December 29, 2023
By Steve Blumenthal
“Write it on your heart that every day is the best day of the year.”
– Ralph Waldo Emerson
In a tribute to the era of big bands, big egos, and even bigger hair, “Rock of Ages” is a Broadway musical set to the backdrop of classic rock songs from the 1980s. It’s a story about holding onto your dreams, no matter how unattainable, and finding your place in the world, all set to the soundtrack of a generation.
The story unfolds on the Sunset Strip, a pulsating hub of rock music and dreams in Hollywood, and centers around Drew, a young, aspiring rock star working at the legendary Bourbon Room, and Sherrie, a small-town girl with Hollywood aspirations.
Their paths cross, and a romance blossoms amidst a rock ‘n’ roll whirlwind. However, their journey is anything but smooth. The musical is interspersed with iconic rock hits from bands like Journey, Styx, and Bon Jovi. Each battling their struggles, the characters find unity in their love for rock music.
The Sunset Strip is a place where the dreams with which you entered are not always the dreams with which you leave, but they still rock (“Don’t Stop Believin’“).
It’s about life, love, and rock and roll.
The Rock of Ages story has nothing to do with macroeconomics but everything to do with my good friend Barry Habib. Barry was the lead producer of Rock of Ages – the 27th longest-running show in Broadway history – and later became a major motion picture. How about that journey? Pretty cool.
I had the good fortune of speaking with Barry this week. We discussed the direction of inflation and interest rates, mortgage rates, the outlook for the housing market, and the Fed. I share that conversation with you today.
If you are not familiar with his work, Barry is my go-to for all things real estate. He is the recipient of three Crystal Ball Awards for the accuracy of his real estate market forecasts, a successful business entrepreneur, and bestselling author. He is well known for his contributions to the housing industry and financial forecasting. I envision a future interview to learn more about his Broadway journey, but today, it’s about what is going on with inflation (good news), the direction of interest rates (good news), and where he thinks mortgage rates will be by mid-year 2024.
Grab your coffee and find your favorite chair. Video and audio links to my conversation with Barry Habib are below. You’ll also find an interesting chart on the history of Fed Rate cycles, a few random tweets, and a wish from me to you for a happy, healthy, and joy-filled New Year! Keep that internal disk spinning high. May every day be your best day of the year.
Here are the sections in this week’s On My Radar:
- Barry Habib – The Direction of Interest Rates, Mortgage Rates, Real Estate and the Fed
- The History of Fed Rate Cycles
- Random Tweet’s
- Personal Note: Happy New Year
- Trade Signals: Weekly Update, December 27, 2023
(Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.)
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Barry Habib – The Direction of Interest Rates, Mortgage Rates, Real Estate and the Fed
YouTube: Here is the link to the video replay of my interview with Barry. Click on the photo. Barry pulls up a handful of charts and walks us through his thinking on improving inflation, targets for interest rates, mortgage rates, and the housing market outlook.
Podcast link: Following is the link to the audio version on Spotify.
Finally, if you prefer to read, the following is the link to the podcast transcript (click on the PDF icon). I apologize in advance for typos.
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The History of Fed Rate Cycles
Speaking about “holding onto your dreams, no matter how unattainable they may seem,” put your Rock of Ages hat on and view this sobering chart. The explosive market rally from the October low is tied to easing inflation data and hopes that the Fed will reverse course. Big picture – I believe we are on a ten-year roller coaster ride that journey—big ups and big downs and big ups and big downs. Current high market valuations will likely lead to flat returns over the coming ten years. If our starting conditions were low valuations, then block out all noise and move forward confidently. Then, there is the end of the long-term debt supercycle challenges we will have to reconcile. I could be wrong, of course. I don’t like the odds. We can do better things with our capital than buy-and-hold cap-weighted indices.
The following chart is sobering.
Hat tip on the above chart to @AyeshaTariq
Not a recommendation to buy or sell any securities. Opinions expressed may change at any time.
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Random Tweet’s
Wall Street’s 2024 Price Predictions for the S&P 500 Index
Notable:
- JP Morgan is predicting 4,200, the lowest price target.
- Edward Yardenni is predicting 5,400, the highest price target.
Current Top 10 stocks make up approximately 35% of the S&P 500 Index.
Demographics are destiny?
Follow me on X (formerly Twitter) @SBlumenthalCMG.
Not a recommendation to buy or sell any security. For discussion purposes only. Current viewpoints are subject to change.
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Personal Note: Happy New Year
“New year is the glittering light to brighten the dream-lined pathway of future.”
– Munia Khan
“I don’t know where I’m going from here, but I promise it won’t be boring.”
– David Bowie
I’m punching the work clock early today and very much looking forward to the new year. It is sunny at 51 degrees in Phila today. I’m meeting my kids at Stonewall this afternoon, hoping to walk a full 18 holes before the way-too-early sunset. And, don’t tell son Matthew; I hope he will be buying the beers. We always have a small wager, and Dad’s in search of a victory.
With Rock of Ages at the top of your mind, channel your inner journey, and “Don’t Stop Believin.”
Brighten the dream-lined pathway and promise it won’t be boring. Ever forward!
Raise your glass and toast with me – Here’s to a happy, healthy, and joy-filled New Year!
Trade Signals: Weekly Update – December 27, 2023
“Extreme patience combined with extreme decisiveness. You may call that our investment process. Yes, it’s that simple.”
– Charlie Munger
Notable this week:
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With kind regards,
Steve
Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
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Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management.
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