In this Weekly Market Recap, host Eric Chemi engages with Adam Kobeissi, the Founder and Editor-in-Chief of The Kobeissi Letter, in a thought-provoking discussion on the current market dynamics. Dive into the nuances of bull and bear cycles, Fed policies, and their impact on the markets. Explore key insights on S&P 500 trends, rate expectations, and strategies for navigating through these turbulent times.
Join us for a comprehensive analysis and expert views on the current state and future trajectory of the financial markets.
Adam Kobeissi 0:00
I think bulls would be happy to see a 3% pullback at this point just so we can get some more healthy technical backdrop. But ultimately, I think dips still continue to be bought into early next year. And I do think it’s possibly see all time highs and 24 if the Fed can navigate the situation correctly.
Eric Chemi 0:20
Welcome to Wealthion. I’m Eric Chemi. I am still confused like a lot of you right now, are we in a bullish cycle or in a bearish cycle, I see data points to both arguments and people are strongly in one camp or the other. And I can’t figure it out. So I was hoping to get some expert wisdom here. today. We’ve got Adam Kobeissi he is the founder, publisher, editor, writer, whatever you call it, of the Kobeissi, he’s investing himself. He’s looking at all these data points. He’s a well known personality, on Twitter, on television, across the media as long as as well as his appearances and events as well. Adam, thank you so much for joining me and taking time out of your day to come on the show.
Adam Kobeissi 0:57
Thanks for having me, Eric. It’s an honor. Love, love Wealthion.
Eric Chemi 1:00
What just helped me help me get this straight if you had to pick? Are we going up? Are we going down right now? Because I can’t figure it out. Honestly.
Adam Kobeissi 1:09
It’s been a crazy year to say at least I was looking at the numbers this morning. The s&p is up almost 20% year to date in a year that probably had more headlines and than we’ve seen in decades. But I think it’s been the market has proven its resilience. I mean, speaking of the equity markets, right, the s&p 500 continues to push higher, we’re almost less than 10% away from a new all time high. Does that mean that we’re moving in a straight line higher from here on out? I don’t think so. I actually think we’re gonna see some choppy price action for the next couple of months specifically, as we’re looking to see what the Feds going to do. I mean, the Fed rate expectations have been anything but certain for the last two years, and it’s only getting worse now. I mean, we’re seeing the base case showing up to six rate cuts and 2020 2024. When literally a month ago, rate hikes were expected in early 24. Now rate cuts are expected as soon as January March. So there’s there’s a lot in the air. And I think that leads to a lot more choppy price action. But I will be clear, I mean, we’re not calling for a major crash. I don’t think we’re on the verge of a major crash. I just think we chop a bit maybe drift higher until we have some more clarity as to what’s happening with the Fed inflation.
Eric Chemi 2:21
Some people have said on the fed the Feds rate cuts it’s they’re only going to cut if there’s a recession. Do you agree with that point of view that cutting means actually bad stuff is starting to happen? Because they overhyped? Right.
Adam Kobeissi 2:33
I mean, it’s I think the Fed is still convinced that they can achieve their quote unquote, soft landing now what you define is a soft landing. I mean, there’s really no definition anymore. But if if we’re saying Can the Fed get inflation to the 2% target without a meaningful spike in unemployment and sparking a recession? I think it’s possible. I do think we do need to see some weakness. And I also think people are kind of jumping the gun. Again, we’ve seen this countless times. The Fed has not even mentioned rate cuts yet actually, the most recent public appearance by the Fed was Jerome Powell saying, we might hike more if needed. Obviously, the inflation data has been more constructive with quarter down to 4% headline inflation down to close to three, but we’re not at their 2% target. And the Fed has made it clear, they don’t want to raise rates or cut rates. Sorry, too soon. Because I think and this has been our thesis all year, the Fed would rather see a mild recession than risk cutting rates too soon, and having inflation kind of resurge again. And that would be the ultimate credibility hit for the Fed, and that would really destroy consumer sentiment. So I think, you know, rate cuts are still not coming till at least q2 of next year, which which in our view, means more chop, but the markets are resilient. So we’ll probably see them still continue to be bought.
