I wouldn’t pay much attention to these stock market forecasts for the next couple of months. Through executive orders Donald Trump continues to unpredictably shake up and shake apart the world economy. Then he largely reverses himself a few days later; saying that that is not what just he did. This is not usual for the US government and the economy, and it is not just about minor changes. My economic performance models don’t know about any really similar circumstances upon which they can draw conclusions. All they can estimate is what would happen if today’s situation was somewhat usual — which it is not.

My long term GDP-based trendline for the S&P 500 index is not much guidance either. Before April it was about 10% above the long-term trend. Then it crunched down in fear to being about 10% below trend. And now it is almost exactly at the trend line.

My older forecasting methods which have been documented since 2007 expect the market to probably slide a percent or so over the next two months and then stage a mild rise. My newer and more elaborate forecasts (shown at the top of this blog) say about the same thing.

What really matters, though, is what Donald Trump and the Republican Congress actually do about passing a budget authorization for FY2026, dealing with reauthorization of the US debt, and setting up a tariff regime that lasts for more than a few weeks. What could go wrong with that?

My guess remains that there will be a great deal of puffery and grandstanding. There will be much fear and theater. But, in the end they will declare a great victory of cutting spending and lowering taxes. This will actually result in some new and wonderful tax-loopholes, a major increase in wasteful government spending, and most importantly, a huge expansion of US debt. Most probably they will blame this on the Democrats.

Come July, I think a stock market boom might be underway. I feel sick.