Credit Flow Investor

The Fed says no more than 2 drops next year 2025.

They said the same in 2023 about 2024 BUT had 4 drops.

So Fed is still concerned about inflation

BUT construction continues to fall and rising unemployment 2025 will create a big crisis in late 2025-all through 2026. M1 money supply indicates a drying up of liquidity for 2025.

So Fed becomes caught between a rock and a hard place.

Cant drop rates too quick BUT the economy-construction keeps falling and cant be stopped AND mortgage market money supply remains cut-off.

BUT gold shows the inflation cycle has rolled over…

AND XLE starting bear

In 2024, there were concerns of inflation from Jul-Oct. BUT Nov-Dec show a new bear cycle.

AND LASTLY THE FED CANT SAVE THE DAY…

Probably why ECB drops so aggressively…I would say Europe is 1 year ahead of US.

Output started down in Feb but unemployment was delayed for 2Q.

PMI not useful as it was too early by 2 years…

UK also negative this year YoY in October..

Continuing Claims keep push up…

In July 2021, OEX turned bearish and market started to turn bear in Jan 2022.

Likewise, OEX turned bearish in October 2024.

ABNB continues in bear market. Last year was +50% in December…now -12%…

Construction Bear Market 2024-

Since 1991 the economy has worked on loans-construction (as loans are huge now).

Many reported the mortgage market collapse in lending 2022 and 2023.

BUT that is only one of the dominoes. They never tell you the whole story of why recessions happen.

1. Mortgage Market Fall -75% 2y……………………………………………….2022-2023
2. Construction Downturn YoY -10%. ………………………………………..2024
3. Construction Employment Down YoY. ……………………………………2025
4. Delinquencies rise on all loans with construction unemployment..Q3 2025
5. Banking Crisis and Credit Crunch.. …………………………………………2026.

These are the 5 key factors to a recession AND why we have not had one for 16 years!

Clearly construction jobs will stall in early 2025…

Mortgage market down 75% from peak BUT construction has continued that being they are way too optimistic in that business.

1. Construction drops -10% in 2006
2. Layoffs in construction start Jun-Jul 2007 and then only mildly
3. BUT enough to cause loan delinquencies to rise > 2% by Q3 2007

SO next year 2025 begins the layoffs in construction and delinquency crisis.

Based on 4 drops by Fed in 2025 and 8 drops by ECB…

This indicates a VERY STRONG USD in 2025.

Clearly it can take 16 years to rebuild debt levels. People forget about debt during that time.

The issue of ‘forgetting’ is covered here in this documentary…

https://www.imdb.com/title/tt3332308/