2027 Could be a NASTY YEAR

Michael Zuber (0:00)

Cool, y'all remember that sign? The daily financial news? The true OGs remember when we had our own little office in the Silicon Valley, and we used that sign. Anyways, we wanna talk about 2027 More and more people are talking about how nasty 2027 might be. We got Paul Tudor Jones. We need to talk about CPI. It came in hotter than expected, probably much hotter. Already changing the odds for rate increases. Folks, if you are in the real estate market, buckle up, hire for longer. We also have some interesting things going on in commercial, with nearly, nearly a trillion, trillion dollar of debt going to foreclosure in Texas. Folks, it is not a pretty picture. We have Iran saying stupid shit, like we can't wait to attack US vessels. We have President Trump saying an attack will happen after the midterms. We have ongoing attack on refineries across the country. Folks, inflation likely going up from here, which means, of course, the Fed needs to or will take action. Why don't we start with, we'll actually start with Paul Tudor Jones. Paul Tudor Jones, if you don't know who he is, I suggest a quick Google search. He is one of the best living investors today. He says things like, think about this, Paul Tudor Jones talking about 2027 I will be short the whole year.

Think about that. Also, Paul Tudor Jones is warning about negative flows. All right, what the heck is a negative flow? Well, on the positive side, you could think about companies buying back shares, things of that nature. However, we have a lot, we have the SpaceX IPO with plenty of unlocks. We have Anthropic, potentially OpenAI. There is a lot of unlock in capital coming, meaning that the stock market might have some negative flows. For the first time since 2009, it might be as bad as 2000 and 2001 This according to Paul Tudor Jones. He warns that a looming.com style equity supply tsunami is coming. These are all the unlocks of the trillion-dollar IPOs will just flow over the market and not be absorbed well. He says, it feels like 1999 where we have a bifurcated economy. Basically, there was a time where it was all internet and then everyone else. Today, of course, it's all AI and everyone else talks about a two-speed economy. So again, not good. Again, 2027 could be a nasty year for the stock market. Remember, folks, there's a thing called the wealth effect. And if the stock market is in trouble and you can't get your equity out of housing, those are two pretty significant negative wealth effects that really could lead to some pain in 2027 Let's go to inflation. We have the last inflation reading or last CPI inflation before the Fed meeting. And to give you context for how bad this print was, going into this meeting or going into this print, the odds of an October rate hike were 20%.

Now they are 50-50. Not only that, but the chances of two rate hikes are up to 50%. Yes, folks, there's a chance that they go in October and go in December, or they skip October and go 50 in December. Not only that, but the odds of a January and March increase have also gone up. So we are talking four, four more rate hikes in the future. So again, folks, hire for longer. If you are in the mortgage market, I am sorry. That's not what you want to hear. Your refi business is going to tank if it hasn't already.

You are going to get more and more home sellers sitting on the sidelines. And of course, what I have been telling you for the last month, all I want you to do is smile. I want you to smile and say thank you very much. You are giving me the opportunity to generate deals of the decade and deals of a lifetime.

It's just where we are. You just got to smile and move on because there are motivated sellers out there and it is your job to find them.

CPI, just for the numbers, was expected to come in at 3.6. It came in at 3.7.

Worse, much worse. Core was expected to come in at 2.4. It came in at 2.6.

Yeah, that's not good because again, at least with headline, you could say it's all energy, it's all oil. Not when you get to core. Core is ex-food, ex-energy. So the fact that core made a significant jump from 2.4 to 2.6 is not good. And don't forget, I tried to tell you yesterday, we are likely to print a 4 CPI headline next month.

Not good and could get worse from here. So again, plenty of rate hikes coming, at least two, but the odds are now up to four before the end of March 2027