YOU KEEP TALKING ABOUT A PIVOT. WHAT IS A PIVOT? INTEREST RATES UP OR DOWN?
Crucial point, total change of direction. In our situation:
The US Federal Reserve prints money like crazy with the result that inflation runs away. It then pivots and stops printing and even draws funds out of the market, creating inflation by cutting rate to zero, has been the modus operandi for all Central banks for years and years. This year however they got scared and furiously raised rates. Oops, too high? So, it could PIVOT again, lower rates, lead to inflation, etc. So, will we have a continuous raise in rates, leading to a recession – or a PIVOT to more inflation?
We as investors get bounced around looking for these pivot points.
October 26 – Bank of Canada (likely up .75%!)
November – US FED. We think the FED may raise .75% or even 1% – noting the British debacle. We also think their stated objective of 4.6% will end up being higher…can you say 5.5%? Annoyingly they may feel that they must stay the course. So:
We think it 70% likely that tightening will continue. There is however now a (England) chance (30%?) of a capitulation and pivot back to lower rates – or stay even. Arrrgh!
MAJOR POINT: Either way…we called it ‘four ugly months ahead’ (ugly – as in uncertainty). If the US keeps raising rates in November and December, stay out. This will affect real estate values and sales dramatically further. If they do not raise – wait. If they lower rates, go BUY, BUY.