house is not equal to being able to buy a house, the latter is the "true" demand), then price collapses - and that may have implications for existing mortgages as downward price adjustments result in underwater mortgages short selling or outright strategic defaulting like we saw a decade ago. We see a lot of HELOC credit lines opening up - and that will choke off if the underwriting asset (the home's equity) evaporates due to regional re-pricing detracting from the perception of a wealth effect (another positive feedback mechanism).
It may be fine "now", but I read that now as a statement isolated from "risk in the future" - and the trend IMO appears to be a general economic contraction and market volatility.
I see this housing supply/demand as similar to gasoline supply demand. Gas prices are falling despite OPEC artificially keeping the supply low to keep crude prices up - which suggests the other variable demand (or rather the lack thereof) is driving the price down.
What's going to a happen, people crushed, stop having families, go homeless -- but banks rake in the big bucks from higher interest rates that squeeze out the last drop of blood.
I'm on a fixed income but have cash so being paid interest is GOOD for me.
That has happened plenty of times throughout History, most notably in France in the late 1700's.
@@faithsrvtrip8768 hope you already own your home. That savings rate doesn't keep up with interest payments or rent increases.
Slides available?
He's bullish now? Contrarian signal, time to turn bearish.
The best strategist seen on your channel so far. The most insightful comments
I need to hear what Caitlin Clarke thinks.
I see no signs of a slowing economy where im at. Restaurants are packed, amazon trucks are everywhere, home prices are still rising. If others see differently, i would like to know.
I'm curious, are you located in the NorthEast? I'm asking because NE states seem to disproportionately benefit from massive Federal government spending.
Gen Z Living in their parents basement with no bills can still afford to go out. How many families with kids are there? Probably none because they can’t even afford groceries.
@@ICDeadPeepsI live in PA
You're extrapolating from your personal experience and saying because you see stores and parking lots full of people that therefore the U.S. economy is booming. The wealthy 10% I'm sure are spending because their homes, the stock market, crypto, gold, all their assets and investments have exploded in value. The other 90 percent and middle and lower class are saying that they're struggling and living paycheck to paycheck and maxed out on credit. Both of these scenarios could be true but it appears inflation and immigration are the two biggest issues in the upcoming election.
I know someone's wife that spent $100,000 in 1 year on Amazon lollll. Her husband was so pissed
Economic investigator Frank G Melbourne Australia is still following this very informative content cheers Frank 😊
100k in a week! Have a scotch ;-)
2nd, 11 June 2024
Yeah we have a recession every 10 years
This guy would be wrong again in 2024 and 2025😂
Summary: Malaise for several years.
TH-cam has taught me that no one knows a thing. We're in uncharted territory in so many ways. Many good reasons to believe that great depression 2.0 is long overdue. But then again, many great reasons to expect France of the late 1700's (wealth inequality becoming increasingly acute until heads literally start to roll).
I didn't know that Sacha Baron Cohen was an economist.
🎉
Adam, please stop saying Okay, alright to every point.
The fact is that Kantrowitz missed it. Just like everyone else.
The HOPE framework failed.
“this time is different”.
Everyone continues to get this market wrong.
I’m truly looking forward to a time when AI is dominating the world of financial advice.
it didn't fail, the E never completed it's signal.