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socks are down for three weeks in a row and in this video we're going to talk about where is the federal reserve's potential U-turn going to first happen we'll talk about that in this video and I'll explain my reasons why keep that in mind though this is different U-turn is different from a pivot where they sort of reduce the level of rate increases that they're handling a U-turn is where is that potential full fed or good that's what we want to try to understand a little bit more of in this video I do want to mention though while stocks are down three weeks in a row and it seems like every single day the only Movement we see in the stock market is down down and just gets worse and worse and worse as we go through December and the tax loss harvesting season here what does that actually remind us of well I don't know what it reminds you of but it reminds me of sitting right here in the same spot last year in November of 2021 during the crazy euphoric bull market and I'm looking up at Sarah Eisen and you know what she said day after day after day new record highs on the S P 500 that does it for me on the closing bell over and over and over well that's one week in a row of record highs that's two weeks in a row recognized that's three weeks in a row of record highs now we're at three weeks in a row of down down down down and hopefully now hope remember is not an investing strategy but hopefully that means it's time to break the trend here soon when we start seeing some green when we get into January but and we are not at record lows on the S P 500 or the NASDAQ so keep in mind that is a little bit different but that three week in a row thing something I'm paying attention to so what's the first thing that we have to know about the Federal Reserve to understand what turned them dirty after all we got two CPI reports in a row that were bullish they came in below expectations inflation's rotating down this is great so what the hell fed why'd you have to be so mean what'd they do well what they did was they gave us a summary of economic projections that were a lot more hawkish than we were hoping they would be specifically they indicated the economy would be closer to recession with GDP close to zero and they indicated a substantially higher fed funds rate than we were expecting I was personally thinking they'd go to like a 4.9 here and ended up going with a 5.1 so pretty aggressive and some are now thinking that the FED has gone so far that the next summary of economic projections could be the start of signaling the U-turn so when does that happen well it doesn't happen on December 27th what happens on December 27th is actually at's just in a few days we'll also be releasing a lot of new lectures before the end of the year which is really exciting in stocks and psychology money and specifically the real estate investing course because I think there are going to be some great opportunities to buy real estate next year join me in the course member live streams as well every day the market is open check those out and get lifetime access linked down below it's the only sponsor for our channel so what do we have over here well this is a kind of chart that I threw together right now we're sitting over here December 22nd December 23rd right we're we're in a pretty uh bearish environment right here I think we could almost go ahead and just color this in and say you know what December we probably just have to write off as painful but I made this a black mark right here for January 1st to indicate that I believe on January 1st we're going to get something known as a defeatism check and this is where the era of tax loss harvesting ends right here and we should hopefully see the people who tax loss harvested start buying back in in January that is for those who tax laws harvested in December some people tax laws harvested in November though and they haven't come back yet at least it doesn't feel that way right so I believe January 1 and really January through about Feb one is going to Mark a defeatism check of course these will be sort of touched on or or uh you know these might move based on the January 6 jobs data and January 12th CPI report but I think January is going to be a big tell usually most retail sells in December most retail Buys in January and remember most of the stock market gains for a year actually happen between November and may of the Year this is why the saying sell in May and go away came up so this is going to be a critical critical period here this chart that I've drawn but there are some reasons in my opinion to believe that the color of the pain changes well I have hope for January I have the most hope that as long as we get a long expectations jobs and CPI reports in Feb 1 we might start getting some hints that if Jerome Powell were to remake his summary of economic projections he might potentially actually reduce them instead of increase his projections that would be a critical point for the market to say oh wow this could be the beginning of a Fed U-turn just like when we actually get the next summary of economic projections which occurs on March 22nd mark your calendar for March 22nd the Stars here representing the FED meeting March 22nd is going to be very interesting because we have gotten summary of economic projection time after time over the last year that has done nothing but this it's gotten worse it's gotten uh and we get like worse there we go worse worse worse it's always gotten worse and March 22nd because they've gone so high on this last SCP report that set off this three-week bear Market here in December they've gotten so high that it's possible March 22nd we could finally see that the inflection point now that's too soon to say that's the FED U-turn right the FED U-turn is usually when the FED starts cutting but markets could try to start pricing in the actual fed U-turn If the Fed says hey actually you know what we're starting to talk about Cuts in 2023.
