S&P 500 Outlook

Hey everyone thanks for jumping back Into the equity verse today we're going To talk about the S&P 500 and we're Going to provide a general Outlook going Into the end of the year if you guys Like the content make sure you subscribe To the channel give the video a thumbs Up and check out the sale on intothe Cryptoverse premium at intothe Cryptoverse Docomo and you can use the code 2023 to Get another 10% off your first month in Addition to that sale so make sure you Guys check that out let's go ahead and Jump in so with the S&P 500 you know the Movements in it at least for the last 3 To four months have been going more or Less how how you might expect based on On seasonality right and we talked about This a lot right and one of the things That I I mentioned back in you know Going into into August so back in like Like Late July early August is I I said Back then that we are likely going to Get a correction now if you're not Familiar with the seasonality side of Things um one of the things that we can Always do is we can just go look at the Year-to-date Roi of of the of the S&P and just see how typically speaking Right not always but typically speaking We get a correction in Q3 of the Pre-election year right and we got that

Correction right you can see that we got That correction it started you know Really like Late July and then finished Up by the end of October this is the Average of all pre-election years this Like this teal line but if you look at Individual years right you can see that This is a correction that we normally Get that's 2019 here's 2015 you also Have have 2011 as well so it's a fairly Standard correction that we've seen and So going into into Q3 or really going into into August we Suggested that there will likely be a Correction right a 5 to 10% correction The Narrative of course is is always you Know up for discussion the main the main Reason that I said of course besides Seasonal I mean right you know Seasonality could be the only reason Right I mean when you have a a very Bullish year in the index and it's up You know it's up 20% by by the third Quarter it's okay to have a 10% Correction okay so that's pretty Standard that was pretty normal to see But one of the other reasons besides Seasonality that we suggested we could See this correction was because of the Bond market And here I actually I I tweeted about This but I also I also made we made made Many many many videos on it as well but If you remember back over here in July

The 10e was breaking out right so the 10e was sort of breaking out above these Levels right going into August you can See it was it was testing these levels Trying to break out and and I even Tweeted about it back then and I let me Get the link here Um but I tweeted about it back then and I said essentially that the continued Breakout of the 10-year yield could lead To a period where both stocks and bonds Fall many investors have refused to Believe the feds hire for longer Monch For a long time and I think the FED will Be successful and bringing inflation Back down to 2% so this is you know this Was posted right here right where the 10-year was breaking out and what's Interesting is if you look at where TLT Was at at the time so you're looking at At the bond market because the idea Again was both stocks and bonds will Fall for the next few months right Especially during this seasonal seasonal Phase but if you look at where TLT was At the time you'll see that it was all The way up here at around 100 Okay now from that level TLT then fell 17.5% right so the reason why that's Relevant is if if the long end of the Yield curve is going up right like the 10 years going up if the 20 years going Up the 30 years going up that puts down That puts pressure on on risk assets

Right it puts pressure on equities but If the long end of the yield curve is Going down right if the long end of the Yield curve is going down that that Relieves a lot of that pressure so you Know from this level we saw TLT drop Down about 17 to 18% now one of the Levels I've been looking at on TT for a Long time as you know as a potential Area that it could theoretically bottom Was between 80 to 85 okay so we did at Least hit that level I'm not I mean it Could be the bottom right like that Could be the bottom but I'm also Open-minded to it potentially going a Little bit lower and you know we'll talk About that a little bit later in the Video but this is at least a candidate Uh for the bottom one of the reasons why It I mean it might not be and I'll talk A little bit more about it later is that There's there there's an there's an idea If if the FED funds rate is not Sufficiently restricted right like if We're not at a sufficiently restrictive Level then you know it's certainly Possible that that the long of the old Curve could eventually go higher as it Starts to potentially uh suspect that Inflation will go back up right there is A risk of something like that happening So we saw TLT dropped about 17% from Then and we saw the S&P right the S&P Also dropped not not like quite as much

As as the bond market did from this Level right but it it dropped about 10% Right so the idea was that going into August you know really going into August September and October we would go into a Period where both stocks and bonds fall Okay and and that happened right so the Stock market fell 10% and TLT fell about 177% but the idea again is it's because The 10year was breaking out that was Leading to risk assets falling down That's one potential narrative right That's the narrative that I said was the Reason why the the S&P is going down but It was also just a favorable outcome as Well based on seasonality how we Normally get a correction in Q3 of the Pre-election year but these seasonal Corrections in Q3 obviously don't last Forever and you know one of the things We said is that you could easily bottom Out in in October and get a get a rally Into the end of the Year just based on seasonality right Again this is one of those things where Seasonality does not always play out Like it really doesn't maybe about 70% Of the time and you can see that this Move has just completely gone you know Back near where it was earlier in the Year okay so bottoming out around the Same time that it tends to bottom out And then getting a fairly nice push up Into you know into November so and I I I

