The Fed has done it again.
The much-anticipated 25-basis-point hike happened.
It could have been the last one during the current hiking “cycle.” The market now thinks that the Fed is pretty much done raising interest rates.
In fact, it anticipates an interest rate cut by the end of the year.
I’m not a sentiment trader… I don’t read the tea leaves of market psychology.
I rely on something more reliable… the 18.6-year real estate cycle.
It has guided me through more than one bull and bear market… in more than one asset… in Western countries.
This is the real “beat” of the market.
And since I discovered it, I’ve used it to get ahead of the investing crowd.
But it does help to understand what everybody else expects. When you can compare the market’s expectations to the real dynamics of the 18.6-year cycle, you can find investment opportunities that everybody else misses.
So what does the market expect now?
The Market Is Ready for Good Times
Jay Powell, the Fed’s Chair, was very careful in his remarks – as always.
He didn’t want to show his cards and tell the market outright that there would be no more hikes.
He pushed back against investor expectations that the Fed would cut rates by the end of the year. He doesn’t want the markets to be too complacent.
Mind games like this are part and parcel of the Fed’s approach to communicating its intentions with the market. Managing expectations is part policy and part psychology. Jay Powell understands that.
But the market isn’t easily fooled…
In fact, market expectations are shaping up to be roughly in line with what the 18.6-year cycle tells me would happen.
The market still expects a recession in the short term. And we could get a draw down in the markets… but not a recession.
Use This Knowledge to Your Advantage
There are plenty of opportunities in the market right now, as I’ve shown my readers in my brand-new newsletter, The Signal. We’re up on three out of four picks, with one pick up double-digits in just three weeks.
(If you want to learn more about how I apply my 18.6-year cycle to the markets, go right here.)
What’s more… energy prices fell today, which could be another opportunity. The market clearly thinks the global demand for energy will go down because of the “upcoming recession”…
Well, I don’t think so.
But I agree with the market in other respects…
Interest rates will go down by the end of the year, and lower rates will produce a rally in most assets, including stocks and real estate.
This will be the final and one of the most lucrative stages of the current cycle.
The market has just signaled that it’s ready for the good times to come back.
But only my readers know how long this final stage will last and what opportunities investors should focus on.
The big picture, however, has started aligning with my forecasts based on the 18.6-year real estate cycle.
It always does, eventually.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
Like what you’re reading? Send your thoughts to [email protected].