hey actually you know what inflation is behaving better than expected wage inflation is turning over right this is the the hopium potential here and we want to be careful that it might not happen if inflation comes in bad we could just continue to get more aggressive SCP more aggressive SCP but I don't think so because now leading data suggesting Commodities next year could be down as much as 20 percent we've got a little bit of an oil rally here happening today it oils up about three percent which is not great we'd like to see energy come down that permeates through the entire economy but we're better than where we were last month we'll see if that can continue to Trend down uh and we've we've gotten suggestions that that rental inflation is really going to give us downward pressure in Q2 and Q3 in fact Goldman and most forecasters are suggesting in Q2 and that's April May June that's what we're really going to see those moves down in rental inflation JPMorgan suggesting the biggest gap down could actually end up coming uh in Q3 and graphically from City that's kind of what this looks like over here you've got owner's equivalent rent going to the Moon here but median uh sales prices of existing homes and sort of rental inflation is uh projected to rotate down here within an 18-month a lag or I should say the owner's equivalent rents are expected to follow either leading rental data or existing home sales down by about 18 months and so we would hope that by Q2 we get a nice Drop Like This Q3 we get our next drop down and that could be a big anchor down for inflation especially since shelter is about a 30 percent weight about a 32 percent weight for CPI about a 25 weight for pce we just had pce numbers today that were you know kind of at expectations and in some areas actually slightly a little bit hotter but we still haven't actually seen that rental disinflation yet and so that's going to be a big factor here so if we can get this sep inflection point I believe the market might try to start pricing in a U-turn and that's where I think we can get to a little bit of a better Market starting really in Q2 now can we get can we pass this defeatism check over in January in my opinion that's going to be critical will we pass that defeatism check because if people don't come back to the market then there is this risk that people just resign and Retail ends up selling and capitulating that ends up marking the bottom and they don't come back they do what my dad did in 2008 right it's like November of 2008 that's it can't take it anymore sells out is 401K at the bottom and never stays part of the recovery look socks are painful in the short term right they go they go up like crazy then they go down and you see your net worth go whoa whoa like crazy it's insane but in long term everything ends up working out you know as long as the companies you're investing in don't end up going bankrupt it generally just ends up working out so I like paying attention to this we can Mark some of these dates here but what else do we have we have something that's actually playing into the fed's hand right now 10-year treasury yields are rising again see this right here as of the fed's meeting we've started seeing an increase in the 10-year treasury I actually have a belief that it's quite likely 10-year treasury yields are going to stay around three and a half percent for quite a while that would actually be more like right there they'll stay around that level or above there for quite a while and this is why I've started closing some of my dollar short positions because the dollar short works really well when treasury yields plummet I don't know if we're going to see those low treasury yields anytime soon at least not until the Federal Reserve really starts cutting and even then think about it if we don't cut until the FED gets to 4.75 we're still well above the 10-year treasury yield here right the FED could cut a whole percent and then we're still just in line with the 10-year treasury where it is now and so my expectations are that leads to more pain for the real estate market so actually if we jump over to this chart right here in a weird way this chart is actually flip-flopped for the real estate market and that is that right now we're actually probably just in the yellow phase for the real estate market and we're more likely to see the orange face over in this region here and we're more likely to see red over in this region uh for real estate and that's because real estate is so much slower to react and so this is where I really really right here May June This Is My Hope and it's my plan uh it could be wrong we'll see I always like to to at least make a prediction so that way if things change at least I know what's changing and then I can revise my expectations right but my expectation is that if stocks do end up moving better by the second quarter of next year then I can move into real estate at a larger pain point in my opinion that's the best time to invest into house hack not personal financial advice I'm talking about myself okay that's potentially the best time because then I can maybe trim a little bit from gained positions in stocks and move those into house hack that's probably by then we should have our reg a live as well so that could be a really opportune time that does mean though you have to get through this pain over here first and the uncertainty of what's going to happen with the fed and if I am wrong then here's how this chart actually looks if I'm wrong okay so let's say I'm wrong because if possible I'm wrong right maybe I'm maybe I'm being too hopeful what if we end up having red all the way through Q3 of 2023 and then we actually get our orange in the stock market and then we actually get our yellow in the stock market and we don't actually get our Green in the stock market until maybe q1 2024 right that's possible that sounds really terrible and painful but it's possible in this case I would not expect the pain for the real estate market to really turn orange yet until the end of queue uh the end of 2023 or the beginning of uh of 2024.
so for me it doesn't really matter where that U-turn happens where does that flip happen but in my opinion that flip happens in a very clear way stocks hit bottom start u-turning and then real estate hits bottom whether that happens and real estate hits a bottom in in the summer of 23 or in the beginning of 2024 or even later when it happens it doesn't matter because I'm not making moves right now that says oh I have to be right about the real estate uh situation right now we're gonna wait we're gonna get that confirmation from the FED before we do anything but that kind of overlay is what I'm expecting and I'm looking for that inflection on the SCP for the next real level of bullishness and unfortunately that's not until March 22nd I hate to say it but that's that's three months away Jan Feb March that sucks we're at December 23rd now now could there be bullishness between now and then sure more CPI data that comes down but really this is a time of patience and patience doesn't bode well if you're in margin right it doesn't do you good if you're in margin it doesn't do you good if you're short-term speculating so buckle up pay attention to what's going on in the market pay attention to the summaries I provide in the channel if you want to do fundamental analysis with me and learn do fundamental analysis either on real estate or stocks in the course member live streams join those you want to learn about the new lectures and strategies for how to identify that bottom in real estate how to take advantage of that bottom in real estate well make sure you you take you watch those new lectures coming out remember anytime you buy you get lifetime access you get all the new lectures that come out in the future so check out that coupon code next one expires on the 27th of December here and uh that is the holiday coupon good holidays and we'll see in the next one remember email me at kevin.com if you want a holiday delivery of a course uh for a friend or something like that or if you need a custom bundle thanks so much we'll see you soon thanks bye
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