Made a video about this I think when the S&P was around like 4200 4300 saying That this was the most likely outcome Given the fact given the fact that Yellen issued shorter duration than the Market was expecting has she had she in Had she issued longer duration it would Have continued to likely put pressure on Risk assets as a longer the O curve Continues to go up right but because she Did not do that she she opted to issue Shorter duration the long the Y curve Started to fall back in as you can see With a 10-year yield right late October It started to fall back in and of course TLT started to go up so this is a Potential candidate for the low but the Reason why we can't know that yet is we Don't know if you know if along longer The Y curve is going higher or not right It's possible that it's gone high enough To slowly economy down but that's not All that evident yet right like we're Still seeing you know the economy grow We're still seeing I mean the Unemployment rate is trending in the Wrong direction but it's still at Relatively low levels at at 3 uh 3.9% It's not like it's at 5 or 6% or Anything like that inflation is still Relatively elevated you would expect in A recession that inflation would you Know be coming down very very quickly as Demand you know dries up right but we

Haven't reached that stage of the Business cycle yet and you know there's No way to know exactly how long this Process will take as the tenure falls Back in here right just to see like Where the breakout point was no here is The breakout here was the breakout point Right here we sort of poked our head Above it here in August then got above It and now we've more or less come back Down to it so over the next several Months this will be telling right like If if the tenure can bounce here then That would likely put pressure on risk Assets again if it falls down right if The tenure Falls then it could still be Short-term bullish for stocks because as The long theal curve goes down the cost Of capital is less and and therefore you Know stocks are gener going to find that Bullish but the issue is if the long of The Y curve is going down because it's Starting to sniff out weakness in the Economy then it's only a matter of time Before the stock market could follow now It could still take months before that Happens right like these things don't Play out overnight if you look at prior Business Cycles um like if you go look At at like TLT in in sort of a a former Business cycle and you overlay the S&P 500 onto this chart soor let me do this On a new price scale so that we can make It out a little bit easier here um but

If you look at like the financial crisis Right like if you go back to the Financial crisis over here this was November of 2008 this is when so you Have the blue line up here this is the S&P 500 you can see that the S&P topped Shortly like I mean shortly after TLT Bottomed right so TLT bottomed first the S&P topped a little bit later and to get An exact number on that you know TLT Bottomed in June of 2007 and then the S&P topped out in October right so you Had you had you you had July August September October you had those four Months um before the S&P really started To turn down and even when it did turn Down it wasn't obvious that this was What was going to happen next right I Mean like you you could have still Argued that even in November it was a Higher low um but of course it ended up Being a lower high and then the rest is History and then if you go back and look At at you know before that in the in the Dot crash let me just pull up we don't I Don't have TLT going back all the way That it needs to here so we'll just pull Up let's just pull up the 10 year um and It'll it'll more or less tell us the Same thing if you look at the 10e you Can see that I mean if the 10 Year's Topping out then the bond Market's T you Know bottoming out but at the 10e here Topped in January of 2000 the SNP

Topped in in March of 2000 right so it Only took a couple of months but it Still wasn't known until much later Until August when we still put in a Lower high and then the market trended Down so again the bond market bottomed First so you know things like the 10 Year the 20- year they topped first then The SNP tops sometime in the nebulous Future right we don't know if it's going To be a few months like you know we Don't know if it's like one or two Months or like four five but you can see The pattern right like the 10year tops It goes down when it first goes down It's bullish for risk assets the issue Is if it keeps going down and you can See that like when it topped over Here when it topped and it came down the S&P kept going up right and I mean it Bounced here but once once it really Broke down below these levels that it Had been holding that was where the S&P Finally started to pay attention Okay That was where the S&P was like oh crap Something's wrong you know and again Like similar thing over here where where You look at where you look at the 10-year yield where it topped out before The S&P topped out the S&P did not Really start to pay attention until Until the the tenure broke down below This level so then you look at it Today you look at it today and we can

