Eric Hovde Predicts

recession, stock market decline, and housing market decline. From December 19th (Newport Beach Independent):

  • Economic Slowdown: The U.S. is likely to enter a recession, with consumers expected to deplete their savings, leading to only one potentially positive GDP quarter in 2024.

  • Corporate Downsizing and Unemployment: Anticipated downsizing in corporations may push unemployment rates up, though they are expected to remain below 5%.
  • Federal Reserve’s Policy: The Fed might increase interest rates by another 25 basis points but will likely start reducing rates in mid to late 2024, with cuts not exceeding 75 basis points unless a global crisis occurs.
  • Stock Market and Bond Market: The stock market is projected to experience a 15% sell-off within the next six months, followed by a moderate rally when rate cuts begin. The bond market, after three consecutive down years, is expected to see positive growth in 2024.
  • Housing Market: Housing prices might decline by up to 10%, but limited inventory should provide some resilience.
  • Commercial Real Estate: CRE values are expected to continue declining, with multifamily properties potentially underperforming after a decade of strong performance.

As I noted yesterday, median Survey of Professional Forecasters is for no quarters of negative growth, and nowcasts are for positive growth in Q2.

Figure 1: GDP (bold black), May SPF median (light blue), GDPNow of 5/16 (blue square), New York Fed nowcast of 5/17 (green triangle), St. Louis Fed nowcast of 5/17 (tan square), all in bn.Ch.2017$, SAAR. Source: BEA 2024Q1 advance, Philadelphia Fed, Atlanta Fed, NY Fed, St. Louis Fed via FRED, and author’s calculations.

Hence, the first prediction seems unlikely to turn out well.

On unemployment, unemployment is predicted by the SPF to rise, but to far below 5%.

Figure 2: Unemployment rate (bold black), and May SPF median forecast (light blue), both in %. Source: BLS, Philadelphia Fed.

What about the 15% selloff? It’s unclear what the 15% is off of; I assume it’s the level in December of 2023. Here is plot of the S&P500 and what the S&P500 needs to be in June to match Hovde’s prediction.

Figure 3: S&P500 (bold black), and Hovde’s prediction (red square). May observation is through 16th of May. Source: FRED, and author’s calculations.

Finally, what about the housing market? The 10% price decline is for 2024, so I assume the 10% decline is off December’s level.

Figure 4: S&P Case Shiller 20 City house price index, s.a. (bold black), and Hovde’s prediction (red square). Source: FRED and author’s calculations.

14 thoughts on “Eric Hovde Predicts

  1. James

    Eric Hovde the rich guy from Newport Beach California that says people in long term care facilities should not vote – because they “only have five, six months life expectancy.” https://www.wpr.org/news/senate-candidate-eric-hovde-nursing-home-voters Such an attitude is not surprising coming from a guy who owns a bank that has an assisted living home in California as an asset cited for a series of violations, The home, Claremont Hacienda in Los Angeles County, has also been named in a wrongful death lawsuit filed by the daughter of a former resident. https://wisconsinexaminer.com/2024/04/24/assisted-living-home-lawsuit-citations-add-to-controversy-over-hovdes-nursing-home-remarks/
    Meanwhile Tammy Baldwin (an actual Wisconsin resident unlike Johnson who spends a large part of his time at a “vacation” home in Florida) – is leading legislation to support caregivers and combat workforce shortages in long-term care facilities – https://www.baldwin.senate.gov/news/press-releases/baldwin-leads-bill-to-support-caregivers-and-combat-workforce-shortages Sen Baldwin has also consistently supported the VA and helped pass legislation to expand VA health care and benefits – https://www.tammybaldwin.com/issues/veterans/

    1. pgl

      “Hovde’s spokesman, Ben Voelkel, said Tuesday that neither the bank nor Hovde are involved in the day-to-day operations of the assisted living and memory care home, which is managed under contract by another company. Hovde has called the lawsuit “manufactured” and The New York Times report about it “a hit job.” And his campaign has said Hovde’s comments about nursing home residents voting have been taken out of context.”

      The Trump defense? Don’t blame me for these violations as I only owned the place? Seriously?

  2. pgl

    “Sunwest had officially grown from a small local real estate bank into a regional bank serving the entire West Coast in just five short years. Sunwest Bank has recently moved its headquarters to Sandy, UT, in the Salt Lake City metropolitan area. From our founding all the way up until now, we have always been a bank that focuses on two things: helping entrepreneurs achieve their American dream, and giving back to our community. Sunwest specializes in working with small-medium businesses, privately held corporations, family offices, and real estate developers and investors. We are the bank built by entrepreneurs for entrepreneurs.”

