Investing Insights

Jon Wolfenbarger's Free Stock and ETF Investor Insights for Profitable InvestingOur most popular feature by far, Investing Insights unleashes the experienced minds of Jon and our team, sharing exclusive information & education we believe smart investors should know BEFORE risking funds in current markets. We share fresh insights at least weekly -- but sometimes more frequently -- as our proprietary economic and technically-driven models & indicators flash bull, bear, turning points, risk flags, wobbles, bubble alerts, accelerating profit opportunities and much, much more. Our members can learn a great deal from this section and it can help both grow AND preserve your nest egg and trading profits. Since you won’t find these insights anywhere else on the web, we encourage you to bookmark this feature and check back often.

BEAR MARKET WATCH  •  March 23, 2023  •  Jon Wolfenbarger

What Could Go Wrong With Fed Tightening Into A Banking Crisis And Recession?

ANTWERP, BELGIUM — As expected, Jay “Transitory Inflation” Powell raised the Federal Funds rate by 0.25% to 4.75%-5.00% and reiterated the Fed’s plans to continue to shrink their balance sheet with “Quantitative Tightening”.


Powell said rate cuts are not in their base case and the Fed “anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.” 


The Fed reiterated their expectations for the Federal Funds rate to end 2023 at 5.1%, the same as their expectation in December. However, they raised their Federal Funds rate expectation for year-end 2024 from 4.1% to 4.3%, which signals rates being “higher for longer”, which is more hawkish than expected.


Acknowledging the banking crisis they helped create, the Fed said “Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain.”


Powell said he still thinks a “soft landing” (i.e., no recession) is “possible”, but the longer the banking crisis lasts, the lower the chances will be. In other words, don’t bet on it!


Meanwhile, Treasury Secretary Janet “Free Lunch” Yellen reiterated the government does not plan to support bank stocks and bonds, saying ”It’s important to be clear: shareholders and debtholders of the failed banks are not being protected by the government”. She also added "no losses from the resolution of these banks are being borne by the taxpayer,” which raises the question of who will be paying for the free lunch to bail out banks from this crisis.


The market currently estimates a 52% chance of another 0.25% hike in May and a 48% chance of no hike. We’ll see how that changes as the banking crisis and recession unfolds.



Leading Economic Indicators Continue To Flash Recession Warning

The Conference Board’s Leading Economic Indicators (LEI) continue to warn of an impending recession and they do not yet reflect the emerging banking crisis.


Justyna Zabinska-La Monica, Senior Manager of Business Cycle Indicators at The Conference Board, explained their latest LEI report:

“The LEI for the US fell again in February, marking its eleventh consecutive monthly decline. Negative or flat contributions from eight of the index’s ten components more than offset improving stock prices and a better-than-expected reading for residential building permits. While the rate of month-over-month declines in the LEI have moderated in recent months, the leading economic index still points to risk of recession in the US economy. The most recent financial turmoil in the US banking sector is not reflected in the LEI data but could have a negative impact on the outlook if it persists. Overall, The Conference Board forecasts rising interest rates paired with declining consumer spending will most likely push the US economy into recession in the near term.”



LEI

Source: https://www.conference-board.org/topics/us-leading-indicators



Many “experts” say a recession is virtually impossible given the continued growth of GDP. But GDP is not a leading indicator of recession.


As the following chart shows, the LEI (blue line) historically signals recessions long before GDP growth (gray line) turns negative. In fact, GDP growth never turned negative in the early 2000s recession, when the NASDAQ fell over 80%. Note that GDP growth has already slowed to levels seen in the first part of the early 2000s and 2008-2009 recessions.



LEI GDP

Source: https://www.conference-board.org/topics/us-leading-indicators




Industrial Production Is Now Declining

The Industrial Production Index is one of the key coincident indicators of the business cycle. It measures real output in the manufacturing, mining and utilities industries and is produced monthly by the Federal Reserve.


The leading indicators predicted Industrial Production would decline as a recession starts. Like clockwork, Industrial Production is now declining (albeit only -0.25% so far), as it typically does at the beginning of a recession, as shown in the graph below (with recessionary periods shaded gray).



Industrial Production




Stocks Are On The Precipice

Despite a banking crisis and signs of a recession, the S&P 500 is only down 17% from its peak in early 2022, after having fallen 28% through mid-October. Incidentally, every single time the S&P 500 has fallen that much over that length of time, there was a  recession. But there has been a lot of back-and-forth churning in the market in recent months and the S&P 500 is still where it was in May of last year. This has been frustrating for both bulls and bears.


