Hey guys, it's Sasha It seems at the moment that everyone and their dog is telling you that you should not invest in the stock market. About 99 of Finance YouTubers are telling you that you should sell everything because you know the stock market fell last year. Everything is down almost every single Finance expert on CNBC and on Twitter and everywhere else is telling you that the greatest Financial collapse ever is about to happen I am not sure which Finance experts are worse and more clownish. the ones on CNBC are the ones on Twitter But here I am looking at all this mess and feeling mighty confused.

Of course I have no way of telling what the future will look like and unlike all of the magic fortune tellers, I am aware of this fact. but I also see data and I am not sure if I am looking at a completely different set of data to the rest of the world or maybe panic and fear sells. you know I'm guilty of making stupid thumbnails too. I'm so sorry, but let me tell you about the data because the data is showing that the exact op opposite of the Doom and Gloom that everyone is prophesizing tends to be a more likely scenario.

Tomorrow, we're going to see the latest inflation data come out for the month of December I will make a video breaking that data down in detail. Make sure you go and check that video out when it comes out. but the consensus at the moment is that inflation is going to come in at around 6.5 to 6.7 percent and that is a big step down from the 7.1 percent that it was one month ago. And if it does come in at that 6.6 give or take, that is a substantial climb down from the 9.1 Peak back in June Since September, we have seen a very substantial curbing of inflations being coming down very steeply and while everyone seems to be watching Jerome power make a speech like the one yesterday or whenever I do not give a what he has to say And here is why in November 2021 Jerome Powell was telling you in Congress telling investors that inflation is transitory.

it was all over the news. He was giving speech after speech saying inflation is going to to go away all by itself for the first time in history and inflation wasn't really an issue at all. and of course every Financial commentator on YouTube on TV everywhere else was just parroting the same. While all through the second half of 2021 I was sitting here making videos saying that inflation is a problem and is about to become a much bigger problem and every month that the FED did nothing, this problem was going to get worse.

I wasn't some kind of an oracle even though I seem to be the only one out there on YouTube I was just seeing inflation going up at a rate that we haven't seen since the 70s and I saw the FED doing absolutely nothing about it for the first time in history and I put those two magic complex bits of data together in my head: I know how difficult? So just like I didn't give a what? Jerome Powell has to say, a year ago when he was telling everyone not to worry and that everything was Dandy You know, keep keep investing. Everything is great. I Do you don't give a what he has to say today either, because right now, the fashionable thing to say is that the FED is going to be tough on inflation. They are hawkish or whatever the term.

They will keep raising rates no matter what, until the rates are at 150 million bazillion percent, or whatever the whole global economy is going to crumble. and you better start digging that bunker in the back Garden because the Anarchy will inevitably follow. But here are the numbers: Oil price in December fell lower than at any point last year, including January before Russia invaded Ukraine. But oil price in December 2021 was also quite low.

so we won't see the huge relative benefit in the CPI data coming out tomorrow just yet. But the first 11 days of January so far are tracking significantly lower than January last year. So when we look at inflation in oil a year on year, in one month's time, when we're looking at January data, it is currently trending to about five to ten percent down year on year. And the beauty of inflation is that it is a relative metric if oil price doesn't go and explode again from here.

for some reason that we can't foresee it, then every month this year, we'll be comparing oil prices this year to these months last year. and unless oil goes and jumps right back up I don't know if it will or why it would it might I Don't know, but if it doesn't, which statistically is a more likely scenario then we will see oil prices be significantly lower this year having a negative effect on inflation. Here's the same chart for natural gas. gas is also now cheaper than at any point last year and again December was a little higher than December last year.

