Top Wall Street Strategist Expresses Worries About Looming Recession: 'We Are At The Very Onset'

A renowned Wall Street strategist, Michael Kantrowitz of Piper Sandler, has voiced concerns over the possibility of an imminent recession. This speculation is based on his analysis of various sectors within the U.S. economy.

What Happened: Kantrowitz employs a four-part framework titled HOPE to assess the economic fallout of the Federal Reserve’s interest rate hikes. The term HOPE is an acronym for “housing,” “orders,” “profits,” and “employment.” He asserts that these sectors are sequentially impacted by rate hikes, commencing with housing and concluding with the job market, reported Business Insider.

Kantrowitz’s analysis reveals that the housing sector is currently weak, manufacturing is diminishing, and corporate profit growth has decelerated. The final indicator, employment, is exhibiting signs of fragility, which Kantrowitz interprets as a significant warning sign.

See Also: US Stock Market Posts Another Week Of Gains As Inflation Softens: This Week In The Markets

He suggests that a yearly 10% surge in the percentage of jobless individuals is a potential harbinger of an impending recession. The current figure is 7.7% and is climbing. Despite the unemployment rate escalating to 3.9% from 3.4% earlier this year, unemployment claims have not spiked dramatically. However, Kantrowitz predicts they will, due to the correlation between homebuilder sentiment and escalating claims.

“Regarding employment – I see enough data that has me convinced that we are at the very onset of a recession right now,” Kantrowitz added.

Why It Matters: Earlier, UBS Group AG also predicted a U.S. recession in 2024, expecting significant Federal Reserve rate cuts. This forecast was substantially more bearish than the market consensus. However, other economists remained optimistic about a ‘soft landing’ for the U.S. economy, suggesting a return to pre-pandemic inflation rates without triggering a major economic downturn.

Read Next: Large-Cap Stocks Pause, Small Caps Shine, Oil Makes Comeback: What’s Driving Markets Friday?

Photo by faithie on Shutterstock


Engineered by Benzinga Neuro, Edited by Pooja Rajkumari


The GPT-4-based Benzinga Neuro content generation system exploits the extensive Benzinga Ecosystem, including native data, APIs, and more to create comprehensive and timely stories for you. Learn more.


Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Analyst ColorNewsEconomicsEmployment RateHousing Marketmanufacturing sectorMichael KantrowitzRecessionStories That MatterWall Street
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!