As the following chart shows, the 36-month moving average (36-mma) usually provides support for stocks in pullbacks…except when there is a major bear market, such as in the early 2000s and 2008-2009. 


The S&P 500 broke below the 36-mma in September, but bounced back above it in October. It is currently about 1% above the 36-mma. A clear break below it will likely signal significant downside to come, as it did in the last two major bear markets.



S&P 500 36-month moving average




Implications For Investors

The Fed continues to tighten monetary policy with rate hikes and Quantitative Tightening, despite the banking crisis and signs of a recession. This is the opposite of their behavior during the major bear markets of the early 2000s and 2008-2009, when they slashed interest rates in vain.


As a result, we believe much more stock market downside potential exists, which will likely occur after the S&P 500 decisively breaks below its 36-mma.






FREE "FORECASTING THE ECONOMY" WEBINAR AVAILABLE


A Members-only webinar is now available titled “BULL AND BEAR PROFITS STEP 2: FORECASTING THE ECONOMY". This is the second of four webinars where we discuss in detail our four key steps for profiting in bull and bear markets. This webinar focuses on the most important leading economic indicators for predicting the boom and bust business cycle.


Understanding how to forecast the economy, which even the Fed and most professional investors do not know how to do, will be incredibly powerful in helping you build conviction to prepare for and profit from bull and bear trends in all assets. It is on the “BULL & BEAR WEBINARS” page here: https://bullandbearprofits.com/Education/Bull-and-Bear-Webinars.aspx




 Previous Issues  


BANKING CRISIS  •  March 13, 2023  •  Jon Wolfenbarger
Banking Crisis Implications For Investors And The “Softish Landing” Dream

RISING INTEREST RATES  •  March 3, 2023  •  Jon Wolfenbarger
Do Investors Understand What Happens When Interest Rates Rise?

RECESSION WATCH  •  February 26, 2023  •  Jon Wolfenbarger
8 Stages Of Recession Point To Crash Landing, Not “Softish Landing” (Part 2)

RECESSION WATCH  •  February 22, 2023  •  Jon Wolfenbarger
8 Stages Of Recession Point To Crash Landing, Not “Softish Landing” (Part 1)

EARNINGS OUTLOOK  •  February 12, 2023  •  Jon Wolfenbarger
Wall Street Bullishness Unfazed By Recessionary Earnings Outlook

MARKET OUTLOOK  •  February 2, 2023  •  Jon Wolfenbarger
Powell Fuels Stock Rally With Hopes For A “Softish Landing”

RECESSION WATCH  •  January 26, 2023  •  Jon Wolfenbarger
Credit Card Crisis Coming As Layoffs Mount (Part 2)

RECESSION WATCH  •  January 22, 2023  •  Jon Wolfenbarger
Credit Card Crisis Coming As Layoffs Mount (Part 1)

INFLATION WATCH  •  January 12, 2023  •  Jon Wolfenbarger
Headline Inflation Slowed, But High Underlying Inflation Keeps Fed Tightening

RECESSION WATCH  •  January 4, 2023  •  Jon Wolfenbarger
Money Supply And Manufacturing Declines Add Fuel To The Bear Market Fire

STOCK MARKET OUTLOOK  •  December 27, 2022  •  Jon Wolfenbarger
Can Investors Handle The Truth…About Stock Market Downside Potential?

BEAR MARKET SELLOFF  •  December 18, 2022  •  Jon Wolfenbarger
Powell “Pivot” To “Pain” Kicks Off Next Major Bear Market Selloff

RECESSION WATCH  •  December 12, 2022  •  Jon Wolfenbarger
Recession Signs Abound As Market Rally Peaks

INFLATION RISK  •  December 7, 2022  •  Jon Wolfenbarger
Fed Likely Forced To Fight High Inflation For Many Years To Come

BEAR MARKET UPDATE  •  November 29, 2022  •  Jon Wolfenbarger
Bullish Sentiment Signals Major Stock Selloff Likely Coming Soon

EARNINGS ESTIMATES  •  November 19, 2022  •  Jon Wolfenbarger
Prepare For The Coming Collapse In Wall Street Earnings Estimates

BEAR MARKET RALLY  •  November 11, 2022  •  Jon Wolfenbarger
Inflation “Beat” Causes Investors To Forget The 4 Most Dangerous Words In Investing

BEAR MARKET DURATION  •  November 3, 2022  •  Jon Wolfenbarger
How Long Will This Bear Market And Recession Last?

