Date: September 9, 2022

For The Economy, The Worst is Yet to Come

In my last update on Tuesday, I spoke about how crummy the stock market looked but that it was oversold enough to bounce this week. In addition, I said that when August closes weak, the odds heavily favor a post-Labor Day bounce. And the market has had a nice week for the bulls with pre-market showing good gains to begin the day. While the S&P 500 may have room to move up to 4100-4150, I do not believe the September lows will hold. There should be more downside over the coming 4-6 weeks which could lead to an amazing bottom for a powerful rally, but let me not get ahead of myself just yet.

Let’s remember that the very aggressive Fed rate hikes have not even filtered through the economy yet. That usually take 3-6 months and the stock market leads the economy by 6-9 months. While I thought growth would slow in 2022 and I think it really slows in 2023 with the unemployment rate going above 4% net job losses. That could or would spell at least a mild recession which the stock market may have already priced in. We will see and know more in a few months.

I was hoping to show my latest study on how the stock market behaves after it is down at least 10% through August 31st. But upon eyeballing the results, I noticed some counterintuitive data and something doesn’t look right. So, I hope to have that for next week.


The landlord in my office park celebrated 40 years in business last night with a pizza truck, adult beverages and a DJ. It felt like a Friday night. I was amazed at how many “new” tenants were in the park. I used to know everyone. What happened?

Holiday-shortened weeks are nice. Weekends seem to pop up again so quickly. I so look forward to being outside with sunny days around 80 and low humidity. The dogs are ecstatic. With 5-6 inches of rain this week we may even make the first fire since spring.

On Tuesday we sold RWM, NUGT, PMPIX some ECH and some BIB. On Wednesday we bought GDX, PMPIX, levered inverse S&P 500, more IWS and more FAS. On Thursday we bought QDF, IWP and more GDX. We sold some levered NDX.


Paul Schatz, President, Heritage Capital