See that the 10e has at least put in a Top right it's put in a top at around 5% okay in the short Term this has been bullish for risk Assets just like it always is right like This isn't that uncommon and we even Said I mean I said a few weeks ago at The end of October early November I Don't remember exactly when it was Whenever Yellen issued the shorter Duration um I said back then that it was Bullish in the short term for both Stocks and bonds the reason why it was Bullish for stocks again is because Lower rates uh take that pressure off Risk assets cost of capital is cheaper The reason it was bullish for bonds is Because you know issuing lower duration Is going to basically is going to Basically reduce the pressure on the Long of the Y curve that's going to come Back um you know that's going to come Back down which should which should send Send bonds higher so that has played out So far right that has played out so far So I certainly you know I certainly have My my fair share of of getting things Wrong in the markets Um but at least over the last few months It seems like the market has more or Less behaved how we sort of thought it Would right correction in August September October short-term bullish for Both or you know bullish sorry bearish

For stocks and bonds July through October and then flipping bullish on Stocks and bonds late October early November I think it was early November Um and and just kind of recognizing that When stuff like that happens don't fight The trend right and also seasonality has Been favorable right seasonal has been Favorable for the S&P as well and and There's no sense really in in you know In spending too much fight time fighting It when when seasonality tends to sort Of favor these the basically the exact Type of price movement that we've seen All year in the S&P 500 so then where are you know where do We go today right that's the question That's the the million-dollar question Of course is is you know where do things Go today well the first thing I would Say is that you know just like in History when the tenure you know breaks Out here it's likely going to try to Hold this for a while like I mean if it Falls below this level like immediately That would probably be very bearish for The stock market right but as we saw Throughout you know various points in History it will try to bounce around These levels for a while and and and Then eventually if this level gives Way that is not is likely not going to Be good for the stock market Okay now the ultimate question though is

Is this the top of the tenure because if It's not the top then you you kick the Can down the road for this whole process Right many many many months right I mean There's no way to know if it's the top Or not many people sort of front ran the 10 years for they've been doing it for a Long time right they you know they Thought it was going to top here and Then they thought it was going to top Here and then they thought it was going To top here but I did not and you know My expectation was that the FED funds Rate would go to 5 a half% and the Reason why I did not buy bonds over here Right the reason why I did not buy bonds Throughout this entire period was Because I did not think that the market Had yet priced in higher for longer Right I did not think the I think the Market really thought the Fed was Bluffing for a long time and and that This you know this really structural Change and interest rates wasn't going To hold think about how many people Probably went out and bought houses Because you know they were they were Told oh rates will come down you know in In a few months and then you can Refinance or you know next year and then You can refinance that hasn't happened Right rates have continued to go higher 30-year mortgage you know hit over 8% Not too long ago had since come back

Down but that I I think is is the is of The question is is this the top for the 10year or is it not and there's I mean First of all there's no way that I can Know the answer to that question the the Theoretical answer is is essentially If if the FED funds rate so if the if The FED funds rate is greater than R Star If the Fed funds rate is greater Than R star Then there's a good chance that's at the Top now R star is the theoretical rate At which interest rates need to be to Sort of change whether the economy would Be in contraction or expansion a lot of Economists don't even think rstar is Even a real thing right but there's this Idea there's this theory that there Exists an interest rate for which below That level the economy expands and above That level the economy contracts and so The Federal Reserve I they have said That they think they are in restrictive Territory now so what they're basically Saying is is they think that 5 a half% Is sufficiently restrictive right so I Mean then you know it's the the FED Funds rate is above our star if it is Sufficiently restrictive then it should Start slowing down the economy if it Is annualized GDP in Q3 was what like 4.9% um so far in in Q4 I think it's Coming in around 2% maybe 2.1% or so we Still have plenty of time to go before

We'll get that number but it's the trend That matters I mean Q3 of 2007 annualized GDP was 4.9% right so it Doesn't necessarily mean anything one of The reasons it can be so high is if a Lot of companies sort of loading up on Inventory they're frontloading that um And then if if the demand falls off Right then they might not need to get They might not need to get nearly as Much inventory in the future which would Then detract from GDP but this is the Question is is the Fed funds rate higher Than our Star or not this is the neutral rate Right so if if theoretically If the Fed Funds rate is at the neutral rate then The economy neither expands nor Contracts okay but again the neutral Rate is just like some abstract concept It's not like it's not like we can look At a number and say all right well that Is definitely the neutral rate like we Don't know the neutral rate could be 5 a Half% it could be it could be 4% or Maybe it's 7% right there's no way to to Know certainly the FED think thinks that They've gone far enough right the FED Thinks they've gone far enough and that They are are sufficiently restrictive so The thing to look for with with the Stock market is to look at the long end Of the yield curve okay and we can go Take a look at that right so we can go

