저자: Kevin · 외국인
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연준 금리 인상이 과도했다는 투자은행 보고서를 소개하며, 실질금리 고점 통과로 S&P500 강세 가능성과 11~4월 투자 유리 논리를 제시. 반대로 Barclays 시각은 노동시장·물가 둔화 미확인과 경기침체 우려를 제시. 본인은 현금 대기 중이며 인플레 둔화 확인 시 롱 진입을 언급. 광고·투자자문 면책 발언 다수.
다듬은 글
Oh. Now, this is a big change of direction. There is an investment bank that is quite well known on Wall Street and has a new call for proposals that I think is worth analyzing in detail. But instead of just giving this perspective, what I'm going to do is give you this perspective, but then I'm going to balance it with the opposing viewpoint of another investment bank.
That way, we can try to see, okay, who has some arguments here. Let's take a look at this because some of the conclusions here are absolutely phenomenally interesting for what's happening in the market and what to expect in the future. Beyond that, of course, there's a Halloween trick-or-treat coupon code link below about wealth-building programs.
Of course, you have the resistance potion. You need to take advantage of the wealth creation programs and join me in those live streams where I break down the earnings for you. If you miss out on Meet Kevin's earnings, you'll want to be part of those daily live streams when we break down the earnings because we really analyze the reports.
It's not just about reading the numbers. We read the reports and you don't have to do anything. You just listen. It's very practical. So, take a look at the programs linked below . Alright, friends. Oh. Take a look at this particular report here. This is a little overwhelming when you first look at it, but don't worry.
I'm going to break it down for you. So, first of all, their first argument is that the Federal Reserve has been too hasty in raising rates. They call this the Federal Reserve in a hurry. And in their opinion, what they discover is that when Treasury yields increase, the price-earnings multiple of the S&P 500 decreases.
And remember, when we see a decrease in multiples, when we see multiple compression, we obviously tend to see the S&P 500 fall. So, what they're arguing here is that as long as the Federal Reserve stays on course to reach the maximum level of tightening and doesn't tighten it any further than the current level, maximum real yields may have already been reached , meaning the only direction would be downward.
And when Treasury yields, real Treasury yields, fall, price-to-earnings ratios rise for the S&P 500. And this is really bullish for stocks. And they'll tell you exactly what actions to take in a moment. But to reiterate their argument in terms of why they are making this claim now, they say that one should not fight against history.
Fighting against history is like fighting against the Federal Reserve. And in the last 60 years, the S&P 500 has yielded almost nothing, absolutely nothing, between May and October. Hang on a minute. How is that possible? Because in the last 60 years, the S&P 500 has always delivered returns of between 7 and 10%.
How could it show zero between May and October? Well, that's because they maintain that between November and April is when most, if not all, of the accumulated returns are actually obtained. In fact, they have a chart that breaks it down. Take a look. If you invested only in the periods between May 1 and October 1, your returns on an original investment of $100 from 1962 to today, 2022, would literally grow from about $100 to $118.
That's all. And if you only invested between November 1st and April 30th, you'd basically be here, on the green line. And then, being fully invested, you would obtain a superior return. Look at that. Because it's fully invested, you always get a superior return. It's not surprising. Generally, the time it takes to reach the market exceeds the time it is produced.
Now, I'm going to make a brief aside because some people like to say, "Yes, but Kevin, you're trying to predict the market's timing." Dude, I saved a lot of money by getting rid of stocks that would have performed terribly in a recession. You need to reallocate your portfolio. Okay, that doesn't mean you're trying to predict the market.
It simply means that you are repositioning yourself to prepare and then overcome with a diamond hand any pain you have prepared for. But anyway, this graphic is truly incredible. So , when we go back to this kind of density of what they're trying to tell us, they're basically saying, hey, look, once the markets realize that, wow, we might be at peak yields, then people might rush to buy Treasury bonds.
However, I don't know if we're really going to see that yet, personally, because there's a lot of talk that the maximum yield could be 5% for the 10-year Treasury. But I'll tell you that today bonds are rising, which actually means that yields are falling. Let's take a look at the 10-year bond, which is currently at 4.125, falling from its four-and-a-quarter level, and we see that, at least intraday, it either bounces back at these highs or is rejected again by these high yields.
Basically, some say they are starting to discount peak yields again. Many say no, no, no, maximum returns occur when they reach 5%. But returning to the argument for this optimism, let's remember that we're going to balance this with some counterarguments in a moment. In this report, they argue that the CPI, which is the inflation of the consumer price index, has essentially been only 2% on an annualized basis over the last 3 months .
