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I Hate To Say It But We Were Right

Hello everyone, and welcome to our Market Alert video for today, which is October 11, 2024. I hope this video finds you healthy, wealthy and wise. Want to say a special hi to everybody in SCWPerS Nation, all you guys, I hope you’re SCWPering your little tails off. I just talked to a client who said they’re headed off to a cruise to St Croix. They’re going to the islands, they’re going to get a suntan, they’re going to go scuba diving. And I’m like, Wow, you guys are fantastic SCWPering their tails off, except they’re going to lose their tails in the in the in the in the ocean, there in the sea, whatever the Caribbean. And you know, I don’t know if you can get those back once they fall into the water. That’s gonna be a tough one, but be that as it may. Thank you for watching. I want to make a very special announcement so I don’t forget, and that is that you should have received, or will be receiving, an invitation to our very first podcast and our very first extended YouTube video program. And this one is only for clients, and it is also mandatory. I’m asking every client to watch it. It is extremely important. There is a threat right now that we perceive to be bigger to you, to your financial security, than bear markets, inflation, taxes, all the stuff that we talk about normally, and that is cybersecurity. And we’ve had a couple of clients attacked by the cybersecurity threat. In one case, the outcome was tragic, and so I want you to be armed and ready. So this video is gonna be coming out, and I strongly, I say mandatory. Of course, you can do what you want. I’m not your boss, but it’s mandatory. Okay, so anyway, so let’s so when you get the invitation, make sure that you that you watch the program. All right, so this week we got the inflation numbers. And as we’ve been telling you the last two weeks, we said is you’re going to hear it here first, and that is that inflation went up. And according to Bloomberg, the vast majority of the economists out there all thought inflation was going to go down. And so I’ve always said that if you don’t watch this video, you do it at your own peril. So maybe I should include all those economists. Maybe they should be subscribing to this video so that they can watch it and get our perspective and bring it into their mix. Hmm, just a thought. Anyhow, I want to share my screen with you, so I’m going to show you a bunch of numbers, but please don’t tune out. The goal here is to make you able at the next cocktail party to impress your friends by explaining to them how inflation is calculated and why you think inflation is going to go up over the next three months into the end of the year. Okay, so I’m going to share my screen with you, so bear with me here for just a moment. Okay, so this chart right here has a bunch of numbers on it, as I said, but bear with me. I’m gonna explain it. It’s not difficult. Okay, so let’s start off over here. This column over here is all the months going back to September of last year. This over here is the CPI level. CPI is a consumer price index, so it’s a level of inflation. This is the monthly change. So how much did it change from the previous month to the following month? This is that monthly changed annualized. All you do is multiply by 12 and it gives you that number. And then this is the comparison of one year versus the year before. Okay, so that’s pretty straightforward. So let me go over with you. What happened now the CPI came in. They just announced it at 315.3. Now in October, they tell us what happened in September, so we know the September number, and I’ll explain the last three months that we have on there here to you in just a moment. So 315.3. Last month, August, it was 314.8. So the difference between those two is an increase of 0.16. That 0.16, if you annualize it, you multiply it by 12, it gives you 1.9. Tthat’s compared to the 1.0 in August. That’s a significant increase in the monthly annualized rate of inflation. So inflation went up, which is exactly what we told you would happen. But apparently, as I said, these economists are not watching this video. So now this number over here is the headline number, as they call it, the CPI. What did it do? And it went to 2.4 I’ll explain that one here in just a moment. So let’s go back to last year, September of 2023 so the CPI went to was 307.79 that was a .25% increase from August of 23. So what they do is they take the monthly change from a year ago and they compare it to the monthly change today. So the monthly change last year was an increase of .25. This year was an increase of .16. That’s less. Therefore the headline number went down from 2.5 to 2.4%. Now here is where the challenge comes in, and here is why we think that inflation is going to trend back up to 3% by the end of this year. Okay, so let’s look at what happened last year. In the last three months of the year, there was an October minus .04, minus .2, minus .1. So inflation went down every month in the last three months of last year. Now let’s say that this year inflation doesn’t do that. Let’s say it stays the same as it is now, okay? So in other words, it’s a .16 increase. If that were to happen, what they do is they compare the .16 to last year’s minus .04 well that is this .16 is .2 worse than the .04 a year ago. And so therefore inflation goes from 2.4 to 2.6. So as Bill Clinton once said, it’s just mathematics. Now the next month, if it goes up by that same .16, we’re comparing it to a minus .2. So inflation went up versus last year, where it went down. So the net of is that inflation now goes to 3.0 and eventually 3.3 if it stays the same. So let’s do a little math, let’s play around here, and let’s say that instead, inflation stays at zero. All right, there’s a 0% change every month for the rest of this year. Inflation doesn’t go up, doesn’t go down, the CPI stays the same. Well, again, we’re comparing a zero here to a minus .04, and that makes inflation go up. We’re doing another zero here versus the .2. And guess what? Gets you to 2.7 and even if the inflation rate stays at zero into the end of this year, will be at 2.8 so for those of you who are visual, let me show you what this looks like graphically. Okay, so let’s scoot over here, and here’s the chart. This is according to Department of Labor. And the interesting thing you can see here is that in June of last year, inflation was 9% year on year, unbelievably high. I mean, very, very high, threatening to all of us, the economy and our and our way of life. But the Fed did a very good job of bringing it all the way down into June of this year. But since then, it’s kind of been up and down around the 3% range. This red line is where we are now, September of last, last month, and this is where we see the trend line heading into the end of the year. So therefore we think inflation is has a good chance of ending the year going up the next three months and ending up around 3% so what does that mean for us, and what do we do about it? Well, in a nutshell, nothing, okay, but let me kind of go over why. So basically, if you didn’t watch the video that we put out maybe four weeks ago now, I had Jordan Roach, our Investment Oversight Committee Director, on with me. We looked at the last 10 election cycles, and in eight of them, there was an October surprise for the market, and the market went down more than 10% but recovered quickly after that. Okay, there was one where it didn’t, and that was 2008 but that was a credit crisis, totally different thing. So therefore we anticipate that we might have one this year also, and if we do, we’ll see it as a buying opportunity, not a reason to panic and sell. Okay, now we haven’t got it yet, but we but we think it’s possible. Now the other things to consider is, of course, the elections, and you know, certainly those are going to be volatile heading in. We also have the fact that inflation is is going up, and the Federal Reserve is lowering interest rates, which is the opposite of what they should be doing. That could be ill received by the market. We have the war in the Middle East, which, if the Israelis decide to bomb Iran’s oil fields, then that could cause oil prices to spike, and that would also be inflationary, and probably not well received. But even in those instances, we’ve looked back at those and we found that even when there have been, you know, because Israel has done this before, they they’ve they bombed oil refineries in the past, it did cause a shock to the oil prices. Did cause the market to react, but recovered very quickly after that. So again, if we get this correction, which is possible, we view it as an opportunity to buy, if you have cash to buy, if you don’t, then you just sit tight and unfortunately, just put your seatbelt on and endure the turbulence. So overall, we think we’re going to be fine. We’re going to end the year very nicely. For this year, we’re up so far very nicely. And I hope this video finds you healthy, wealthy and wise. And of course, I encourage you to subscribe to this video so you never miss a single episode. You don’t want to do that. Share this video with your friends. And also, I want to remind you we have our cyber security video, podcast, slash YouTube video that you should get the invitation to or for. And if you haven’t, you should get it soon. Make sure you attend. We have over, I think, 600 clients that have already signed up at this point, but we want every client to watch this. It’s the single most sophisticated threat we’ve ever seen to you since, since I’ve been in business, anyway, and so we want to protect you from that, and if you’re informed about it, then hopefully that can that can help in that regard. So again, thank you for watching, and we’ll talk soon.

Please note: transcript has been modified after the time of recording. 

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023 

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