Take a look at the the long end of the Yield curve So we'll go look at the treasury yield Curve so remember inverted yield curves Inverted yield curves basically tell you That the economy is sick okay that Doesn't mean the market can't rally During an inversion in fact more often Than not the market does rally when the Yield curve is inverted it's when it un Inverts where a recession is is Potentially the highest risk right if You can clearly see that on Treasury Yeld spreads right it's upon the Uninversity Where there's you know more likely a Recession in the cards now there are Periods in the 70s where you had a Recession while we were still in the you Know while we were still in inverted Territory on the yield curve that was Also during a period of inflation so it Is relevant to think that that could Happen again today because we have high Inflation but you know I I think there's This this prevailing Theory and we've Sort of pushed back against this for the Better part of 2 years that there was a A recession in in 2022 because we had Two consecutive Court of negative GDP And you know by by that technical Definition you could call it a recession But normally the nve would look at the Unemployment rate and and other factors

Sort of declare if it's a recession or Not and you know you think about Recession you think about people losing Their jobs not at a 50-year low in the Unemployment rate so I don't think we've Experienced a recession I I think that This so far has just been a pretty Typical bare Market uh that we had from January through October um if it turns Into a recession which it could do Then I mean then then you would see the Unemployment rate go up and you would See all sorts of other things happen Okay which by the way the unemployment Rate is starting to go Higher but remember I mean like again I Think a lot of people with these markets They they sort of get Frozen because They they look at the yield curve and They say well crap right the economy is Sick that means a crash is coming right But my my view right my view for Basically the last two years has been That the earliest the recession would Arrive would be the end of this year the Earliest it would arrive would be the End of this year and now we are at the End of this year and we know that the Unemployment rate is starting to go Higher right so there's no guarantee That it continues higher but it has Started to go higher and if you apply Like a 3-month moving average it looks Like it's starting to curl up here right

You know it's gone from 3.5 the 3month Moving average up to 3.83 in a Relatively short period of time you know Normally when it starts to curl up it Really starts to move Right but it I mean it plays out so Slowly I mean we get one data point Every month right like there's no way We're going to know if this is a start Of a recession until at least another Like 6 to 12 months more than likely and If we just start printing unemployment Rate again back down here at like 36 37 38 then you're just kicking the can down The road even further So you have to remember that even though You have an inverted yield curve it Doesn't mean that the market can't rally Right and that's what it's been doing For a long time and that's what it Normally does also the market normally Rallies when it sniffs out a Fed pause So if you were to go look at interest Rates if you were to look at interest Rates and and where the FED pause is and Then we overlay the S&P 500 onto this Chart you know once the FED pauses the S&P can often rally for a while right it Rallied here um you know the FED paus Right here and we got a little bit of a Rally it's common right here the FED Paused and we rallied the the market Normally rallies when the FED pauses and That's what it's doing again today that

Is not uncommon so the market tends to Rally during an y curve it tends to Rally on a Fed pause um it loves Absolutely loves climbing the wall of Worry and what I've said is that it can Do that it can climb the wall of worry Until either you get the re acceleration Of inflation or the labor market weakens So far the labor market Mark has been Relatively Tight in fact initial Claims are still extremely low I mean I I would think you would need to see this Printing in like the 300K region to Start really you know thinking that it's Recession imminent right I mean it's Still at around 209,000 relatively low in the grand Scheme of things one of the more Concerning things of course is continued Claims that one has been you know moving Higher right so this one has been moving Higher that one's a more concerning Metric but still initial claims is Relatively low meaning that you know While there have been layoffs there Haven't necessarily been like you know That much compared to what we would Normally get okay continue claims going Higher suggests that while people are Getting laid off at the same Pace as They normally do they're having a harder And harder time finding a new Job so when it comes to the

S&P I mean you know and if you look just Look at seasonality if you just look at Seasonality Then we tend to get a a um you know a Nice move going into into the year Apple's another good example you could Look at the 2023 year-to-date return on Apple and then look all up pre all Average of of all prior pre-election Years and see that's pretty much where It normally is right like this is where It normally is at this point in Pre-election years right you could also Average out election years if you want Which would be next year and you can see That in election years the returns are Not nearly as good on average right I Mean you can still You know on average it still has gone up 20% right but you're not getting the Same type of move that you tend to get In in pre-election years um and if we Look if I add the average of Pre-election years on here you can see That pre-election years are all the way Up here whereas election years are all The way down here one of the reasons why Markets don't like election years is Because there's more uncertainty in in Election years because of the elections Right and so um I think one of the That's one of the reasons why in Pre-election years the market just tends To go higher you know at a at a fairly

