So Tom Lee just released a huge bombshell about the market in 2024 by saying that in 2024, the Federal Reserve will be done fighting inflation and he made some insane predictions about where the market will go in 2024. Before we get to where you think we can go, you were pretty right as to where you thought we would be, right? Your 4750 was your target for the end of this year, where 46 we'll call it. You should know that Tomley specifically call where we are right now. About a year ago in January 2023, when the S&P 500 was 4,000 Tom Lee said it's going to hit 4700.

Guess what? We're currently at 4650 and it's not his first time. He got it right a few other times before, so our bet was inflation would be softer. you'd avoid a hard landing. and then we've seen the FED kind of take its foot off the neck of monetary policy.

So I I think it was. Economists were too bearish. Essentially, what he said is two important things: I'm going to give you those things and then I'm going to share with you my analysis. As far as how accurate I think this guy is I Think people should study Market Internal structure.

We've seen a huge turnaround in cyclical stocks. The banks are turning, the regional banks are turning up small caps are leading. This is not end of cycle. Market Behavior This is early cycle expansion re accelerating.

What if it's just a late year run as fast as you can catch up to what you missed. A lot of money has come in and it's just chasing everything to the end of the year as rates have come down. Well if if we thought this was a head fake uh and you know I think if this is 98, you know we can run another 7% from today to when to year end. But this year year end? well.

I think 4,800 is more reasonable. but um, but I think that if it was a head fake, we'd see credit calling baloney and we'd see spreads riding or high yield falling. But what's happened is spreads have rallied, high yields rallied. It's actually a improving liquidity rally while investors took $240 billion out of stocks this year.

So you you're a believer in the broadening of the move and you think it carries beyond the calendar turn? Yeah, because now as we get into next year, uh, we'll have an Fomc decision. but I think it's going to show the FED is no longer fighting an inflation War but really shifting towards managing the business cycle. Huge change. Um I think interest rates could make a huge move lower.

Mark Newton Our technician thinks it could be 3, 3 and half% 3.2 and that would take mortgage rates down to 5 or under 5% We know that would help the economy and I think there's a lot of pent up demand for Capex. So I I I'd say that stocks could do very well next year. Well, you must if you think we're going to get to your target for 20124 S&P is 5200. Yes, Number One: He's saying that the Federal Reserve will be done fighting inflation in 2024.

That's super important because that leads to his second point, which is his next year prediction. As you notice, his predictions seems to be on point. Now, his second prediction, which is a complete derivative of the fact that the FED will relax its monetary policy, is that the stock market will do about 15% on the S&P 500. That's a bold prediction, but a guy like Tom Lee who's done it before, definitely deserves my attention.

To break it down and tell you what I think about this now. Look, we just found out that the inflation rate dropped to 3.1% The CPI data came out 3.1% It's clearly the tail end of this inflationary cycle, and obviously, if I'll wake anybody here in the middle of the night, I'll smack them on top of the head, I'll pour some cold water on them and I'll ask them what is the target for the FED. Everybody will know it's 2% but how do we get to that 2% and how close the FED is to getting to this 2% Because that's the key to Tom's prediction. Tom Lee basically says: look, monetary policy will be eased in 2024 because the FED will beat inflation and the stock market will do well as a result of that.

But in order for us to judge that prediction, we need to answer two question: Number one: How likely is the Fed to beat inflation in 2024, and two: What needs to happen for that to be the case at the end of the day? There's basically three things that drive the CPI read: Number one is a statistical setup. The CPI is a comparative system. So as far as the inflation dropping downwards towards the 2% it has to happen when the months we are comparing to were horrible months. As far as inflation, the worst inflationary situation was in the comparable months last year.

The easier it is for us to beat them this year and get a bigger drop down. And of course, if you look at the end of 2022, it wasn't as bad as the beginning of 2023. Which means that the comparable months we're probably looking at for the biggest push downwards is January and February And that means we'll get the results in March April. So the push downwards is most likely to happen in the first quarter towards the second quarter of next year.

But that's a very partial view of the entire picture. As far as Shelton Gasoline, these two dominated where the CPI went over the past three years, and as these numbers go, they will determine what happens in 2024. Now, look, all prices are cooling down as they are expected to do. They're cyclical in nature.

They go up in the summer as people travel and they go down in the winter. It's very, very simple. It's very, very cyclical unless there's a big world war going on and there were some options of that happening in the Middle East. But now it seems to be a very regional conflict.

Oil prices will remain low currently below $70 a pop. Now Crude 70 is a whole lot better for the CPI than Crude 100, which is something we just had in September. So from September to this point we already down from 100 almost 195 all the way to sub 70. That is going to play into the next inflation cycle which will get next month.

Now on top of that, natural gas prices are dropping as well. That will eventually be reflected. But on top of all of that, don't forget Shelter Shelter is starting to creep downwards. It's happening as mortgage rate start to slowly ease off.

There's more transactional activity and that more transaction activity leads to cheaper prices being reflected in the CPI. Because the only thing that kept the shelter so high is the fact that we had no transaction activity is complete freeze a Mexican standoff. Now we're starting to see a decline in the mortgage rate rates in the United States And as a result, you start seeing shelters coming down now 6 and 1 12% We're already at 8. So as these things move downwards and their Prime to keep moving downwards at least until oil prices start climbing up in the summer, which is exactly the same time where shelter starts climbing up because people tend to move at least people with families in the summer months where you don't have schools.

So summer months are really good for oil prices and for shelter to start climbing. So that means until summer comes in next year, there's a good chunk of time the first three quarters in which inflation is very likely to come down closer to the Fed's Target rate and closer to the FED being able to say hey, we did it, especially when the GDP numbers are doing fine above 5% Unemployment numbers are very low, and it's a good point to say mission accomplish, especially when you have the political background and the political backdrop of an election year. Magically, somehow we have very easy monetary policy once we head into elections, even though the FED is supposed to be apolitical I Guess right? So baring any craziness that might happen next year such as a huge war or aliens or another disease or something crazy unless something happens that completely derails this situation right now, we're headed to a very, very good 24 and that's going to be a great year to be in the stock market, which means that now is the right time to dollar cost average into the market before it spikes in 2024. So for me, The Sweet Spot is between the first quarter and the second quarter of next year where I think the market will start pricing in the FED basically taking the foot off the gas and starting to cut rates.

whether the FED officially announces it or not will not matter as much as what the market will believe. And of course you know what they say about opinions. Opinions are like everybody's got one, so I'm sure that you do as well. So comment below.

let me know if you agree or disagree with Tom Le or with anything I Just said keep it respectful I'm happy to interact with you in the comment section I'll see you next video.