BEAR MARKET LOSSES  •  October 25, 2022  •  Jon Wolfenbarger
3 Ways To Estimate Stock Bear Market Downside Potential

INFLATIONARY BEAR MARKET  •  October 17, 2022  •  Jon Wolfenbarger
Accelerating Inflation Creates Stock Bear Market Opportunities

BEAR MARKET INDICATORS  •  October 9, 2022  •  Jon Wolfenbarger
Is The Stock Market About To Crash?

GOVERNMENT DEBT WATCH  •  October 3, 2022  •  Jon Wolfenbarger
The US Government Is Heading Toward A Major Debt Crisis

BEAR MARKET INTENSIFIES  •  September 24, 2022  •  Jon Wolfenbarger
The Fed Pivots To Even More “Pain” For Stocks And The Economy

FED WATCH  •  September 14, 2022  •  Jon Wolfenbarger
High Inflation Continues To Force Fed To Cause “Pain”

COMMODITIES  •  September 5, 2022  •  Jon Wolfenbarger
Oil And Commodities Bear Market Is Likely Just Beginning

RECESSION WATCH  •  August 28, 2022  •  Jon Wolfenbarger
Powell’s “Pivot” And The Top 10 Signs Of An Impending Recession

HOUSING WATCH  •  August 17, 2022  •  Jon Wolfenbarger
Housing Bear Market Will Help Cause Great Recession 2.0

BEAR MARKET WATCH  •  August 9, 2022  •  Jon Wolfenbarger
Why The Next Major Bear Market Selloff Is Likely Coming Soon

RECESSION WATCH  •  July 31, 2022  •  Jon Wolfenbarger
Fed Rate Hike + Negative GDP = Stock Market Rally

BEAR MARKET WATCH  •  July 22, 2022  •  Jon Wolfenbarger
It’s Like 2008 All Over Again, But Likely Worse

BEAR MARKET RISK  •  July 13, 2022  •  Jon Wolfenbarger
Here Is Why Stocks Will Likely Fall Another 40%+

DISINFLATION TREND  •  July 5, 2022  •  Jon Wolfenbarger
From Inflation To Disinflation: Impact On Stocks, Bonds, Commodities And Bitcoin

COMMODITIES WATCH  •  June 27, 2022  •  Jon Wolfenbarger
Is The Commodities Bull Market Over? See What This Key Indicator Is Telling Us Now

RECESSION WATCH  •  June 23, 2022  •  Jon Wolfenbarger
Here Comes Another Recession, Thanks To The Fed

BEAR MARKET TECHNICALS  •  June 19, 2022  •  Jon Wolfenbarger
How To Spot Stock Bear Market Selloffs And Rallies

BULL VS BEAR  •  June 9, 2022  •  Jon Wolfenbarger
Three Key Reasons This Is A Bear Market Rally, Not A New Bull Market

INVESTING RISKS  •  June 1, 2022  •  Jon Wolfenbarger
The Biggest Risk Investors Face In Coming Years

RECESSION SIGNS  •  May 23, 2022  •  Jon Wolfenbarger
Central Planning Disaster…The Fed Is Hiking Rates Into A Recession

BULL VS BEAR  •  May 15, 2022  •  Jon Wolfenbarger
3 Reasons Bear Market Rally Could Continue, Despite Recessionary Signs

BEAR MARKET SIGNS  •  May 7, 2022  •  Jon Wolfenbarger
Bear Market Rules Apply…Sell The Rallies Instead Of Buying The Dips

BEAR MARKET SIGNS  •  April 28, 2022  •  Jon Wolfenbarger
This Is Not Your Father’s Stock Bear Market

BONDS AND COMMODITIES  •  April 21, 2022  •  Jon Wolfenbarger
Outlook For Bond And Commodity ETFs In The Coming Recession

SECTOR TRENDS  •  April 12, 2022  •  Jon Wolfenbarger
Stock Sector Performance Is Warning Us About The Market’s Direction

FED WATCH  •  April 8, 2022  •  Jon Wolfenbarger
Can The Fed Predict Anything?

