1 Sector to Cause Fed to Pivot on Interest Rates
There’s no denying it: I’m a data guy.
Looking at numbers, I see vivid pictures of what’s happening in the economy and market.
But there’s one sector that requires a little more insight than just the numbers.
I know. It was hard for me too.
But when you combine the actual data with a little vision for America 2.0, it paints a whole different picture.
One for the bulls.
That sector is housing.
And the numbers look dreadful … to the untrained eye. But when you look at the bigger picture?
There’s a more bullish scenario playing out.
Although the data presents a grim narrative, the cooling of the real estate market is GOOD for growth stocks.
As real estate and the overall economy begin to slow, the Federal Reserve will have to rethink aggressive rate hikes.
But before you buy, read this to make sure you’re following this rule…
Housing Data 🔻, Growth Stocks ⬆️
Did you know that real estate is the backbone of the American economy?
That’s because household formation and real estate spending are huge contributors to our gross domestic product (GDP).
And if you’re just looking at the data, it can look grim…
Housing starts — a data-point that measures groundbreaking on new construction projects — was down 14.4% in May.
When compared to the consensus estimates (-1.8%) for the month of May, this can seem pretty alarming.
Especially considering that the U.S. is facing a home shortage which contributes to higher prices.
Pending home sales were also down 12% year over year (YOY) and mortgage rates climbed to their highest level in 13 years — near 6%.
But here’s the thing. When people buy new homes, they’re not just buying the home.
They have to buy a bunch of other home goods: furniture, appliances, cleaning products, etc.
This extra spending increases corporate profits. And as we know, as revenues and profits increase, stock prices tend to move higher.
But the Fed is watching.
To avoid further decline, they will unwind rate hikes.
That means growth stocks and real estate could be the first to see a boom again. We strongly believe that the Fed will pivot sooner, rather than later.
That’s because as we move forward, inflation will begin to be compared against higher numbers from a year ago.
This should drive year-over-year inflation rates lower organically, and supply chain issues should begin to be resolved.
And here’s another actual data point you’re probably not hearing about:
one thing lost in translation in the "higher interest rate" panic is that real rates are negative pic.twitter.com/Kus7DxpY4a
— 🇺🇸Paul Mampilly (@MampillyGuru) June 22, 2022
But so far, the panic has caused huge declines in innovative growth stocks like ours.
The decline — although painful — have given us incredible bargains.
Bargains that we may not see again during a bull market.
And if you are as #BOP (bullish, optimistic and positive) as I am, there’s one thing you can do to prepare for the coming bull market ahead of the Fed pivoting…
Stay IN Growth
You might have guessed it — the best thing to do right now, despite market volatility, is to #HODL (hold on for dear life).
This is the time to flex your Strong Hands, not sell at a loss.
If you’re really bullish like Paul and I, this would be the time to average down.
By buying at these low prices, you get innovative growth stocks for a fraction of their worth on paper, not accounting for future growth.
But remember, timing the market is difficult.
So, when you’re buying the dip, keep Paul’s words in mind: “Buy low and buy slow.”
He lays it all out in this free report.
It’s Rule No. 3: Build your positions over time.
Now could be that time.
By buying low and slow over time, you get an average cost for your shares, which helps you take advantage of low prices.
The key to this isn’t the frequency or the quantity: You can buy using $1 once a month or $1,000 dollars twice a week. You have to decide what amount you’re comfortable with.
No one has a crystal ball to tell you what the market will be like tomorrow. No one.
But today, prices are low. And it makes it a good time to build your America 2.0 model portfolio.
Before you go, let me know what you think of today’s Bold Profits Daily:
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Until next time,
Investment Research Analyst, Bold Profits Publishing