Eric Chemi 3:59
I agree with you. I think it’s clear that their intention is not to let inflation get out of control. And they would rather overdo it. Right, overcooked that one, right, you know, we’re not going to take any risks and inflation is going to get out of the bag again, that we would rather have people whose jobs would rather have there been inflation, we would rather really just hammer this Volker style a little bit if we need to that that there. I want if there’s a lot of talk from Powell that they’re not really going to hike, you just have to say it just to keep people at bay, right? Like, don’t don’t ask me, I’m saying it. I don’t want to do it. But I’m saying it.
Adam Kobeissi 4:32
I mean, that’s the thing, too, right. Fed policy works a lot. A lot of Fed policy, the effects are felt before any monetary policy is even enacted. Right? The Fed is just what they say is powerful enough to move markets clearly, as we’ve seen, and also let’s not forget, if you go back to 2022, or even early 23, the Fed was saying that they might need a recession to tame inflation. I mean, they’ve literally said that so it’s a recent thing since July or early earliest. Some are saying that we can achieve a soft landing versus removed a recession from our forecast. That’s fine. That’ll be great. And look, we’ve been saying that July in July, we said July was the last Fed rate hike, we still think that is the last rate hike. But I do think rates are higher for longer, which means just a long pause ahead until inflation is comfortably at or below 2%.
Eric Chemi 5:20
I want to run through some of your recent tweets, just to get a sense of the charts you’re putting out there and people can see it at Kobe see letter, just your last name, and then the word letter. That’s the handle on Twitter X, whatever we’re calling it now. First of the pin one, the pin tweet, you’ve got your 2022 performance, you’re 86%. Last year, you’re 35% and 21. Year is a publicly transparent as any as any great publicly traded company, any hedge fund something like that. But can I ask you How is 2023? Going now that we’re here in December, how did you conduct it? It’s
Adam Kobeissi 5:53
been a great year, our performance report will actually be out in about a month. So I’ll let everyone check that out. But I’m excited to show everyone how we did and I mean 2022 was great. And especially in these years where the s&p is up 20%, like I mentioned, it’s an incredibly strong market, right, so outperforming the market is always our goal. And I think luck with the way markets are trading with the increased volatility we’ve seen, I think our strategy continues to shine. And for those who are not really familiar with what we do, we we started about eight years ago. And the whole basis of our analysis is to combine technicals and fundamentals and eight to 10 years ago, if you posted the chart with technical analysis, people would basically laugh at you. We actually started doing that on Twitter back in 2015. And now I think technical analysis has become the roadmap for most traders, many large funds are using it, we have a lot of hedge funds that subscribe to our content, a lot of individual investors that subscribe to our content, just to see our technical roadmap. So in a market with an uncertain macroeconomic picture, and a lot of volatility, it’s been fantastic. And I think 2023 is great and 2014 even better.
Eric Chemi 7:05
So you saying you beat the market? We don’t know the numbers yet. You’re not releasing the numbers say that you’re saying?
Adam Kobeissi 7:10
No official statement yet. But in a month, I hope everyone tunes into our website, that could be a slider.com. And we’ll have all the numbers posted fully transparent.
Eric Chemi 7:18
Okay, okay. So what God I think a lot of people this year up 20%, but so much negativity in the sentiment in the news and people could point to a chart doesn’t Hey, this is gonna break down. Only seven stocks are up, everyone else on aggregate is down. What do you make of that, of that disconnect? We’re up big in a world that kind of lot of people talking to him and gloom?