RECESSION WATCH  •  April 4, 2022  •  Jon Wolfenbarger
Recession And Bear Market Countdown Has Started

FED WATCH  •  April 1, 2022  •  Jon Wolfenbarger
The Fed Can’t Control The Economy, But They Do Lower Living Standards

LONG-TERM RETURNS  •  March 27, 2022  •  Jon Wolfenbarger
Will The Stock Market Really Be 50%+ LOWER In 12 Years?

BULL VS BEAR  •  March 20, 2022  •  Jon Wolfenbarger
Strong Stock Rally Last Week, But Evidence Remains Bearish

BEAR MARKET SIGNS  •  March 10, 2022  •  Jon Wolfenbarger
Objective Signs A Stock Bear Market Is Starting -- How To Profit Instead Of Lose

ETF TRENDS  •  March 2, 2022  •  Jon Wolfenbarger
War Is Helping Fuel The Commodity ETF Bull Market

BEAR MARKET SIGNS  •  February 21, 2022  •  Jon Wolfenbarger
Warning: Widespread Shift To Bearishness Across Most Stocks And ETFs

SECTOR TRENDS  •  February 17, 2022  •  Jon Wolfenbarger
Current Best And Worst Stock Sector ETFs

PROFIT FROM INFLATION  •  February 9, 2022  •  Jon Wolfenbarger
How To Profit From Inflation With ETFs

INTEREST RATES AND STOCKS  •  February 1, 2022  •  Jon Wolfenbarger
Proof That Major Stock Bear Markets Can Start Without Rising Interest Rates

BULL VS BEAR  •  January 24, 2022  •  Jon Wolfenbarger
Stock Market Crashing: Bull Market Correction Or Bear Market Beginning?

FED WATCH  •  January 18, 2022  •  Jon Wolfenbarger
What Fed Rate Hikes Can Do To Stocks And ETFs In 2022

STOCK MARKET INDICATORS  •  January 8, 2022  •  Jon Wolfenbarger
Rough Start To The Year Is Not Encouraging For Most Stocks And ETFs

LEADING ECONOMIC INDICATORS  •  December 31, 2021  •  Jon Wolfenbarger
2022 Perfect Storm: Global Slowdown + Fed Tightening?

SECTOR TRENDS  •  December 20, 2021  •  Jon Wolfenbarger
Current Best And Worst Stock Sector ETFs For Long-Term Trend And Short-Term Trade

ASSET TRENDS  •  December 13, 2021  •  Jon Wolfenbarger
Current Best and Worst ETFs For Long-Term Trend and Short-Term Trade

BULL AND BEAR TECHNICALS  •  December 5, 2021  •  Jon Wolfenbarger
Holiday Sales Continue On Stocks and “Risk-On” ETFs

BULL AND BEAR TECHNICALS  •  November 27, 2021  •  Jon Wolfenbarger
“Red Friday” Sale On Stocks And Most ETFs

FED WATCH  •  November 19, 2021  •  Jon Wolfenbarger
The Market Says Interest Rate Hikes Are Coming, Whether The Fed Likes It Or Not

COMMODITIES  •  November 11, 2021  •  Jon Wolfenbarger
Commodities Are The Only Major ETF Asset Class With Attractive Long-Term Returns

BULL VS BEAR  •  November 4, 2021  •  Jon Wolfenbarger
Bull Market Continues, But Stocks Will Likely Be 50%+ Lower In 12 Years!

BEATING THE MARKET  •  October 26, 2021  •  Jon Wolfenbarger
Why Mutual Funds Don’t Work

CRYPTOCURRENCIES  •  October 19, 2021  •  Jon Wolfenbarger
Bull Case For Bitcoin ETFs — And The Best One To Buy Now

BULL AND BEAR TECHNICALS  •  October 11, 2021  •  Jon Wolfenbarger
The Stock Market Is Weakening More Than Most Stock And ETF Investors Realize

BEAR MARKET PROFITS  •  September 30, 2021  •  Jon Wolfenbarger
How To Trade ETFs To Maximize Bear Market Profits

BEAR MARKET PROFITS  •  September 22, 2021  •  Jon Wolfenbarger
How To Identify Bear Markets With ETFs And Basic Technical Analysis

BEAR MARKET PROFITS  •  September 19, 2021  •  Jon Wolfenbarger
How To Make Money -- Instead Of Lose Money -- In A Stock Bear Market