    OH REALLY! This gang reminds me of Princeton Stevie boy. “Do you know who I am”!

  3. Baffling

    Considering he made these predictions in December 2023, with little accuracy 5 months later, he appears to have similar analytical skills to our own steven kopits. Neither individual seems to base their analysis on data. Both seem to rely in the “do you know who I am” authority approach to analysis. I would be worried if Hovde runs a bank.

    1. Ivan

      The biggest problem with those types of personalities is not just that they don’t know enough – its that they don’t know how to learn more (which is the root of their problem with not knowing enough). Whenever they make one of their many mistakes, they try to blame it on someone else (or deny the facts). Whenever their opinions are in conflict with opinions of other people they don’t try to reflect on or argue their case, they just presume those others are wrong. If you can’t listen you can’t learn.

  4. pgl

    Hovde Properties is his real estate firm that was started in 1933 by his grandfather. A Wisconsin version of Donald Trump. Come on Menzie – he’s the perfect senator for your state (cough, cough).

  5. AS

    I liked reading both sides of the argument. Even if a person is wrong, we may learn something useful.

    Most forecasters of big moves are often wrong or if right can rarely repeat such forecasts with accuracy, according to Maury Harris, author of “Inside the Crystal Ball: How to Make and Use Forecasts”, Wiley, 2015.

  6. Macroduck

    Hovde is on record saying that changes to the Fed’s portfolio have an impact on financial markets as large as the impact of rate policy, or larger; watch the balance sheet in preference to rates. Hmmm…

    Do we have empirical evidence for this claim? No, and we can’t have. The problem with Hovde’s claim is that he hasn’t specified numbers of basis points or billions. This is rather like warning that over-watering is more likely to kill your hydrangeas than over-fertilizing. One cup of water is worse than one pound of fertilizer? No, but it’s a stupid comparison to begun with. Never mind that balance-sheet reduction is mostly on auto-pilot while rate decisions are made up along the way.

    Hovde has noticed that volatile assets are volatile – those aren’t the words he chose, but that’s what his words meant. He thought crypto-currencies were going to keep falling. He noticed that profit margins were up because pricing led costs higher, and so predictrd stocks were going to keep falling.

    Far dumber things have been said, but other than volatile assets being volatile – not really a prediction – his predictions have been wrong.

    Anyhow, he’s a walking, talking market advisory letter. Lots of passive voice: “…is expected to…” all over the place. Lots of expression of certainty where modesty is warranted, as is made obvious by his many forecasting misses.

    So, hucksters gotta…huck? Is this what we want in our elected officials? It’s what we often pick, so maybe we do.

    By the way, I collected Hovde’s views from YouTube videos of his investor presentations. I won’t link, but they’re easy to find.

  7. Ivan

    Excellent summary of the trap Israel has brought itself into and why Netanjahu would do such a thing.

    https://www.cnn.com/videos/world/2024/05/19/fareeds-take-israel-netanyahu-gps-digvid.cnn

    It is indeed about saving his own sorry ass, not the country. The reason Netanjahu is refusing to talk about a plan after the war with Hamas has been won, is that he know he cannot “win” and that if he did he would end up in jail. His plan always was a forever war, so he could keep himself out of jail forever.

  8. Not Trampis

    Eric Who? Is this just another neville nobody.

    don’t you blokes know your country has permanently in recession since biden took over ( sarc)

    1. pgl

      He is running for the Senate representing Dr. Chinn’s home state. I guess he got TRUMPed by Steve Garvey in California. Garvey is also dumber than a rock but he was a good baseball player. Sort of like Hershell Walker in Georgia and being a good football player.

  9. Ivan

    Bleach blonde, bad build, butch body, Moscow Marjory may have bit off more than she can chew:

    https://www.cnn.com/2024/05/19/politics/video/jake-tapper-jasmine-crockett-marjorie-taylor-greene-sotu-digvid

    Fetterman unfortunately decided to stick his head in the hornets nest:

    https://www.cnn.com/videos/politics/2024/05/19/sotu-fetterman-on-aoc.cnn

    which is bad because I like him even though he often does seem to get himself into deep water from a lack of sophistication and deeper thought processes.

    1. pgl

      When a fellow sees a chick fight break out – maybe he should do like most of the male Congressmen did. STAY OUT! Then again it was the Jerry Springer show and at least Fetterman noted it was the bleach blonde, bad build, butch body that started it all. BTW calling Greene a racist is sort of like saying the Pope is Catholic.

  10. Moses Herzog

    Can anyone investigate if Hovde’s genome holds much similarity of Kopits’ genome?? I see a lot of parallels in their process of thought.

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