The real estate and financial markets are heading for significant disruption, according to this week's TFTC guests. From housing crises to stock market bubbles, here are the most critical predictions that could reshape the economy in the coming years.
The real estate and financial markets are heading for significant disruption, according to this week's TFTC guests. From housing crises to stock market bubbles, here are the most critical predictions that could reshape the economy in the coming years.
Real estate analyst Melody Wright predicts a wave of foreclosures will hit the U.S. housing market by the second quarter of 2026, driven by new FHA program restrictions taking effect this October. "We will start to see this have a massive impact. We are going to see increasing foreclosures from here regardless, but we will see material foreclosures in Q2 of 2026," Wright explained during her conversation with me.
The catalyst is the end of pandemic-era forbearance programs that allowed homeowners to repeatedly defer payments without proving they could actually afford modifications. Starting October 2024, borrowers can only access these programs once every 24 months, must make three trial payments, and cannot have delinquent student loans. Wright notes that Google searches for "help with mortgage" have already reached March 2009 levels, signaling widespread distress despite unprecedented government intervention. She emphasizes that property taxes and insurance costs have doubled in many areas, creating an affordability crisis that rate cuts alone cannot solve.
Edward Dowd predicts the U.S. stock market will experience a correction comparable to the dot-com bust, potentially beginning within the next year. "We have a dot com bust like 2000 dot com bust coming and a housing crisis at the same time. So it's going to be ugly," Dowd stated, noting that forward P/E ratios have exceeded dot-com bubble levels.
He points to the concentration of gains in just seven or eight AI stocks while the broader market stagnates, with the Value Line Geometric Index of 17,000 stocks still below 2022 highs. Dowd emphasizes that the 10-year forward projected returns for the S&P 500, including dividends, are currently zero based on historical dividend yield patterns. The combination of an overvalued stock market and a deteriorating housing market creates what he calls an "unprecedented bubble of epic proportions," with credit spreads at two standard deviations below normal, indicating extreme complacency before the reversal.
Despite widespread expectations of persistent inflation, Dowd predicts CPI will fall below 2% by the end of 2024, creating opportunities in long-term Treasury bonds. "We're predicting inflation will print a sub 2 percent number for the end of the year CPI," he explained, acknowledging that while CPI measurements are flawed, the rate of change is what matters for bond markets.
This prediction runs counter to consensus as many expect the Trump administration's policies to be inflationary. However, Dowd argues that tariffs are ultimately deflationary in the long term as corporations face margin squeezes and cannot pass costs to consumers. He views 30-year Treasuries as particularly attractive, noting that in a slowing economy with deflationary pressures, long bonds traditionally perform well. Additionally, he suggests the government may implement yield curve control as a "national security issue" given the need to refinance $37 trillion in debt, providing a backstop for Treasury investors.
Hey freaks, quick update - I've started recording video versions of the newsletter for those of you who want to listen while commuting, working out, or just prefer audio content over reading.
If you've been wanting to catch up on the Brief during your drive or daily routine, I'm now posting these as video episodes. Same insights and analysis from the written newsletter, just in a format you can throw on in the background.
Let me know what you think - if these are helpful, I'll keep making them alongside the written version.
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