Strategist Sound the Alarm: Anticipate Stocks and Home Prices to Dip, Marking an End to the US Economy’s ‘Trampoline Landing’ in the Coming Year

A strategist predicts that the US economy’s strong recovery will come to an end next year. They warn that the stock market and home prices will decline, signaling the end of the “trampoline landing” experienced during the rebound. This prediction suggests that the economy will face a challenging period after the initial bounce-back..

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Vincent Deluard, the director of global macro strategy at StoneX Group.Vincent Deluard/Real Vision

Stocks and home prices are poised to drop and the US economy is set to cool, Vincent Deluard says.
Investors will grab larger bond yields, and wary sellers will list their homes eventually, he says.
The StoneX strategist sees a slowdown in 2024 after public spending fueled a “trampoline landing.”

Brace for stocks and house prices to drop, and the US economy to slow after its “trampoline landing,” a leading strategist has warned.

“I’m concerned about stocks,” Vincent Deluard, the director of global macro strategy at StoneX Group, told RealVision this week. “We’re getting to the point where things hurt.”

Deluard noted the S&P 500 has rallied 25% from its October lows, and now trades at more than 22 times earnings. Investors might decide to cut their exposure to stocks, given the growing pressure on corporate profits, and the fact that 2-year and 10-year Treasury yields have jumped to almost 5% and 4% respectively, he said.

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The frozen US housing market will also thaw in time, Deluard said. Many homeowners have locked in cheap, fixed-rate mortgages and are loath to give them up by selling. The lack of inventory has shored up home values, even though the Federal Reserve’s hikes to interest rates since last spring have sharply increased mortgage rates.

“Look at the real estate market, no one wants to sell,” Deluard said. “But eventually, people switch jobs, move cities, get divorced, die. That will bring the prices down.”

As for the wider US economy, it has defied recession forecasts and rebounded for a few reasons, Deluard said. He pointed to public-spending programs such as the Inflation Reduction Act and CHIPS and Science Act, cost-of-living adjustments to payments for social-security recipients, and inflation-related tweaks to income-tax brackets.

However, Deluard predicted the growth outlook would darken by January or February. “A lot of that momentum is going to slow, it’s going to hit the brakes,” he said, adding that the Fed’s rate hikes are ultimately “going to bite.”

Read the original article on Business Insider

Vincent Deluard, the director of global macro strategy at StoneX Group, warns that stocks, home prices, and the US economy are all poised for a slowdown. Deluard predicts that investors will start seeking larger bond yields, leading to a decline in stock prices. He also believes that the frozen US housing market will eventually thaw, causing home prices to drop. Deluard attributes the recent rebound in the US economy to public-spending programs, but expects growth to slow down by early 2024. He cites the Federal Reserve’s rate hikes as a factor that will impact the economy negatively.

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