Adam Kobeissi 7:41
Yeah, I mean, that that’s, that’s I think a lot of people have learned number one, that the stock market is not the economy, right? That’s the age old saying, you can have all the negative headlines in the world and the market can still go up, you’re gonna have all the positive headlines in the world, the market can still go down. And we’re, I mean, this is something that I’ve been very vocal about The Magnificent Seven, the seventh largest tech stocks are basically have become the stock market. So in a year, where obviously, there are a lot of headwinds, but in the year where AI had its biggest big breakthroughs of all time, it’s now become the topic of everything. The stocks that were already leaving the market higher, just got a bunch of more, a bunch more gas on the fire fuel to the flame. And they’re they continue to push higher, I think that’s become the situation. And there’s also a lot of question, Is that is that A, is that a good thing? Right, that a few stocks are basically dictating where the market goes, if you if you strip out the seven stocks in the s&p were up around 5%, year to date now 70% of the NASDAQ so year to date gain has been fueled by the five largest stocks in the index. So I don’t know if that’s just the new normal, or if that means that there’s a major correction coming. But what it does mean is these tech stocks are more important than ever, as we head into 2024. For sure,
Eric Chemi 8:58
you do wonder if you go back over time, and you just said, okay, the top 10 stocks out of the s&p 500? How did they do relative to the rest of the index? And I don’t know if you have that data? That’s if that’s a future project that you’d be curious to see. Okay, if you go back to 1980 1960, whatever it is, was there always that was it always like, well, the best 10 stocks are going to, they’re going to eat up most of the returns. That’s how these bell curve spectrums work.
Adam Kobeissi 9:23
Yeah, I don’t have that data off the top of my head. But if you look at we were looking at the price earnings ratios of these seven stocks, these you know, The Magnificent Seven versus the seven largest stocks in the.com bubble and we’re actually approaching the same level of P E ratio that we saw back then as well as other previous bubbles. But it’s always hard to compare. Now it’s 2001 versus any other recession because it’s just a different situation. It’s a different backdrop. The companies are different tech is more prominent now than ever. So I don’t necessarily have an answer to that. But I think it will be interesting to watch to see how this unfolds. If somebody
Eric Chemi 10:04
asked you the most basic question of okay, let’s say we’re basically close ish to all time highs on the s&p 500. Are you buying now? At the most expensive it’s ever been? Would you be a buyer at that level? Yeah.
Adam Kobeissi 10:16
So we have been mainly buying the dip, all, I’d say since around q1 of this year. And then a lot, a lot of dips this year. A lot of dips. And we’ve we recently turned bearish last week, just looking for a near term pullback, kind of saying like, look, the technicals are very overbought, we were on this huge run, there might be some profit taking the year end. And also, everyone’s calling for a Fed pivot. Again, as the Fed said, they’re not ready to pivot, and we have a Fed meeting coming up next week. So I think we’re due for even a three to 5% pullback would be great to see, I think bulls would be happy to see a 3% pullback at this point, just so you can get some more healthy technical backdrop. But ultimately, I think dips still continue to be bought into early next year. And I do think it’s possible we see all time highs and 24 if the Fed can navigate the situation correctly. So
Eric Chemi 11:07
buying the dip makes sense a little bit of a okay, you’re getting bearish because you too, I’m looking at one of your recent tweets, retail sales declined it October, for the first time since March, right. All of a sudden, that suggests a little bit of a directional move. That happens to be the first month of student loan payments resuming since the pandemic now almost almost four years now, right? More than three car sales falling in October from September, furniture sales declining. That to me feels like a very bearish set of aggregate data.