Brisk Pace but whereas in election years That's not the case as much okay um and I mean you can see like with the S&P it Had a pretty substantial correction over Here in early 2020 of course that was Due to a pandemic but we did have an Inverted yield curve in 2019 and then it Also had a fairly substantial correction In I mean this was your your sort of Your Q3 2015 correction but then it also Had another correction in 2016 as well Pretty similar and and it actually went A little bit lower lower than where it Had gone in in Q3 2015 we didn't have a Recession right here but we had a Recession scare right like there there Was some indicators suggesting that we Could be going into a Recession so again so far you know this Correction played out like we thought it Would in both stocks and bonds this move Higher played out how we thought it Would with both stocks and bonds right Bonds went up stocks went up the main Thing to watch for now is how long does The 10year hold okay how long can it Hold and that is what I will be watching You know how long does this thing hold Up and it's not just the 10 year I mean You can go look at the 30 year as well You can see that on some shorter time Frames it sort of broke the uptrend that It was on but it's still above you know This prior breakout point right it's

Still has plenty of room to work with Here I mean it could go all the way back Down to 4.4% find support on that and Then eventually move higher and then TT Could theoretically put in a new low um It all depends on on if this level that It just hit is sufficiently restrictive Or not um so that is you know that's Certainly the thing to look for and I Mean all these moves have been getting Weaker right I mean like the RSI is is a Dubious indicator but I mean you can Just kind of just in general you can see That like this High over here on on 30y Year or you know you could see that was Higher up than this one that's even more Pronounced I think on the tenure yeah Like on the tenure each of these highs Continues to be just a little bit lower This was about the same and then it just Kind of keeps going Down right so like a high High and a Higher high this was a high and then a Lower high and then a lower high so it Is the trend is weakening but the thing With the thing about RSI is that it Doesn't mean that it can't go higher Again and just continue to form that Divergence right it could it could Happen again so one of the reasons you Know you have to be aware of of the Yield curve here and and the long end is There is you know there is some thought That there's a chance that in order to

Get to the sufficiently restrictive Zone That the long end of the yield curve Needs to go up to where the short end is Today you know like 5 a half% or so I Don't necessarily know if that's true Right I don't know if I if I believe That or not but there is a chance that That's the case and that's the reason Why I'm not willing to you know to to Look at you know to look at TLT and to Say it it has definitely bottomed it is Possible right it's possible that it Bottomed at you know in this range it's Possible if the tenure you know if if The long of the if the long of the Y Curve topped out then it's certainly Possible that that that I mean well I Mean the long the curve toped out then You got TLT is bottom But I don't know if if the long of the Yo curve needs to go back up and you Know there's probably going to be a time Sometime in the next few months where Where the 10year tries to hold support and then Get some type of a bounce okay and the Thing to look for will be when it gets That bounce does it put in a higher high Or does it put in a lower high Right does it put in a like sort of a Higher high or a lower high here's a Good example from you know from like This is this is just before we had a Pretty big meltdown in the stock market

In 2018 you can see that like the the 10e put in a high and then a higher high And then a higher high but then it it Eventually broke this structure right Here right and then look at the S&P During that Time right the S&P well the S&P was Already starting to melt down but you Can see the S&P melted down right around The time that the 10year top so that was Actually a bit more of a a bit more of a Kneer reaction um that also did not Correspond to a recession so maybe it's Not the best comparison but that is the Relevant thing to look at does the has The FED reached a sufficiently Restrictive Zone you know I think about Two years ago I said that the terminal Rate would likely be 5 a half% Um I mean I think that's probably the case Right like I don't think they need to go Higher but one of the I think one of the Difficult aspects of it is if the stock Market keeps going higher right if if Crypto keeps going higher right if these If the trends Prevail and because when The markets Trend right it can take a Lot to slow them down right it takes the 10year breaking out sometimes to slow Them down as long as those markets Trend Then the wealth effect happens right Where people they they feel richer and So they're more likely to go spend more

Money and if they're more likely to go Spend more money that's going to Increase demand which puts upward Pressure on inflation and if it puts Upward pressure on inflation then it Might mean that the FED has to keep Doing more so it's basically this game Of like you know this game that we go Back and forth where the FED tries to Raise enough the market sees oh the Fed's done let's just run and the market Then the FED says oh no we're not done We're going to go up again and the the Market sort of backs down for a little Bit and then things the feds down again And then the market rallies and we just Keep going back back and forth and the Question is is you know who's going to Win in the end right well the stock Market I think the hard part is if the Stock market goes up without a Substantial correction how do we get Inflation back down to 2% right that's Sort of the soft Landing scenario I'm Not saying it's impossible it is Possible I mean you can go look at 1967 As an example where where we had an Inverted yil curve and there was no Recession although we did get a Recession a couple years later and the S&P went on to put low or low but that's Sort of the question is is you know can They engineer a soft Landing or not History history suggests that soft

