It’s on.
The final and most exciting stage of the 18.6-year real estate cycle has begun.
You may not have noticed it…
Because the signal that tells me the cycle is accelerating came from outside the United States.
It was Canada. This week, it became the first G7 country to cut interest rates.
I’ll explain what that means in a moment. But before that…
Why Does It Matter?
At this stage of the real estate cycle, economic growth and growth in the markets accelerate.
We have already seen signs that the global financial system is ready to loosen its lending conditions.
Countries on both sides of the Atlantic are starting to cut interest rates.
Mexico, Brazil, and Chile have already cut their rates. Hungary, Sweden, and the Czech Republic have done the same.
None of these countries has the economic gravity of Canada, let alone the United States.
However, this snowball effect of central banks making credit and liquidity more available has begun.
And it will only get more pronounced as other rich countries join Canada in cutting interest rates.
What to Expect From This?
First, expect more countries to join the party.
Inflation is still running higher than the central bankers’ 2% target, but the trend is clear. It’s slowing down.
As a result, more and more countries will ease their monetary policies. This will drive the value of equities and land higher as credit will become more available.
Second, don’t expect the Federal Reserve to be too quick to act.
The Fed knows that the market is watching it closely. And it also knows that the U.S. economy has been doing just fine – even with relatively high interest rates.
But it doesn’t really matter what the Fed does over the next couple of months. And the reason is simple.
The Cycle Will Continue Regardless
I’m not aware of any Fed officials familiar with the workings of the 18.6-year real estate cycle. I’d be surprised if there is one.
The Fed is the ultimate ivory tower, stuffed with economics PhDs with decades of mainstream economic training.
But right now, the Fed is acting as if it understands… The economy is doing fine, and there’s no need to rush into cutting interest rates.
That’s because of where we are in the 18.6-year real estate cycle.
It’s the ultimate driving force of economies and markets.
And right now, we’re in the growth phase.
This growth phase will continue for months and months. And when the Fed finally decides to cut (probably later rather than sooner), it will do so at the exact moment of peak growth.
It will accelerate the cycle further and drive land prices, equities, and even commodities higher.
We’re in for one of the biggest rallies of all time.
Hop on board.
Regards,
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Phil Anderson
Contributing Editor, Inside Wall Street with Nomi Prins