The Big Market Moves Playing Out Right Now

 

In the past week or so, a couple of things have changed.

I've told premium members about it already, and we’ve positioned accordingly.

And now I’m starting to give more detail on it here in these free writings and in the Bizarro World weekly podcast and in my weekly video updates. 

 

Specifically, what’s changed is that bond yields have softened. That's ushered in a bit of a change in the market. It's a bit better environment to be buying defensive things like real estate, including REITs, and utilities, and even gold.

 

Here in Spokane, which is one of the five fastest growing housing markets in the US, the mayor declared a housing emergency this week because the homeless problem is, frankly, out of control.

They're on literally every street corner in the downtown area and increasingly have encampments on highway exits and areas adjacent to parks.

Rent is going up fast because it's inflating. The cheap money and stimulus from your government and its Federal Reserve have priced low end buyers out of the market and pushed rents out of reach for others in that demographic.

That's why there's a housing emergency.

And this proclamation that the mayor here in Spokane made is just lipstick on a pig. It doesn't have any teeth. Declaring a housing emergency doesn't do anything fiscally or politically. It doesn't change anything.

You think the government can govern itself out of a government-induced problem?

This is what you have to be aware of and fight against on an individual level.

It is your responsibility to separate and insulate yourself from — and profit in spite of — governmental policy that is detrimental to your way of life and well being.  

It is your individual responsibility to rise above and not get swept up in this erasure of the middle-class, which is happening in front of your eyes

So what do they want to do here in Spokane? They want to basically incentivize developers to build more duplexes, and they're even experimenting with triplexes and quadplexes. As an investor, I'm thinking about building a duplex. Right? That's brick and mortar real estate, of course, but I've also been talking to you about buying real estate investment trusts.

I've made a specific stock recommendation to members of Foundational Profits in that vein, a real estate investment trust that owns assets in the low end of the housing and real estate market. It owns things like trailer parks and marinas that have trailer parks attached to them, for example.

What I was telling my premium members is don't kill the messenger. I'm not the one making the monetary policy that is making people poorer and that is unfortunately exacerbating wealth inequality and increasing homelessness.

I'm not the one doing that. But I am going to be the one profiting from it because I'm not going to be the one on the corner.

 

So, when I tell you to buy things like real estate investment trusts, that's why.

It's because real estate is now inflating quite fast. Year over year home prices are up something like 12%.

Again, the low end of the spectrum is getting priced out, and you can own that pricing power in your account by owning assets that harness that rent price inflation, or that real estate inflation.

And that's another big move in the market.

You don't need to be in the market every day buying and selling and day-trading these things I'm talking about.

I'm not day-trading REITs. I'm harnessing cycles and shifts in cycles.

And so I’ll tell premium members to start rotating and taking profits in other sectors and putting money to work in the new cycles that are emerging.

I pay attention every day to see when that is going to happen so premium members don't have to. That’s why they pay me.

I take the legwork out of it because I can tell them when these big directional shifts are happening, just like I told them that oil was going to start inflating last November. And oil continues to move up here as inflation continues to take hold.

It's not going away anytime soon. It’s certainly not transitory as many government mouthpieces need it to be and want you to believe.

You've got tin at record prices. You've got nickel moving higher, now oil and natural gas moving back higher as well. Same with copper and, of course, real estate.

So what’s changing?

I mentioned the falling bond yields.

But what's also changing is that growth is not keeping pace.

For the past eight months or a year, stocks have been inflating, going up precipitously. Just think about the meme stocks, like AMC and GameStop for example. I mean, stocks have been running really fast, and growth was going up fast as well because it was coming off such a low baseline.

 

If you remember, the world shut down in 2020 for a pandemic, and as it reopened, those numbers, quarter over quarter, year over year numbers, the growth was ... Well, it's the highest it had been — literally ever.

The S&P 500 experienced a 12.8% net profit margin last quarter. The best print on record. 

 

Now you've got Q2 numbers starting to come in, and those net profit margins are starting to tick down a bit. With lockdowns largely over, the economy is growing from a larger baseline, so it’s growing slower than it has in recent months.

The growth is starting to slow a little bit. And it’s doing so while you’ve got inflation still ramping.

What you’ve seen recently is a Goldilocks market, with inflation and growth both rising fast. You got numerous highs in the stock market, decade highs in commodity prices, and euphoria over cryptos.

Everything was going up.

But then growth starts to slow just a tiny bit while inflation is still going up, and that portends the turning of the cycle that you're seeing right now.

You've got to be rotating into that and rotating out of the things that were inflating the fastest. I sold some small caps, for example, rotating into gold large caps. I bought some utility stocks this week.

Those are the sort of big cycles that we're trying to harness. Here, I’m trying to show you why.

As simply as I can state it: Growth's starting to compress while inflation is still going up. That means things are starting to turn.

If you don't understand that, continue to watch and read the things I put out.

I'm trying to educate.

And, of course, if you want all the work done for you and you just want the stock and fund picks that are a result of this research… Then you have to become a premium member.

And you should start with Foundational Profits, which is totally worth it for $99 a year.

We have an energy stock we're buying now.

You can learn more about it here.