So I think we can all agree that 2022 was not a good year for the stock market. The majority of people that I spoke to are losing money and have not had a good year, and everybody's obsessed with one question, which is, where is the bottom of the stock market? When do we know it's time to jump back in and start increasing our positions? The problem is that nobody really knows, including myself since my crystal ball is not here, so nobody knows. But I always been very, very consistent by telling you the minute the FED pivots, that's where I know the minute the FED pivots is the moment we actually have some clarity about where the bottom is going to be. It doesn't necessarily mean that the fit pivot automatically sends the stock market for a six-month rally. That's not what I said, but I'm saying that's the moment where things starts to change. The problem is that we haven't had any kind of catalyst to show that the FED pivot should happen soon. with inflation being at almost eight percent still seven percent with the war in Ukrainian Russia with China lockdowns with the price of energy, just everything seems to point to the fact that we're still far away from that potential Fed pivot. When we say Fed pivot, we mean a change of policy from a more hawkish stance, more increasing rates, more going aggressive against the market, into a more accommodating policy. Now look, this is the first time I'm going to show you a clip by somebody with a credible standing in the community who comes out and says hey, I actually am legit and I think that the FED will pivot in 2023 And here's why. Now we're going to examine what Professor Siegel is saying here. and let me just clear it up right here before we start this segment that he's a former Finance Professor from Wharton That means he knows what he's talking about. So whether you agree or disagree with him in my comment section, that's fine. It's okay to disagree with him. Everybody is entitled to their own opinion, but let's keep it in the back of our heads that this guy knows what he's talking about. so he's not some sort of a talking head, normal talking head on CNBC he's actually a credible Source Now I'm gonna watch this clip with you I'm gonna hear out his argument and I'm going to give you my honest, raw opinion into what he's saying here. Would I agree, disagree, and why? Most importantly I Want to encourage us to think together about this and the best way to do it is to listen it with it. Go into it with a completely open mind, open heart, listen to what he has to say, and then analyze it on my end. Basically, I'm going to stress test what he's saying here and we'll let you know what I think he's right or if is wrong. Let's start the clip and let's see what he has to say joining us. Now to talk about this, someone who I imagine disagrees vehemently. but we'll see Jeremy Siegel Professor Meredith Citra Finance at the University of Pennsylvania's Warren School of Business take on Goldman Sachs Jeremy What do you say Professor? Yeah, I think Goldman is I mean I respect them so much, but I think they're being way too too pessimists. I Just want to clarify what they're talking about. There's a note from Goldman Sachs that we're heading into a worse position. the FED is not going to Pivot and the market is going into some serious bad times in 2023 and Jeremy Siegel is coming out saying hey, I have a contrarian opinion to that and that's why he's having this interview with Andrew Listen, it's taken way too long for the FED to get it and and they haven't gotten it yet that inflation is basically over. but they will uh, and I think they're going to get it. uh, maybe maybe very late this year or early next year. and I think as soon as they get it, you know you're going to see a big increase in in the equity price. So what he's saying here is that he thinks that the FED pivot the change of policy from hawkish to more dovish from aggressive to more lenient happens either by the end of this year which is 40 days or the beginning of next year which seems more likely. And what he's saying here is that the moment that the FED changes their policy, their stance, the equity markets will react instantaneously because the Equity markets they price in Into the Future. So if the FED change is policy now, everything will get priced in accordingly and will get a massive rally in the stock market. In the headline here: I think he said 20 I Don't really know, but that's kind of the argument here Now we haven't heard his reason or his kind of catalysts as to why he thinks the FED will pivot so fast and I'm assuming it's about to come up right now. What makes you so convinced though that they are going to shift Given how Jay Powell has has said and we've talked about it on this show over and over again. This idea. It's a little bit. uh, maybe like an antibiotic. You know you got to go for the full 10-day dose that that on day seven you may. it may look like you're feeling better. It may look like it, but you know if you stop taking it, you can get sick again. What? That's a great Point By Andrew you're going to get the The Case Shower Monthly Housing index as well as the federal um uh index. Both are expected to show another big decline. Uh, and as you know, my point has been, housing has declined, but the way the government computes it and it's a very important part of the index, it's so lagged that it'll continue to show increases. and I think finally the FED will say you know what on the ground Yeah, things are all declining and uh We've you know we've got to think about that but I was I was shocked when uh Jim board said you know just last week Uh yeah I think things are are getting worse and and now I I'm I feel I have to be even more aggressive. He's referring to a statement that was made last week by one of the FED Governors I Believe that was the gentleman from Saint Louis who said that things are getting worse and that the FED has to go from four percent or five percent all the way to seven percent just to tackle this current inflation. So Professor Siegel is saying I have no idea what he's talking about I don't know where he's getting his numbers I absolutely do not agree. that's an academic way of him. Basically to call out this guy say hey, you don't know what the F you're talking about I mean I really wonder what sort of data uh uh, he's looking at tomorrow when he says I wonder what sort of data he's looking at is a nice academic way of calling him an idiot. just my two cents. Maybe I'm wrong but I had a lot of professors speak in my life and that's prefers to speak for. dude, you don't know what you're talking about. Gonna get the the monthly money supply as as I think I've noted, we've had a uh, that's super important. That's the first time where I think he's making a valid point. now. He talked about the housing market cooling down and that's going to contribute to lower inflation for sure. But he hasn't addressed the big elephant in the room which is still commodity prices because of what's going on in Russia and Ukraine which is China still looking down which means less production capacity in China Which means that winter is coming