But from January onwards, natural gas prices exploded last time around. Unsurprisingly so when we're looking at this data over the next few months, if the price of gas does not go absolutely insane like the last year, we will again have a strong negative CPI factor in here as well. Even if gas goes as crazy as it did last year year which you probably assume is somewhat unlikely in terms of CPI, the effect is going to be zero because it's relative and you can see that in the latest prints of the CPI from last month, energy was set at plus 13.1 percent year on year and energy Commodities at plus 12.2 percent, Energy directly has an eight percent weight in the CPI and indirectly as much as another 10 when you consider that it is baked into some of the other items as well. So here's around I don't know 17 18 of the index that is currently sitting at Plus 13 that is likely to turn negative in the coming months.

It won't turn negative immediately because it takes time for the commodity prices to filter through to everything else, but that's where it's headed. Shelter is currently sitting at 7.1 percent. Because shelter lags real property prices and real rental costs, this number is unfortunately probably going to continue climbing up for a while. You can see from the Zipper Report and other housing data that the rate of growth in the price of rentals has slowed down in the last few months still going up, just not as fast.

But the shelter part of the index still has to catch up to around 12 months of very high 12 to 15 increases that were happening a year ago because at that point, shelter was Trend sitting at three percent or four percent or whatever. So based on that data, Shelter will probably keep climbing to eight percent. nine percent. Maybe higher than that, even.

But shelter is a one-third of the index, so this will be the one number that nobody is paying attention to right now. Absolutely nobody cares about Shelter. When you listen to inflation analysis, everyone just pretends it doesn't exist. But I Have a funny feeling that in a few months Shelter will become the number one topic when people discuss inflation.

Because energy is coming down, food has been coming down consistently every month. There's every chance that it continues into this year as well dropping below 10. New and used cars are seeing a lot of pressure on price, so I'm guessing that those are going to come down too. So in two or three months time, we might be looking at an inflation report where Shelter is the highest number on the piece of paper, pulling the whole index up artificially because of the lag effect, and because it has such a big weight.

And here is a thought: if inflation does drop to 6.6 it seems to be the consensus or whatever tomorrow, and then continues dropping to below six percent over the next two or three months because of the factors that we just discussed. The Fed rate right now is at 4.5 percent. Now because the FED is so busy playing politics instead of doing their job, I am guessing they will go and do another increase at the end of this month or whether it's warranted or not because you know you can't just go and do a U-turn but probably a smaller increase this time. Maybe a quarter, maybe a half a percent.

So the rate is going to sit at 4.75 or 5 the next meeting of the Fomc after the end of this month is on the 15th to the 16th of March and we have two more inflation reads: for January in February and for February in March before that meeting. So I know I know Jerome Powell said some blah blah blah in a speech. Boo! Who? Who cares? What do you think is the Fed going to do if inflation dips below six percent in February Read one day before the next committee meeting starts? Or maybe it'll stick around the six to seven percent mark because you know shelter is artificially pulling the numbers up. Well, my take is that we're going to have endless debates on CNBC across all the social media about how much of a lag shelter really has and whether that means that the real inflation is actually a whole lot lower when you don't consider shelter in the same way.

Now, anything can happen between now and then and I don't know another. War Something Absolutely nuts because in the last two years we have seen one or two things come out at us that we didn't expect. But for me, the median probability outcome is that we don't have a rate increase at the next meeting in March Because remember, this financial crash is very unusual because employment data was extremely resilient out of nowhere. Normally, employment data naturally collapses as a result of the economy stumbling, but we haven't seen that at all.

And at the same time, rail wages have been losing massively to inflation, which is also very unusual. And this has meant that the inflation waste spiral, which is about the worst thing that can happen when inflation is high. That spiral did not happen. Wages did not go crazy, they didn't go and explode, they didn't keep up with inflation, And that has meant that people don't have as much money to spend.

And with prices being higher, people are a lot more careful with how they go and spend their money. So we're seeing a big, massive downward pressure on inflation across the board. As a result, there is a lot of anecdotal tangential data on this, too. Advertising revenues have fallen sharply across the world in the last couple of months.

