Doug Kass on why inflation will come down rapidly; History of last eight bear markets; Enrique's 'quick cash' system; Man almost dies climbing Mount Blanc

1) I attended the Robin Hood Investors Conference the last two days and, as always, it was incredible...

I was in the conference business for 15 years, running the Value Investing Congress twice a year, so trust me when I say that the Robin Hood conference is the best in the world.

There's no media, and attendees aren't allowed to share what the speakers are saying... But I can tell you that one speaker whom I know and greatly respect made a compelling case that inflation is coming down and won't be an issue for investors in 2023.

I've been saying this for a while and, while I can't share the slides my friend presented yesterday, I can share the below missive from another friend, Doug Kass of Seabreeze Partners, who presents strong evidence that inflation is coming down rapidly...

The Gang That Couldn't Shoot Straight

• With apologies to Jimmy Breslin 

• My radical view is that investment decisions should not be guided by hawkish Fed rhetoric, as they will be folding like a cheap suit when it becomes clear that inflation has peaked

The near-universal tightening of monetary policy throughout the world is now contributing to a global economic slowdown, delivering a clear moderation in inflationary pressures/expectations and raising an increased possibility that yields may now be peaking:

1. Crude oil is down 40% from March 2022:

2. Soft commodities have moved broadly lower in recent months (lumber, wheat, soybeans, grain, etc.). As of last week, the S&P GSCI Commodity Index is down by about 30% from its March 2022 peak:

3. Global freight rates are down 57% year to date:

4. Used car prices, which were a good tip-off to higher inflation in early 2021, are down 13% in 2022:

5. Home prices are down 6% from June 2022 and are now dropping more quickly in the face of a more than doubling in mortgage rates.

6. Rents in September 2022 exhibited the first decline of the year, and the year-over-year percentage increase is at the lowest level since May 2021.

As a former housing analyst I want to do a deeper dive on the housing market. Although the housing markets represent a small portion of GDP, the sector hits above the weight, as it has a multiplier impact on consumer spending.

Two years ago a 30-year fixed-rate mortgage was 2.90% and the average new U.S. home price was $405,000. Today the same mortgage is 6.70%, the highest level since mid-2007 and the largest spike in rates over the last year since 1981, and the average home price is nearly $525,000. As a result, a $25,000 increase in the down payment (assuming 20% down) is required and monthly mortgage payments have doubled from $1,345 to $2,700.

Going forward, the ability to access the housing market will clearly be more influenced and dictated by family income than Fed policy:

7. Finally, let's now look at the precipitous drop in ISM Manufacturing, Orders, and Prices Paid:

ISM Manufacturing

New Orders

Prices Paid

Source of previous three charts: Peter Boockvar

The price declines listed above represent a potentially market-friendly development.

In further support of our claim that the back of inflation is being broken, we offer the following chart which shows that market-based inflation expectations hit an 18-month low last week (down from a peak of 3.02% in April 2022 to a current reading of 2.19%).

Bottom Line

I will repeat for emphasis that the Federal Reserve made the greatest mistake in monetary policy in history by not raising rates in 2021 and for misgauging the persistence and level of interest rates:

Last year the Fed adopted an ex-ante policy (of looking forward) based on deeply flawed forecasts that understated the stickiness of inflation. It was in our view the most significant mistake that has ever been made by the Fed. This year the Fed has compounded last year's mistake by front-ending or stacking aggressive interest rate moves/intentions on an ex-post basis (looking backward) based on lagging inflationary indicators.

My radical view is that no investor should listen to the Fed because they have been and are currently clueless and will fold like a cheap suit when, in the next few months, it is clear that inflation (and interest rates) have likely peaked.

Thank you, Doug!

2) Speaking of the Fed, this is an interesting tweet:

I think the market is going to remain range-bound until investors have visibility into when the Fed will stop raising rates (which I believe will happen sooner than people think), at which point the market will take off like a rocket.

3) In the meantime, however, my colleague Enrique Abeyta has a breakthrough he just released that has been years in the making...

In short, he has developed a system that allows you the chance to legally "withdraw" hundreds to thousands of dollars from the stock market... in just days... by getting key information faster than the public.

In fact, Enrique has booked an 87% success rate since he began, by using a fiber-optic wire to get data most people never see. He's calling it the "quick cash" system... Learn more about it right here.

4) This story killed me (and almost killed the "climber") – what a bozo! British climber rescued while trying to climb Mont Blanc in a tracksuit insists he was 'well prepared' but admits 'maybe it wasn't a good idea' after trek nearly killed him. Excerpt:

A British climber rescued after trying to climb Mt. Blanc in a tracksuit on his birthday has insisted to MailOnline he was "well prepared" but admitted "maybe it wasn't a good idea" – as he revealed he thought he had "died" on the peak.

Aerospace engineer Feda Hussein, 26, was discovered at 10,170ft by alpine rescue teams with his body temperature at 25c – the normal reading is 37c.

He had spent the night in freezing temperatures on the Italian side of the peak which straddles the French border and is the highest in Western Europe.

Officials have revealed he was wearing a tracksuit, hiking boots, and his tent was a simple tarpaulin which had become useless in the bone numbing stormy conditions – with him just "five minutes" from dying.

Speaking exclusively to MailOnline from his hospital bed in Aosta, Feda denied he had been under prepared and said: "I got lost and the weather turned which made things worse for me."

While around 25,000 people summit Mount Blanc each year, plenty of people die doing it, so it can't be taken lightly.

When I did so on July 4, 2016, I hired a professional guide to keep me safe, as I always do when I'm rock climbing and mountaineering. I posted pictures and a write-up of my adventure here.

Best regards,

Whitney

P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.