Adam Kobeissi 11:36
Yeah, definitely. And here’s the reality, the consumer has been struggling for the entire 2023. And the markets up 20%. Affordability has been getting worse since 2022. Housing prices and housing, affordability, interest rates, everything has been getting worse for the consumer, but the market hasn’t reacted to it. And I think that it’s an important point here that I think the market is so fixated on what happens with just literally what is the inflation rate, what is the Fed do what’s happening with corporate earnings, if there’s no trigger on those high level items, and also consumer spending. I mean, it did go down that chart that suggests that student loans are hurting spending. But the holiday season seems to have been strong so far. And every time that we start to see negative headlines. Well, then there’s a new record high on Black Friday, there’s a new trend here and there. And could that that could also be consumers are just taking on a lot more debt, right, I think credit card debt and we saw Buy now pay later spending on Black Friday hit multi right? blew out every record in the past this year. Just taking on more debt, although that’s probably bad in the long run for consumers, it may be fueling short term corporate earnings, right and more spending, almost like consumers got used to how they were spending during the stimulus era. And they want to maintain that right. So it’s it’s an interesting situation where I think we can still push higher in the near term, but ultimately see weakness later next year even into 2025. It doesn’t mean that right? When the Fed gets inflation to 2%, everything’s great again, and we’re good to go. Right. There’s it’s not that people feel I feel like people have this this notion that once inflation is down, everything is good, the grass is greener, and we’re good to go. Like that’s just half the battle, right. So near term, I do think dips continue to be bought longer term, I think we will see some the weakness, weakness in consumer and consumers and potentially a spike in unemployment start to kind of hinder markets in the economy.
Eric Chemi 13:34
It feels like it’s almost as inequality of these haves and have nots, the people with money can go and get Black Friday, Cyber Monday records, the people who don’t, oh, now I’m reaching into Buy now pay later, I’m reaching into debt, I’m unable to keep up. So all like we see all these declines in the aggregate data for general people, but the people who have money can spend more at some point that that can’t be good for the country that can’t be good for the economy.
Adam Kobeissi 14:01
Absolutely. I mean, as we’ve seen in every other you could call it crisis or recession. In the past, the wealth gap always widens, right, and I think COVID was the ultimate gap. You basically gave everyone a couple $1,000 a stimulus but in return and we were we were tweeting this every single day saying stimulus will be the biggest involuntary tax in US history. And that’s what it became. The worth of $1 is is down 25%. And over the last few years, everything has gone up in price it’s permanently higher, and even as the rate of inflation goes down, and I know this is a commonly misconstrued misunderstood topic, the rate prices are still rising. They
Eric Chemi 14:43
were going down, right like a 25%. So something that was $100 is now 125 and is never going back down to $100. See?
Adam Kobeissi 14:53
And you’re also so when you say we’re we have 3% inflation or 2% inflation. We’ve now had two years of inflation. So yeah, 3% on whatever it was last year on whatever was your top 10 On top of 10 on top of. Exactly. So it’s like a compounding effect. So I don’t think affordability is going to get any better the housing market is is certainly a very unique situation that I’m very vocal about. And I don’t think housing affordability is going to get any better anytime soon. So I think consumers can still feel pain. And I think the current backdrop for consumers is not favorable, but I don’t think that necessarily means there’s an imminent crash in the stock market anytime soon. You
Eric Chemi 15:32
got you mentioned, the housing affordability, you’ve got this Redfin chart, the income needed to afford it typical home in the US hit a record of 41%. In 20, this year, that’s double where we were just 11 years ago, right? That’s, that’s crazy, right? Like he’s got a post tax basis, homeowners are homebuyers are spending 60% of their income 60% of their income on home payments. You sort of wonder because you know, I see it in my area, you see the the price of houses, it’s, it’s mind boggling. We’re used to now but it’s mind boggling from if we were sitting there in 2012. The idea that these houses would be worth X, but people’s incomes haven’t gone up, right? People say, Oh, you got a little bit income house prices gone up? Are we gonna get to the point where no one can afford to buy a house, I think we’re almost at home with your parents forever and ever, all the nation renters and you never get out of it, you’re stuck forever. The
Adam Kobeissi 16:23