Landings are not the most likely outcome But they're an outcome that you should Consider because they do sometimes Happen and the question is is you know Does the FED reach a level with a with a Terminal rate with a Fed funds rate that Puts it you know sufficiently Restrictive but not overly restrictive To slow the economy down too much the Problem is if like if the neutral rate Is only like 4% or something and the FED Has gone too far then we're not going to Know that until it's too late right and The the way that that would sort of come Up is if you if you were to go look at At the unemployment rate again right so Go take a look at the um the Unemployment rate and you can see that It is starting to Trend Higher if this continues to surprise to The upside right like if it goes to 4% And like 4.3% the problem is that when It starts moving it moves pretty quickly You could look at a here's a let me Switch this over to like a this is a 36 Moving 36 month moving average this is a 24mon moving average of the unemployment Rate right so like Historically when it gets Above This Level it just keeps going higher right Like there's not a lot of instances Where it gets Above This level and then Just stops there are a couple of fake Outs here and there right you can see

Like right here but normally when it Gets Above This level it just it it Keeps trending for a while and the Reason is because the FED has gone too Far now we don't know if the FED has Gone too far but remember interest rates Induce long and variable lags like you Don't know the effects until until you Know 12 to 18 months after they've Happened and by that point If the Fed You know if if the unemployment rate Goes up to let's say like 4% 4.5% or Something it's not like a rate cut is Going to immediately fix things right if You think about how long it took rate Hikes to have an effect think about how Long it would take rate cuts to have an Effect and that's one of the reasons why The market tends to bottom out on the Last rate cut not the First Rate cut Because normally what happens on the First Rate cut is the the market just Says oh no that's not enough like you Need to keep cutting but we're we're so Far away from that scenario right now Like we're still we're still in the Phase right now where the market is is Essentially just trying to figure out if If the if the FED is you know if if We're above the neutral rate or not you Know and again so far the economy is Still growing the economy is still Growing there's no clear sign that that It's slowing down in in in terms of you

Know in terms of like GDP you could look At other things and see that it's Slowing down like you go look at the ism The PMI stuff and see that slowing down You could look at the unemployment rate And see that's slowly trending higher But there's other areas that it's not Like initial claims are still relatively Low um you know the coincident economic Activity index while it is trending Lower if you're not familiar with what I'm talking about like it it is trending Lower so this one coincident economic Activity index it still hasn't rolled Over like it normally would in a Recession right like normally in a Recession it sort of levels out or or Goes down it hasn't done that yet it's Still trending up but the rate at which It's trending up is slowing down and you Can see that by looking at a month over Monon change right so like if you look At the month over month change that the Pandemic drop really really kind of Distorts most things but if you zoom in Over here the the month-over-month Change of the of the coincident economic Activity index which by the way it it is A comprehensive picture based on Non-farm payroll average hours work Manufacturing the unemployment rate and Real inflation adjusted personal income It's trending down right So this index is still trending up but

It's trending up at a slower Pace look At the month-over-month Change it's kind of noisy so I tend to Like to add like a three-month moving Average Right so you can see that it's trending Down right like so in September 2021 it Was at 8% on average 3month average 08 Then by January 2022 it was at 6 then By June of 2022 04 then by June of 20233 and then Today 243 right So it is slowing down out right like the You can see that the the the the economy Is slowing down some it's not going up As much as it was the question is is you Know can the FED engineer it in a way That stops IT before this thing goes Negative because when this thing goes Negative right that's where you get your Recessions right when it goes negative Or when it's basically about to go Negative right like you can see here the Recession started when this thing was at Um 0.117 this recession started when it was At 0.09 um these recessions over here this One started when it hit 0.11 this one Started when it hit 0.0096 this one Started when it hit you know about 0.006 Again today it's at 0

243 and it just had a pretty big drop Actually because it went from 317 down To 243 this is a pretty big drop on the 3mon the 3month SME of this we haven't Seen as you know this is a larger drop Than we've seen in a while one of the Reasons is because if you just look at The raw data you can see see that you Know these two data points right here Relatively low it's this one that's you Know that was relatively High um so this Is is something we have to watch and if You're curious you know you know what These are again are made up of I I Already mentioned it but the Unemployment rate it's been going up Right which is one of the reasons this Has been slowing down because the Unemployment rate goes into that real Inflation adjusted personal income right So if you go look at and then there's There's um average hours worked in Manufacturing but let's just go look at Real personal Um Income right Here it actually went down this past Month right you zoom in here it actually Went down so that that's why it's Slowing and if you look at the Month-over-month change of this the Month-over-month percentage change right You can see that it's been slowing down Here so that's why that index that we