up. so Energy prices will go up because of heating because of everything that's going on right now and if China actually reopens then the flip side of that is going to be more consumption of energy. So without OPEC actually playing ball with the US here which it isn't right now, these problems have yet to be solved and that alone, the real estate market cooling down, the loan in itself I even think is enough of an accelerator to offset that, but this is where he's hitting it at the head. I Think he's talking about money supply is coming down now. watch some of the Old Milton Friedman lectures Milton Friedman Always said and he's kind of the OG in the community. He's one of my favorite all-time greats. He's always said that the main thing isn't none of these Supply chains or OPEC or none of this is money supply means inflation. Money supply is what decides if we have a vision or not and I could not agree more. The moment you have more money in the system, people spend more than inflation happens. We all saw that happen during the epidemic. So Jimmy secret is saying hey, look, don't want to believe me on the real estate market, whatever but the money supply is coming down which will reflect in slower inflation which will basically mandate the FED to rethink its policy. The greatest six-month decline in the money supply since World War II I Expect another decline tomorrow So monetary conditions are still extraordinarily tight once they get to their recognition. Hey What's Going up. Uh, in the real world they'll say we just don't have to tighten anymore and we don't have to get into the fire Professor you know we just had the CEO of he was about to say something super controversial and Andrew interrupted in which ah let him speak because that was he was about to say he was about to say I don't see them getting into the far and then Andrew stop them What he was about to say is I don't see them getting into the five percent area so he doesn't even think the FED will ever hit five percent interest which is kind of the consensus right now. It's a very, very bullish stance on the market Smucker's on this morning. he seemed to be able to pass this calls on and then some to to the customer base right now, right? Yeah, I Mean there's there's certainly going to be pass on with without without any doubt. Um, uh. But when you take a look at the the important part of the index, that housing index which for the FED is going up because of the way they constructed in the real world is going down. 40 of the core index is this housing. So even when you take into account passing on uh and I think I mean I Think it's true many of them have passed on, but now their commodity costs are not going up anymore. I Mean there's some labor costs going up? Uh. But but outside of that I think basically 90 of our inflation is gone. Perfect. It's a very aggressive stance. Uh, especially as far as it goes with commodities. Uh, don't forget that while the US is kind of self-sufficient as far as energy, as far as the food production Commodities mostly. and it has a lot of friendly neighbors that provided Canada and Mexico and whatnot, the price of these Commodities is global and it's set on a global Marketplace And globally there's a big shortage because of what's happening with Ukraine and Russia, not just Commodities raw materials because what happens in in Russia and Ukraine is actually not Um is not in the position where you can say well this is over right now and there's an absolute free flow of Commodities and Grains and whatnot. And you have to remember like most of the world relies on Russia and Ukraine to provide them wheat and grain. right now that's up in the air to say that 90 profession is gone. It's a very aggressive stance I Don't know if I would agree to that stance I would definitely agree to the my money supply situation and but let's keep listening Professor I But where do I hope you're right and I know eventually no matter what I hope you will be right. but the question is when you'll be right and and therefore I'd ask do you think we're talking about 50 basis points or 75 for the next time or or something else And then as you look out to 2023, how you think the FED pivots because part of you know you just mentioned Jim Bullard saying he's seeing the opposite that you're seeing, you know Jay Powell has talked about. you know, just his own credibility. The question is, there's gonna be there will be a pivot at some point. but also there's a bit of how do you pivot when you start to think about those other kind of issues. Well, I think the most important thing I I Think it's looking to me like 50 basis points because I think the the data will still come in on the softer side. What's more important in that December 14th statement is that a real strong hint of a pause and which is what I think should happen. Um, you know, given given the lags and monetary policy, well he's saying that the beyond the 50 basis points which you think is going to be the increase next time the FED lingo, the FED terminology has to reflect the more Dover stance to kind of calm down the market from the planning they're in right now. Interesting given the tightness that we've seen so far. um uh uh, they need to pause to see what actually is going to happen. That would really spark a big rally, but even a strong statement that we have seen good signs about inflation and that most of our increases are behind us. I think could spark a December rally. Uh, if not, then it will come in July excuse me in January Uh, the first meeting of next year. Oh my goodness, that's super aggressive. So he's thinking the FED pivot happens either in December or January and it's going to start off in the immediate rally about the rally? probably? Yeah, the market is so much in fear mode that any good news will definitely do that. That's an aggressive stance, so he's definitely seeing a pivot in the next two months. So there you go: if you needed like a credible source to potentially show you a an option of a of a pivot, a credible option of a pivot. And there you go. a comment below. if you agree or disagree with him: I'm thinking that this whole thing is going to come down to um, what happens in the rest of the world I Think the US is living in the global market prices of everything even though we have a lot of it and we don't need anybody to buy it from Mostly The problem is it's the global market. until China stays closed, until Russia and Ukraine are fighting it out and until we can't find a way to work with OPEC to reduce the prices of energy globally, this is going to be a stretch. I Hope he's right I do because it's going to be good for everybody if if we are in fact in a position where we beat inflation and but I'm very, very doubtful if we're there here yet or not. um. I Guess we'll find out. We'll find out if you need some good positive. Catalyst Here you go, comment below if you agree with him with the professor Siegel Or you think Jim Bullard from um from St Louis is right and this is just the beginning of the pain you know? comment below. Let's see what everybody's thinking. I'm curious to see and I'll see you next video.