situation is continues to be 100% A supply driven thing it’s supply supply supply. That’s all that matters. Right now, interest rates going up have had almost zero effect on housing prices were down I think five to 6% from the all time high, which is after going up 40% Since the pandemic that the situation here is that 90% of borrowers have a rate below 5% 30% or below 3%. To put that in perspective, prior to the pandemic, only, I think it was three to 4% of borrowers had a rate below 3%. It was I don’t I don’t never I’ve never heard of a single person that had a 3% mortgage prior to the pandemic. Now, it’s like every other person has a 3% mortgage, they might even have two houses because the money was free. And why not? And why would you sell your house if your mortgage rate is going to almost triple two to three times what it is now. As prices have gone up. And affordability is at record lows. So what we have now is existing home supply is I mean, it’s at a 15 year low. We have meanwhile we have new homes are actually the only option really now to get into the market. I mean, any existing home that is in any decent of a shape basically sells right away, and there’s a lot of competition for it. So now we have a bunch of new homes. And actually for the first time since oh five, the price of a new house is about to drop below the price of an existing home. So a new house will soon be cheaper than an existing home even as square footage on these new homes continues to go up. So why
Eric Chemi 17:52
is that? Why would a new home be cheaper? Is it because the old home people are existing residents and they’re just not going to leave because there’s
Adam Kobeissi 17:58
no supply. So the only option for buyers right now if you go to your market your go on Zillow. And wherever you live, you don’t realize that the share of new homes on the market is incredible. I mean, almost every one every two houses. I don’t know what the exact number is, but it depends on your city. A lot of the houses are new construction. So what are these home builders doing? Well, they’re saying, Look, well, we’re offering incentives. Now homebuilders are saying, well, I’ll give you a 3% a 4% mortgage rate will subsidize your mortgage if you buy our new house. So and then new home prices now are starting to come down because there’s more demand for them. But then the home builders are not taking on this liability of basically paying half of your mortgage rate on the bet that rates are going to come down. But as we’ve said the Fed the Fed wants to keep rates permanently higher for longer, even if they do start cutting rates. And that going back to where they were. So now you have all this stuff going on in the background. And I don’t think price is going down anytime soon. Unless supply returns. And as rates continue to go up, the amount of supply is going to continue to go down. So we might need lower rates for more supply or some sort of external factor to step in at
Eric Chemi 19:08
rates. The only desperate sellers are the builders, the developers because they live there, they need to sell it everyone else who lives in an existing homes like I don’t even go anywhere. So unless you’re gonna pay me tons of money. I’ll just sit so it makes sense that now that I think about it, the only people who really need and want to sell is that new home builder that has to offload it.
Adam Kobeissi 19:26
That’s exactly right. And I think the only other way that we get supply to come down would be an external factors such as maybe a spike in unemployment, increasing foreclosures sending more supply to the market. And right now the delinquency rates on mortgages are at an all time low because everyone’s mortgage is at 2%. Right. So why why would you it’s easy to make your mortgage payment right now. But if unemployment rises, and that’s definitely possible with the Feds policy right now. Well, then maybe people will start missing mortgage payments and people start foreclosing on their homes and then Supply sets returning. And if there’s a big large, a big rush of supply to the housing market, I think prices would come down very quickly. So the Fed needs to be careful not to go nuts not to let this get too far out of hand on their fight against inflation, because it can definitely spread into other markets beyond equities if things get ugly here. You know, speaking of
Eric Chemi 20:18
the Fed and what these higher interest rates are doing, there’s a lot of disruption dislocation, what people are used to, there’s been a big argument on, oh, well, the government’s not going to let the Fed have these higher long term rates, because they’ve got to pay the interest on their debt. They don’t want to pay high interest rates on debt, they want to pay very low. And so there’s going to be political pressure to keep long term rates low. What are you hearing about that? What are you saying there was a whole freakout of when that tenure was at five immediately sort of snapped back down to under four and a half? Because they the government’s budget deficit debt levels where they’re literally can’t afford interest payments on this?
