Donoghue Forlines: Markets in Motion – Deja Vu

Markets in Motion Commentary by John A. Forlines III,
Chief Investment Officer, Donoghue Forlines
Originally Published October 11, 2023

The last couple of months have felt reminiscent of 2022. Since the end of July long-term treasuries have delivered a return of -14.20%, while the S&P 500 has returned -7.69%. Downward momentum has yet to abate, as the technical picture for stocks continues to deteriorate and yields have hit 10-year highs. This sets up tough choices in asset allocation, but we believe presents advantages for tactical strategies.

Macroeconomic Outlook

The US economy is on a knife-edge where weaker growth could tip it into recession while stronger growth could trigger a second wave of inflation. Both outcomes will lead to a recession. But this likely will not happen until the second half of 2024. While the economy has held up past many expectations, a look at the history of recent decades shows that such long and variable lags between policy tightening triggering a recession signal and the recession’s actual arrival is typically longer than 12 months. In other words, just because a US recession has not yet materialized does not mean that one will not strike in the next 12 months.

Click here to read the full Donoghue Forlines Markets in Motion Commentary.


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