ETF STRATEGY  •  September 16, 2021  •  Jon Wolfenbarger
Proof That ETF Strategies Using Technical Analysis Significantly Beat “Buy And Hold” Investing

BULL AND BEAR TECHNICALS  •  September 10, 2021  •  Jon Wolfenbarger
Good News And Bad News For Stocks And Stock ETFs On Three Different Time Frames

BEATING THE MARKET  •  September 1, 2021  •  Jon Wolfenbarger
Three Ways To Beat The Market With Stocks And ETFs

BEAR MARKET RISK  •  August 28, 2021  •  Jon Wolfenbarger
Here’s Why The Next Stock Bear Market Will Likely Be The Worst Since The Great Depression

ETF TRENDS  •  August 26, 2021  •  Jon Wolfenbarger
These Popular ETF “Inflation Hedges” Are Now Moving In Opposite Directions

ETF STRATEGY  •  August 24, 2021  •  Jon Wolfenbarger
What Smart ETF Investors Need To Understand About Bitcoin, Gold and Stocks

SECTOR ETFS  •  August 19, 2021  •  Jon Wolfenbarger
Sector ETFs With The Best and Worst Earnings Growth In 2021 and 2022

ECONOMICS 101  •  August 12, 2021  •  Jon Wolfenbarger
Employment Remains At Recessionary Levels, Thanks To Government Subsidies

MONEY MISCHIEF  •  August 9, 2021  •  Jon Wolfenbarger
Wise ETF And Stock Investors Focus On Money Supply, Not Employment

BULL AND BEAR TECHNICALS  •  August 7, 2021  •  Jon Wolfenbarger
Bonds, Gold and Silver ETFs Are All In Bear Markets

MONEY MISCHIEF  •  July 31, 2021  •  Jon Wolfenbarger
Commodity Stocks and ETFs At Risk As Money Supply and Industrial Production Growth Slows

STOCK MARKET TREND  •  July 24, 2021  •  Jon Wolfenbarger
Stock Market Uptrend Remains Intact, But Four Key Indicators Show Cracks Below The Surface

STOCK MARKET SENTIMENT  •  July 20, 2021  •  Jon Wolfenbarger
Stock Market Investor Sentiment Is Flashing Danger Signs

STOCK MARKET WARNING  •  July 14, 2021  •  Jon Wolfenbarger
Investor Warning: US Stock Market Is Most Overvalued In History!

ASSET TRENDS  •  July 9, 2021  •  Jon Wolfenbarger
What Major Asset (and ETF) SURPRISINGLY Has The Most Bearish Trend Right Now?

INFLATION DANGERS  •  June 30, 2021  •  Jon Wolfenbarger
3 Reasons ETF And Stock Investors Must Prepare To Profit From Rising Inflationary Pressures

DEBT DANGERS  •  June 23, 2021  •  Jon Wolfenbarger
The Government Debt Bomb Could Decimate Stock And ETF Investors Who Are Not Prepared

BULL AND BEAR TECHNICALS  •  June 15, 2021  •  Jon Wolfenbarger
What This Proven Indicator Is Telling Us About The Stock Market And Economic Trend

BOOM AND BUST INDICATORS  •  June 8, 2021  •  Jon Wolfenbarger
What Every ETF And Stock Investor Should Know About Business Cycles

BOOM AND BUST INDICATORS  •  June 1, 2021  •  Jon Wolfenbarger
How To Use The Yield Curve To Profit From Booms And Busts

CREATING WEALTH  •  May 25, 2021  •  Jon Wolfenbarger
How To Achieve Financial Freedom By Investing In ETFs And Stocks

FREE MARKET INSIGHTS  •  May 19, 2021  •  Jon Wolfenbarger
How Successful Stock And ETF Investing Benefits Society By Creating Wealth

CRYPTOCURRENCIES  •  May 13, 2021  •  Jon Wolfenbarger
Trader Alert: 5 Bitcoin Bear Market Sell Signals

BULL AND BEAR TECHNICALS  •  May 6, 2021  •  Jon Wolfenbarger
How To Profit More Than Buy And Hold Investing

BULL AND BEAR TECHNICALS  •  April 30, 2021  •  Jon Wolfenbarger
Why Smart Stock Traders Always Use The 250-Day Moving Average