Adam Kobeissi 20:59
Yeah, the cost of debt service costs for government debt have almost doubled since the low and they’re they’re only going to continue rising as as rates rise. And, and also, as the only interest rates are not only impacted by the Fed, there’s a lot of other factors we can get into that the government is almost self perpetuating the rise in interest rates from the amount of issuances that Treasury issuances they’re doing. But as far as the pressure on the Fed, I mean, in an ideal world, the Fed acts by their dual mandate, right, which is maximum employment and price stability, without influence from any outside factors. Now, are we in an ideal world? Probably not? No. But at the same time, it’s kind of like you’re weighing two things. So you can have governmental pressure because of this mounting debt load. But at the same time, are you going to cut rates and then let consumers suffer? And then you’re so an either it’s kind of like a lose lose situation where if you please, either side, you’re you’re kind of hurting the other side. So I’m not necessarily I don’t really believe that the Fed is going to start cutting rates because the government is pressuring them to do do so. And I actually think that the government itself will continue to drive interest rates higher through more than $2 trillion and expected borrowing coming up over the next year or so. And deficit spending is only getting worse as tax receipts go down. So I don’t see the Fed cutting rates because of government spending anytime soon. Do you see
Eric Chemi 22:28
a world though, where you’re really concerned about the US government, the US economy, the stability of the country, because the debt and the deficit are just so high and and we’re maybe in a world where job growth is not going to continue? Right? We’re kind of stuck on people’s housing, mobility, maybe I want to move to take a job, but I’m not given up this mortgage to go move somewhere to take a job. For example, are you concerned about? Let’s call it the future of your kids and grandkids life because of where we have been going the last several years? So
Adam Kobeissi 22:58
I mean, look, if you zoom out on a long enough basis, on the chart of the USA, we’re in a perpetual bull market, right? So to call for like a doom and gloom situation where the whole you know, there was a big narrative earlier this year that the dollar is disappearing bricks, and I don’t think the dollar status is going anywhere. It’s the dominant reserve currency. I is the debt ceiling, a long term concern? Absolutely. The debt ceiling is basically not a ceiling. It’s on Capitol 2025 It’s, it’s raised every time that it’s met, we’re probably gonna have 50 trillion in debt by 2033. Based on the government’s their own forecasts, they literally told us this. So I think it is a long term kind of crisis forming, but I trust that ultimately where it will find a solution I think we have to cut spending and I think we have to not spend more than we have I think it’s as simple as that. And hopefully, hopefully Congress and all the politicians will get that done for us.
Eric Chemi 23:59
They always they always do a great job of doing things that are logical and make a lot of long term sense I’m sure can you Yeah, you’ve got a lot of recent charts on on gold on Bitcoin those are the two things that people look at if you’re concerned about government stability, reserve currency status inflation the value of $1 Where do you see cuz I know your looks like from what I can read you like Bitcoin you’re not as sure about gold?