Now, what they're doing here is taking the actual CPI figure and taking this little chart we have, which looks something like this, where we hit a peak and have been bouncing down. Well, when we take that average, fine. We could say that we only have an annualized inflation rate of 2%. Look, nobody believes that at all right now , because we've seen too much widespread inflation spreading to too many problem areas, especially rent and housing inflation and services like healthcare, which aren't expected to peak until early or mid- next year.
But they still keep arguing that, you know what?, we have a report on the labor cost index coming out on the 28th. That'll be in a few days, folks. It will be in three days. And that will be a critical moment to determine whether wages are escaping the pattern of a price-wage spiral. Or are we really at the peak of inflation, maximum returns, and peak turnover rates, meaning that there are no longer people saying, "I'm going to quit my job because I can get a better salary at another job"?
Instead, people stay. So we see that dropout rates are going down, which actually reduces inflation, right? All these arguments support the idea that inflation will go down and, over time, suggest that yes, there is indeed a lag in housing inflation , but that we may see that peak about 9 months later.
They argue that rents peaked in December 2021. They don't give us any idea of when they think housing may have peaked. Personally, I believe that rents and housing peaked in May and June. But they argue that we will probably see a real recession in which even Joe Biden will say, "Yes, yes, we are now in a recession in the third quarter of 2023." But they actually believe the market may have bottomed out now.
And that , in the short term, the S&P 500 has the potential to reach a peak before we enter an official recession. Although, come on, you and I both know we're already in a recession, right? Two quarters of negative GDP. That's all I need to know. Okay, this sucks. I don't need the NBER to tell me what a recession is.
I don't need Joe Biden in the White House to redefine what a recession is. When is a recession? Okay, and that's fine. But let's take a look at this argument. They argue that the S&P 500 could rise to 4,300 from its current level of 3,800. That would represent an increase of around 13%, peaking in April 2023.
And they believe that for the remainder of the decade, in fact, we believe we could see earnings per share double over the next decade. However, the price-benefit ratios will be halved. Therefore, we will no longer see that kind of stimulating, bubbly, and overvalued valuation for the market. But because of the doubling of earnings, we'll still see some decent returns investing in the S&P 500 between now and the end of the decade, which is obviously very, very motivating to potentially buy the dip.
However, they say that a risk factor here could be the rebounds in commodity prices. If we are in a secular bull market for commodities, basically higher highs and higher lows for commodities over the next 10 years, that will hurt us a little. But if we see a rebound in commodities, the value could be in whatever you want to invest in if commodities perform well.
The value would include things like energy, utilities, banks, real estate , cars, excluding growth cars like Tesla. Those are more growth and cyclical stocks. Procter and Gamble could be another style of value. But if raw materials really do fall, we could see outperformance . Therefore, it really depends on what we see happening.
However, one of the things they point out is that we haven't yet seen the inversion of the 10-year, 3-month yield curve, and they believe this will happen in January, indicating that we will actually have a recession in September. That's what they believe. But they also believe that this recession will be very, very similar to World War II, where we spent a lot of inflationary money on World War II right here.
This green graph and the peak that coincides with the COVID war spending that caused this delay. You could see this gap here, this gap in the peaks here between the green line which is spending and the blue line which is inflation, and this is kind of a reopening inflation peak. And what happened after the war?
Boom! Inflation simply plummeted. And that is actually the trajectory we are on right now . Now, I'm going to give a bit of my own counterargument to this and just say that , hey, look, the 5-year equilibrium rate , which is something I generally look at for a decrease in inflation, has tended to come down substantially.
Okay, that's very, very clear evidence that we expect inflation to go down. But I will tell you that in the last week or so, uh, maybe even three weeks here, it has really come back to life. Well, you know, I was expecting a more sustained downward trend . However, we tend to have these kinds of upward movements.
That happens with break-even points, but it's something watching it, and if this keeps going up, especially if we reach the dreaded figure of 30 again, the Federal Reserve is going to have to play another trick on us . So, well, I'm very, very optimistic about this company. Now, I want to talk about an alternative argument and some projections.
Let's draw some projections from an alternative argument. Now, Barclays gives us the alternative argument, okay? It's not that it's not a Barclays ad or anything like that. It's just an alternative argument from this other investment bank that we've been analyzing. What is an advertisement? The coupon link below is for programs on how to build wealth or life insurance that you can get in 5 minutes by going to medkaven.com/life or 12 free shares that you can get with Weeble by going to medkaven.com/weeeble.
Any of those. Medkaven.com/join for courses , life for life insurance, or Weeble for Weeble. Those are the ones who sponsor this video and keep me in business so I can buy products from other YouTubers like Bread Boys. Greetings to them. Okay, fine. So, what does Barclays think? Okay. Well, here's Barclays.