Just showed you has been slowing down This is one of the things that go in That's going into it that I mean you Cannot clearly see the other reason is Because the unemployment rate is going Up right so obviously the index is going To slow down as the unemployment rate Softens up the other one was average Hours worked in manufacturing so we'll Go over to average hours work per week We'll go take a look at Manufacturing and you can see that it Just ticked down from 40.1 to 40 not a Huge change right it's not a huge change But it is notable because it was at 40 You know it was at 40.1 from April until September and then it just dropped down To 40 so again like there is some Slowdown it's not a lot but it is there These are the reasons why you know these Are the reasons why you're seeing this Index Trend down or not Trend down but Slow Down and the last one was non-farm Payroll so we'll go take a look at at Non-farm so here's non-farm private Payroll employment level um this one you Know if you look at a month over Monon Percentage change and we I mean you can You can zoom in it's been slowing down Right let's tune out some of the noise And look at a three-month moving Average you can see it pretty clearly Right it it has been slowing down this

In fact this level here is the lowest That's been since early 2021 Right the lowest it's been early 2021 Unfortunately we don't really have a lot Of data we just have it going back to 2010 um but I mean generally you know You don't this entire period of here we Did not have a recession and it was Positive the whole time right over here It started to go negative and then we Ended up getting and we ended up getting A recession yes it was a black swine Doesn't mean that we wouldn't have had Something but um something to consider This is starting to go down pretty Quickly right I mean the the three-month Moving average of this thing is down to Is down to 9.88% just the normal number is down to 0876 Per. right so like some of these data Points like the next data point is going To remove this one at 0.14 and and if It's somewhere down here then it's going To even you know create further track So it's a tricky Game because I I think like sort of the The the general sentiment is that by a Lot of people is that if you have an Inverted yield curve that means Recession now when that's not the case It does not mean recession now um it Means sometime you know recession later

That's what it normally means is Recession later it doesn't mean Recession now a lot of people get stuck Sitting on their hands and and not Investing because of that right they Just sort of sit on the sidelines and They don't invest in anything because of That um that's not how I navigate the Market right like with the and I've told People on on the ITC premium stuff this You know every single month basically For the last several years I tune all That out I mean with the S&P I just Invest based on the risk level the same Thing I do with with um with with with Bitcoin it's just based on on the risk Level the S&P 500 risk as long as it's Below a certain risk level then I'm a Happy buyer right as long as it's below A certain risk level um and that risk Level can vary from one phase of my life To another um at sometimes has been Higher like you know for a lot of my Life it was 75 um I was happy now it's a Little bit lower than that maybe around Like 7 or so um right now the risk on The S&P is 684 okay and I mean you can See like when it comes down to these low Risk levels down here that tends to be a A fairly attractive opportunity In the S&P 500 so I mean I mentioned just a few Weeks ago on ITC premium you know that I Was I was buying at at at around 41 to

4200 because the risk was low enough Right the risk was low and it was only Compounded by the fact that we have this Favorable seasonality going into the end Of the year and you know and we have um Yell and issuing shorter duration than The market was expecting we had the so We had the the longer the yield curve Going down so you know the question is How long does this last I did want to Mention I'm not much of a gap Trader and By I'm not much of one I mean I'm not One at all like I don't really care About them but I I do like I did notice That that you know a lot of the gaps did Eventually get filled that a lot of People were looking at and I believe the Last Gap just got filled here on the S&P So I mean I wouldn't be that surprised If there's some type of a pullback I Mean this is an explosive rally I mean This is we don't get rallies like this That often in the S&P where it goes up Like a 11% in in a few weeks that's not A very common move to see so we could Get a pullback I think more times than Not we we do get a pullback after a move Like that but we also know that that Seasonality still theoretically favors Um the you know the market to sort of Slowly grind higher in in December the Only way that that well not the only way But like the there's always geopolitical Risk and all sorts of stuff but I mean

The way that that might not happen is if Like let's imagine IM December gets here And we get the unemployment rate and it Comes in like way above what people are Expecting right I think consensus right Now is 3.9% let's say it just flashes a four Handle but that could spook the market Right that could spook the market and be Like oh crap like we're no longer in the Threes anymore and and you know as it Gets to 4% 4.1 4.2 4.3 you're starting To get closer to triggering the the Som Rule recession Indicator it hasn't triggered yet but it Is getting relatively close the creator Of the Som Ru recession indicator thinks That it will trigger in the coming Months but she said that even though she Thinks it'll trigger she suspects we Will avoid a recession so I mean she's She thinks that this time will be Different um you can also look at the Su Roll recession indicator we created it Per state a lot of the states are Relatively um low like I mean like Colorado is is coming up to that Threshold now but it has hasn't crossed It yet um but it is coming up to that Level and you can see there's plenty of Times where it went up to that level and It did not mean a recession when it goes Well above that level that can off mean A recession if you look at Connecticut