Adam Kobeissi 24:25
Yeah, so we we only come on Bitcoin for our subscribers and primarily because it’s the biggest currency I mean, it’s become so big now. The biggest cryptocurrency has become so big it’s almost a trillion dollar asset in itself. So we figured why not get into that a little bit and we’ve been bullish of Bitcoin basically, this entire year started when it crossed 20,000 call for 30 and now call for 40 I mean, it’s all based on the SEC approving these Bitcoin ETS which it looks like it’s going to happen. Could that it looks like we might be setting up for a potential sell the news event though, as in the new Your turn, right? I mean, at this point, when is this priced in? Because we
Eric Chemi 25:02
know we all know this is coming. So like, what what what else are people surprised at? Why are they buying Now we all know this is coming. And
Adam Kobeissi 25:09
I think what it comes down to with with crypto in general, once these coins start running, we’ve seen it so many times, they’ll just go up every single day for weeks on end, like literally without a pullback. And any rational trader or long term investor will say man like I’m even if I’m bullish of this, I’m getting kind of nervous here because we’re not it’s just a straight line higher. But that’s just the nature of crypto markets. And I think if anything, crypto has proven that it’s here to stay over the last couple of years. I mean, it’s had, I can’t think of an industry that’s had more setbacks and crypto since 2020. And here we are Bitcoin back about 40,000. Maybe going to see 50,000. I do by the time
Eric Chemi 25:50
we finished recording, it’ll be at 50. Right? That’s how
Adam Kobeissi 25:53
it will be it’ll go down to 40 and then hit 50 By the time we finished recording. But yeah, and then gold itself. We actually recently initiated some shorts on gold right as we hit 2100
Eric Chemi 26:05
based on technicals and overbought What was that base,
Adam Kobeissi 26:09
there was a technical trade as well as just we continue to believe that the markets are pivoting too soon again. And I think that’s the Feds going to kind of put markets back in line over the next few weeks here into January and February saying, Look, we might start cutting rates, we will we will start cutting rates eventually, but not as soon or as many rate cuts as markets want. And ultimately, I think that means the near term spike in the dollar is coming. Treasury yields are going to probably find the tiny while find a bottom right around the 4% range. And then they’ll pressure gold prices, maybe back below 2000 announced maybe even into 1900 into early next year.
Eric Chemi 26:45
You mentioned that pivot again, you sort of get the sense, from your perspective, you don’t think that the market is pivoting correctly, the market’s expectation of a pivot is right. Talk more about that, that disconnect on what you think the market is trying to do versus what you think will actually happen. Yeah,
Adam Kobeissi 27:02
so the market has shifted. If you if you go back a month ago, prior to the CPI, the October CPI report, we saw rate cuts beginning in not we the market saw rate cuts beginning in July of 2024. It
Eric Chemi 27:18
was forecasting rate cuts, beginning in July of 24. Right as we were in October,
Adam Kobeissi 27:25
that’s where we were. And then after CPI came out, it moved up to May and then it continued to move up. And then it kind of moved into March. And then when Bill Ackman came out and said he expects rate cuts early next year, and you know, not not calling out Bill Ackman. But I know that specific day markets rally and and bond markets pull back. And then futures now move to showing the base case showing rate cuts in March with a growing chance of rate cuts in January. And if you look at the the Futures Curve, the interest rate, there’s 125 basis points of rate cuts expected at the base case, there’s even probability of up to 175 to 200 basis points of rate cuts in 2024. And my opinion, that’s just far too soon. And I actually posted a survey this morning from the Financial Times where they surveyed a bunch of economists and said, When do you think the Fed will cut rates? Or how much will they cut in 2024? The majority of economists saw 50 basis points of rate cuts or less in 2024. So we’re having almost a 75 to 150 basis point gap between what economists are expecting and markets are expecting. And the Fed is kind of on the side of economists saying well, we’re not cutting sooner than right later. And I don’t think fighting the Fed is as a profitable strategy, as we’ve seen for the entirety of this year. So I think markets just pivoted too soon again, and we’ve seen this happen at least four to five times over the last couple of years.
Eric Chemi 28:51
So that’s fundamentally how all of this perspective connects. When you look at what you’re talking about in terms of the s&p or a Bitcoin or gold or your tech stocks in general, it seems that they all are based on this fundamental shift. Are you with the market camp of cuts are coming sooner and quickly? Or you at that fed slash economists camp of No, they’re staying up? And they’re staying up for a while?
Adam Kobeissi 29:15
Yeah, no, I think I think rate cuts will not come in q1, I think they and I think they will probably start in q2 of next year. And I don’t think that we’re going to cut six times in 2024, like most people are expecting so I definitely would or would probably side with what the Fed is saying. And the Fed. What they’re saying is they implement the rate cuts themselves. So I think I believe that more than futures, which have been wrong probably 20 times this year and continue to move on a daily basis.