For example, the revenue per thousand views from ads here on YouTube is a lot lower now than this time last year. A lot lower advertising revenue on the websites that I work on is also substantially down. And this is because companies do not make the return on investment they need from ads because people are not spending as much money. So those companies are pulling back from advertising spend.

and this is a good thing. Everyone see seems to look at employment data that is good and say, oh no, it's good employment data. The FED is going to go and crush the rates because they need to lower employment. This is the same argument that I keep hearing over and over and I Don't get it.

Apparently strong employment is a bad thing, but the good news is that this line of argument is technically known as complete horseshit. I Mean you don't have to look very far to find out what the Federal Reserves monetary policy goals are is to promote maximum employment, stable prices, and moderate long-term interest rates. Note: it starts with maximum employment. So yeah, maximum employment is literally the objective of the earth.

OMC The reason so many people seem to misunderstand this point is because high employment would typically be a bad thing in this current scenario if the inflation wage spiral took hold because it would mean that people's success is spending continues pushing up prices. People are able to go and spend more money because they're all employed by and here we are and the data suggesting that everything is the exact opposite and heading the right way. Inflation is falling significantly over the last few months and heading back towards that two percent goal. Hopefully we'll see another big drop tomorrow.

Employment is remaining incredibly strong. very surprising, but hey, don't look A Gifted horse in the mouth. And at the same time, the stock market is down 18 or whatever from its peak just over a year ago. Tech stocks and earlier stage companies are absolutely destroyed.

Many of them are down 40 to 70 percent. Everyone is waving their hands above their heads, selling stocks, telling you you should sell stocks as well. The worst ever recession that you've ever seen is apparently coming and is going to wipe everything out. Michael Berry Went and said some.

so let's go and print his tweet again. Is going to be way worse than the financial crash. and you know what? Maybe it will happen. Maybe it won't I don't really give a as a long-term investor.

All I can see is that key economic variables that I am looking at are trending in the right direction I See stocks that are selling at absolutely stupid prices because the Market's emotional state seems to closely resemble a teenager on drugs. And can the market go even further down? Sure. I Have no idea the market can stay irrational for a while, but when will the market bounce back? I Have no clue. Maybe it'll bounce back in March when the FED does not increase rates for the first time in a while and everyone starts making videos about the magic fed pivot that came out of absolutely nowhere or whatever.

Maybe it'll bounce back in two years time. It doesn't really matter. What does matter is that there is a window right now where you can go and buy stocks for massive discounts. Now not all of the stocks are going to go back up.

Sure. I Get that. I'm not an idiot because there are a lot of overhype bubbles. There's a lot of companies that seem to be valued based on I have no idea what, but the market overall will go back up at some point.

and I'm sure the moment we're hitting new all-time highs, all the people shouting right now that you must sell all of your stocks. We'll be shouting at that point that you need to start buying all the stocks again because we're heading to the Moon. You know after those stocks go up 100 from here because that's how the world works. Stay safe out there.

Do your best to ignore all of this noise and all of the BS that you hear every day. Look at the numbers. If you're a long-term investor, remember what that actually means? Investing on the way down will be some of the best investing you will ever do. Everyone looks at the Peaks before the big crashes and says like oh, it took 12 years or 15 years or whatever for the stock market to bounce back from the peak before the.com crash.

But if you invested all the way down through that downturn and at the bottom, as part of that, the money that you will be investing in there will be making exceptionally strong returns in much shorter time scales. This is the power of being an actual long-term investor rather than a general Gambler Trying to predict which way the wind is going to blow tomorrow. Panicking the moment that the stock market takes any kind of wobble. If you found this video useful, please don't forget to smash the like button for the YouTube algorithm.

Help the channel by checking out some of the affiliate links in the description. If you want to try out a new investing app, you can check it out at no extra cost to you other than the broker's fees and you'll help the channel as well. Thank you so much for watching I Really appreciate it and as always I'll see you guys later.