It's relatively low right it's nowhere Close to triggering the sum rule but if You go look at the District of Columbia it it triggered it long ago it Started to come back down here a little Bit but it triggered it long ago and There's periods over here right where it Went up and then came back down and then Went up again the one of the ones is is Concerning as well as California you Know California triggered the Som Ru uh You know a while back it is starting to Roll over a little bit though Okay so you know it's hard to know if You're going to get something like this Over here where it you know goes up it Comes back down and then it goes up Again um this is also coming out of a Period of high inflation and you know I Think Powell will stay the course until The job is done you know whether it Means just holding it 5 and a half% for Far longer than the market thinks or Whether it means raising rates Beyond 5 And a half% going to like 6% or Something just to show the market that They mean business and they're going to Achieve their target hopefully they can Achieve it by just keeping rates at at 5 And a half% and just if you're curious We'll just click on a few random States Just so if you're watching maybe you'll Be interested here's New York um is Starting to Trend up so like if you zoom

In it was trending up and then it came Back down and now it started to Trend Trend back up again um Wisconson it just triggered the Su rule Right you can see that it just triggered It it's actually moving up pretty Quickly here in Wisconsin um let's go Look at Virginia it moved up and then it came Back down and not starting to go up Again it's pretty noisy on on the state Level right it's pretty noisy on the State level here's New Jersey New Jersey Looks pretty bad you know it triggered It triggered earlier this year and it Isn't hasn't really shown any signs of Of slowing down here in fact if anything It almost looks like it's been Accelerating to some Degree Nebraska it triggered in 2022 then came Back down now it's starting to go back Up again and you can see there's periods Like that in the past like where it goes Up comes back down and then goes up Again Tennessee Oregon North Dakota Wyoming pretty interesting Trends Louisiana Indiana I'm just sort of doing it so you If you you if you live in that state and You're curious you can just pause it and

And see um Hawaii I think Hawaii was Pretty you know pretty low still um I Went through and looked at all of them At one point Kentucky KY starting to shows some some Weakness here starting to go up but Again I mean you know you still have Most of the states have not triggered The sun roll which is why on the National level it hasn't triggered yet But it's getting close close so that's Where we are that is sort of my view on The S&P right now it loves it loves Climbing the wall of worry and um and You know I mean it can always continue To do so until it has a suff sufficient Reason not to so just remember after After the FED pauses the S&P tends to Rally during an inverted yield curve the S&P tends to rally um and it's only it's Only once the labor market really Finally gives way that it'll it'll start To pay attention but there's no there's No way to know how long that that's Going to take like it could be could be A couple months from now could be a year From now right I don't know um that's my View on the market uh hopefully enjoyed It if you do like the content make sure You subscribe give the video a thumbs up And again we do have the sale on IND the Cryptoverse premium at inth crypto.com Links in the description below and you Can get access to a lot of these charts

That we you know we were showing and you Can sort of peruse them at your you know At your at your will there uh and you Can even use code 2023 at checkout to Get another 10% off on your first month Thank you guys for tuning in make sure You subscribe I'll see you guys next Time bye

Coinbase
OUR TAKE

Coinbase is a popular cryptocurrency exchange. It makes it easy to buy, sell, and exchange cryptocurrencies like Bitcoin. Coinbase also has a brokerage service that makes it easy to buy Bitcoin as easily as buying stocks through an online broker. However, Coinbase can be expensive due to the fees it charges and its poor customer service.

Leave a Comment

    • bitcoinBitcoin (BTC) $ 66,999.00 4.87%
    • ethereumEthereum (ETH) $ 3,520.84 2.61%
    • tetherTether (USDT) $ 1.00 0.05%
    • bnbBNB (BNB) $ 593.77 3.9%
    • solanaSolana (SOL) $ 169.04 6.46%
    • staked-etherLido Staked Ether (STETH) $ 3,519.27 2.5%
    • usd-coinUSDC (USDC) $ 1.00 0.13%
    • xrpXRP (XRP) $ 0.577262 1.2%
    • the-open-networkToncoin (TON) $ 7.30 0.33%
    • dogecoinDogecoin (DOGE) $ 0.125594 5.3%