Barclay says: "No, no, no, no, no, no, no, no. The data doesn't really suggest that we're having any kind of significant decline yet in the labor market or inflation. And it's far too early to suggest that things are going to be smooth sailing. In fact , they come in and say here that the economic data has been surprisingly positive.
Initial jobless claims have fallen recently, which is the opposite of what would suggest a slowing economy. Frankly, profits have been pretty decent. Coca-Cola beat expectations, UPS is holding steady, right? In fact, we're still seeing solid profits with the exception of a few companies that just suck, well , okay, I'm not going to name them, but, well , you know, I'm going to make a mess of things.
Anyway, probably Facebook too. Oh, God, I shouldn't have said that. Anyway, job postings on the private platform have increased recently. In fact. Isn't that crazy? We expect to see fewer job postings, yet according to Indeed, there are more and more job postings. At the same time, fewer people are filing for unemployment, which is just a sign is a dirty trap we'll get from the Federal Reserve, or that precedes a dirty trap you'll get from the Federal Reserve.
They will never tolerate a wage price spiral. I've been talking about this since January. I sat down with a Federal Reserve official , someone who used to work for the Federal Reserve, and I said, " Dude, I'm worried." He works at JP Morgan now. I said, "Dude, I'm worried about the wage price spiral in January." And he said, "No." And now we're talking about it again.
And it's like, "Uh-huh." Yes. The worst thing that could happen. A spiral of prices and wages. And look at this. I do n't know about this here. That doesn't excite me much. Initial applications. I'm going to cross that out. I think this fluctuates so much from week to week that it doesn't matter that much.
This is about job offers on Indeed. It's interesting. I want to start paying attention to what Indeed is doing. But, you know, the argument here is that investors are getting too excited about the idea of a Federal Reserve turnaround. And here are the following scenarios for 2022. We have three scenarios here.
A bullish case, which is a soft landing, a shallow recession and a normal recession, being the basic case. And they believe that in 2022 we will basically still have a straight decline. Even in a soft landing, we are still 10% below, and in a hard landing, 20% below. 14.6% in the middle. They believe that by 2023, in the soft landing scenario, we could see a 12% increase, but that is offset by a drop of more than 16.5% in the S&P 500 next year in the event of a real recession in which we continue to see a collapse in earnings.
One of the big problems we face now is that we keep expecting profits to plummet, but that hasn't happened yet. And so, we continue to put the problem off. It's like, well, in the end the profits will plummet, right? And then it's like, well, it wasn't the first quarter, it wasn't the second quarter, and now it's like, is it going to be the third?
Maybe not. So we keep putting off the problem. It's like, well, when are we really going to have the recession? And that's where you have some people on one side. The argument goes: well, by the time businesses are really ready to enter a recession and consumers think, "Well, yeah, I've officially run out of money," maybe inflation will have started to come down.
Now, that could simply be the optimistic scenario where someone says, "Oh, yes. As soon as people run out of money, suddenly we'll have no more inflation, and that will also happen right after the election." Mhm. Okay, whatever. In any case, there is a lot of cynicism we could have towards the market.
The reality is, look, inflation is either going to go down or it isn't. If inflation goes down, you'll be fully immersed in this market. You're betting on growth. This is not financial advice. I am a financial advisor, but I cannot give you financial advice because I cannot give you generic or impersonal financial advice in a YouTube video.
And that's why we're not going to do that here, but we want to make it very clear that, obviously, if we start to see a significant drop in inflation, you have to move quickly into long positions. Meanwhile, I haven't been punished for sitting around with cash and waiting on the sidelines, as painful as that is to say, and there are a lot of people with FOMO who say, "No, no, no, no, no.
You have to participate, but you have to be careful because FOMO can hurt you when it turns into sadness." Yes, forget about fear. It simply turns into sadness and regret. Romo Romo, eh, regret for having entered. Ro, whatever . Anyway, I don't know, friends. What do you think? Who do you agree with?
Do you agree with the first argument that, well, some optimism is on the horizon and we're basically at peak performance? As long as the Federal Reserve doesn't have to be more aggressive in combating a spiraling price and wage system, we should be on the upside because history says that October through April is the time to play.
After all, this is where the sale comes from, right? Or do you think Barclays is more right and says, well, wait, wait, wait, wait, not so fast? We still haven't seen the data the Federal Reserve is looking for. Let me know what you think. Be sure to check the links below as well. Remember metvven.com/lifeforlife insurance.
Visit Metaven.com/weeeble to get 12 free shares of Weeble. And of course, meet Kevin.com/join for the programs and that trick-or-treat coupon code linked below. Take advantage of that sooner
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