Eric Chemi 29:45
Other than the Fed, who they they’re actually read, they can say what they want and they’re the ones who do like they’re the they’re the actors, they are not controlled by anyone else. Everyone else is responding to them. Is there anyone else that you would be reading or paying attention To for those of us that are watching the podcasts that are watching this interview, where else would you point them to other than your letter, right other than your letter like, Where else should they be reading? If it’s okay, if you you want to listen to Jerome Powell, who else do you find is very incisive in terms of their, their perspective on on what’s happening? Yeah,
Adam Kobeissi 30:17
I mean, I think, look, I think if you’re not on AIX or Twitter, at this point, you’re missing out on a lot of very bright people, some of the brightest minds and finance post free stuff on X every single day with their perspective. So I think if you’re not on there, that’s a great place to look. And also, I’ll say, just look at the data to the source, right? There’s there’s nonstop economic data coming out. Now, every single month, every report is just as important that as the last one or more important, and look at the look at the raw data yourself, and maybe come to a conclusion yourself, and then compare to what other people are saying, because there’s a tendency to just kind of someone is well known, or they believe this, and then everyone will just believe what they say is automatically, right, that’s not necessarily the case. So I think, you know, get on Twitter, see what people are saying, and then look at the data yourself, and compare. And ultimately, you know, like you said, I think our newsletter kind of does a good job of staying fairly neutral, and just objectively approaching markets. And, you know, I think 2024 is going to be a great year for those who can just remain objective, look at the data, and trade, trade trade with technicals, and then follow the follow the technical roadmap. This
Eric Chemi 31:30
is great. Well, where else can people find you then? So it’s the Kobeissi Letter on Twitter on x, then, what’s the website? If people want to subscribe to your newsletter, tell us everywhere we can find you there. Yeah,
Adam Kobeissi 31:40
so all our social media is just @Kobeissiletter, we have every platform. And then if you want to read more of our premium analysis, we post we have a private Twitter feed, as well as the report that we posted on the Kobe C letter.com. I’m sure it’ll be in the description. And you can subscribe there. We also have a free charter the week that we post every week on our on our website, which is also at the Kobe celebrity.com. And you know, from there, we basically post our weekly report with what we’re trading how we view markets, and every day, we provide daily updates for subscribers on a private twitter feed with how we’re viewing the markets developments, what’s going on at the Fed, and just about anything under the sun that relating to investing, so I highly encourage everyone to check it out. This
Eric Chemi 32:23
is good. I like the way you break down that fundamental difference in the two camps, right? Are you at that market camp or that that fed camp and you’re right, the, the Feds not going to be bullied, they’re not going to be pushed around, they have credibility issues that they want to maintain. And they’re going to do what they say they’re going to do. And the market can whip around very quickly, like we’ve seen this year. So Adam, thank you so much for joining me here on the show. And thanks for everyone, for watching, for listening, if you enjoyed this podcast, if you enjoyed this interview, please like it, subscribe to the channel, share it, post it so that more people can hear these voices and the content can continue to get out there. And and if if you’re hearing what Adam has to say, and you’re not sure if you trust your financial plan right now, and you’re not sure you want to do it yourself, you can go to wealthion.com you can put a quick email in there. And we’ve got investment professionals that we endorse that you can connect with. It’s free of charge, no obligation, no commitment. It’s just a conversation you can have if you’re trying to figure out should someone professional be doing this for you because you’re not sure it’s it’s for you to be doing running full point on your own family’s finances. Sometimes it’s better to have a pro, take a look at it. And of course one reminder, the new show speak up with Anthony scare Moochie. It’s live Fridays at 11am. Eastern, he’s going to take your calls your submission so you can go to wealthion.com forward slash you’re gonna write for wealthion.com forward slash ask Anthony that’s linked in the description below. So you can get your questions submitted before the show Fridays at 11. So if you don’t have questions for Adam, you might have questions for the Mooch or vice versa. So thanks again for watching for listening, and we’ll see you next time.