Unprecedented, Unusual, Challenging Economy More Bifurcated Than Ever | Michael Kantrowitz

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**Michael Kantrowitz** (0:45)
The broader picture, though, is that, yeah, I still think we're in a economic backdrop that is unprecedented, unusual, from so many different circumstances beginning in COVID, and that things remain bifurcated under the surface and challenging, but in the aggregate, from the high level, they remain okay.

**Adam Taggart** (1:15)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Today's guest is best known for his HOPE Framework, a highly effective way to measure the health of the economy and tell whether it's getting stronger or weaker. Well, as we enter the second half of 2025, where markets remain richly valued near all-time highs, what does this framework tell us 2025 has in store? To find out, we've got the good fortune to speak today with Michael Kantrowitz, Chief Investment Strategist and Managing Director at Piper Sandler. Michael, it's great to see you again. Thanks so much for joining us today.

**Michael Kantrowitz** (1:50)
Yeah, my pleasure, Adam. Always good to talk with you.

**Adam Taggart** (1:52)
It's always good to talk with you, Michael. And I've had a number of people of late asking for your return. When it's been too long since you've been on this channel, folks start getting itchy. They very much value looking through your hope framework and a lot of questions about, well, okay, what is it telling us these days? So, the last time you were on this channel, Michael, in fact, the last couple of times, you talked a lot about the bifurcated economy that we have here, some parts of it doing well, some parts of it doing not so well, but kind of on average, good enough to kind of keep us out of recession, at least looking through your hope indicators.
Is that still the same or are you seeing something different these days?

**Michael Kantrowitz** (2:37)
More the same. In a way, there's been some now bifurcations within the bifurcations. So what I mean by like, if you think about the economy, housing is very weak and the AI story is still very strong. So that's at the macro level. Underneath that, if we just look at housing, you can say we now have a lot of bifurcation within housing. You've seen, for example, some states are now seeing sharply rising inventory, sharply falling home prices. Yet in some states, you're not seeing that. You're still seeing very low inventory and very sticky home prices. So housing is getting more regional or even more bifurcated within itself. And the broader picture, though, is that, yeah, I still think we're in a economic backdrop that is unprecedented, unusual from so many different circumstances beginning in COVID. And that things remain bifurcated under the surface and challenging, but in the aggregate, from the high level, they remain okay.
All right.

**Adam Taggart** (3:46)
So I noticed that I referred to the HOPE framework a couple of times in this first minute or two here. For the very few people that may not have seen your previous appearances here, Michael, can you just give this 60-second dial through of what the HOPE framework is?

**Michael Kantrowitz** (4:03)
Sure. And I will, as I like to do, I like to show more than just, I don't want to be just a talking head. I want to be a talking head with images. So you could see my screen, right, Adam?

**Adam Taggart** (4:16)
Yep. Totally see it.

**Michael Kantrowitz** (4:18)
So I'll just zoom in. This is kind of the HOPE framework. It's a heat map. It's an illustration of how the economy and different indicators within the economy flow through in terms of a typical economic sequence. So you start off with housing, sorry, housing, which tends to be thought of as an early cyclical indicator or early cycle indicator because it's very sensitive to changes in rates, which typically is followed by changes in orders or soft data like PMIs, which is followed by profits. And then lastly, all of that eventually flows down a river to companies' employment plans and whether they hire or are firing. So HOPE obviously stands for, well, that's what HOPE stands for. And yeah, we've been in a very unique environment here in terms of the debate around the economy landing, hard landing and soft landing, which that debate I would imagine still continues because there's been, there's the ongoing recession fears. We always look for housing to firmly rebound because historically, that's what ends an economic slowdown and gives you a broad-based recovery. And we've yet to see that. So we haven't landed yet and we're still in this circling the runway perhaps. And it could go on for a while longer.