THE FED JUST BAILED OUT THE STOCK MARKET

What happens, Graham, here are the guys, if the wait is finally over after almost two months of silence? A few hours ago, the Federal Reserve

just

reduced the rate increase to 25 basis points, indicating that even larger rate increases could soon come to an end after all the mass layoffs are already putting downward pressure on the rate. of employment. Wall Street is bracing for the biggest drawdown since 2008. Home-buying demand is slowing and inflation is falling due to weak retail sales, so now that the FED is opting for smaller rate hikes, some officials Fed officials believe the pause could come much sooner than expected and that rates would eventually be lowered.

While others believe this is

just

the beginning with the possibility of serious damage. If the Federal Reserve doesn't continue raising interest rates longer than expected, that's why we should talk. about exactly what's happening, look at the Fed's warnings over the next few months and cover exactly what they might be doing because I have to say this could very well be setting a whole new trajectory that we haven't seen in over a year if the Things are going as planned, although before we get into the final details, if you appreciate me rushing to post this while sitting in an airport about to board a six-hour flight, it would mean a lot to me if you hit the like button to the YouTube algorithm or subscribe if you haven't already I know it's really annoying to ask but it helps it makes a big difference and as a thank you for doing that here's a photo of a puffer fish with green spots so thank you very much and now come on.

Let's get off to a good start, so before we talk about the Fed's recent rate hike and its warning for the rest of 2023, let's break down what's currently happening in the

market

because there's a lot more than meets the eye over the last year in the

market

. that the Federal Reserve has been on a mission to raise interest rates to the point where inflation starts to slow, although the problem is that they don't have the best track record of accuracy, which most people don't realize is that the federal funds target rate was initially thought to be in the range of 1.9 percent by the end of 2022, but in April it moved to 2.75 percent in June it moved to three and a half percent in August moved to four percent and is now currently five percent with the goal of reaching that point in the coming months, although the good news is that it seems to be working for the last six months, inflation has been declining steadily since its high of nine percent in June 2022 so far six and a half percent, which is still high, but it is trending downward, plus companies are starting to reduce their workforce and although this is horrible news For the middle class, this is music to Jerome Powell's ears because this means that wage increases are finally starting to slow.

I know it sounds completely backwards, but the general philosophy is that when job growth is strong, employees make more money and when they make more money they spend more money and that drives prices up, so in 2023 the good news is bad, but bad news is good and the more bad news we have We understand that we are less likely to see higher interest rates, which is good, in fact, speaking of good news, the most recent consumer spending report showed a decline of 0.2 percent month over month during a time when people historically spend more money than usual, this is giving the FED even more reason to believe that the economy is not slowing;

However, in terms of the implications on

stock

market and housing values, here's what you need to know because the latest data is extremely revealing in terms of which direction the market is headed. First, let's talk about the real estate market in areas like San Francisco. Sales of luxury homes around five million dollars have already decreased by 70 in the last year. All homes remain on the market longer than before and total housing inventory once again fell below 1 million units. With growth slowing from last year's Peak Zillow report, it's not surprising that the biggest deterrent for buyers right now is price, with the typical home now costing 62 percent more per month than at the end of 2021.

This also means it experienced the largest month-over-month housing decline since 2011, with buyers and sellers still deadlocked to determine who gives up first. Zillow explains that buyers will shy away from high prices and potential sellers will stay away from the market, which will, of course, result in less inventory. Overall, but even with fewer homes available, 52.9 percent of them sold for less than the asking price, which was similar to what we saw in July 2020. Now, obviously, real estate is local and Each market will be different, but if I'm curious which market experienced the biggest drop. Minneapolis takes first place, closely followed by Oklahoma City, Phoenix and Houston, although other areas like Salt Lake City, Raleigh, Indianapolis, Cleveland and Nashville have seen a pretty big increase, so it remains to be seen what those prices look like. . will be affected over the next year, however, the most important signal to look for for all of this is what is known as the pending home sales index, which is probably one of the best leading indicators to watch in terms of what direction direction the market is heading.

After all, past sales only show us where the market was not what it is currently doing and once you look at current real estate activity based on current contracts you will see that we saw a slight two and a half percent increase in December as result of the all-time lows for the previous month, although this is really just the beginning because the other impact of interest rates is also what is happening in

stock

s, as I mentioned above, over the last week, the stock market rose from 99 optimism that the FED would raise rates. by 25 basis points and then pause or continue raising interest rates at a much slower pace than in the past.

On top of that, there is also hope that reopening China's economy will help ease supply chain constraints, drive greater demand, and boost international trade, of course. to people finally posting profitable screenshots about Wall Street bets, although others say that while China could drive excessive growth, it can also lead to higher inflation, its need for materials and oil goods and wrinkles mean that The FED may have to raise interest rates for longer. In fact, more than expected, the president of the Swiss Chinese Congress House said that Chinese needs for energy and raw materials will compete with European needs and global needs, so I see an easing of inflation at the moment, but We will see more pressure on inflation in the third quarter, now for the bad news. with this is that Michael Burry warned us earlier that in the past inflation appears in spikes, this is solved you fools people and then he comes back with the graph showing that since the 1940s inflation never occurs just once and then it disappears, in fact, in all circumstances throughout the current inflation.

It usually subsides, people celebrate by spending more money, and then reappears for up to a decade. It's also worth noting that even the White House did an analysis on inflation after World War II and determined that in almost all cases inflation took several years. normalize from the high and it never stabilizes in just a few months, so although we might currently be seeing some good news with the FED in terms of rate hikes, it's not over yet, but hey, at least on the side Positive, the average analyst expects the S P 500 to finish the year above 4,000 with a range between 3,500 and 4,500 and there is a record amount of cash on the sidelines waiting to pick up shares every time they go down, although I must say that a lot of That really goes back to the Federal Reserve's decision in recent months and in terms of what they said recently, we're going to want to hear now in terms of their most recent decision, let's face it, a rate increase has already been priced into the markets. of 25 basis points for the last few weeks and it is no surprise that inflation slows down;

However, the real question everyone wants to know is simply when the rate hikes will stop. So far we have not received any confirmed addresses and thefts are expected, but currently 80 percent of traders are pricing in a further 25 basis point rate hike at their March 22 meeting and then a pause while they wait and see what happens. In fact, ING's chief economist said US inflation shows that price pressures are easing, even in a strong inflation environment. In the jobs market, the Federal Reserve will be tired of hitting the ceiling on interest rates, especially because there is concern that if investors think inflation is over, they will spend more money, causing inflation to persist even further. more, that is why it is believed that the Federal Reserve is not going to do it. give us some indication of what's going to happen well in advance, but as of now they are pricing in a top federal funds rate of 4.75 to 5 percent and all of that will be determined from the information and data that we receive between now and However, on March 22, on the positive side, consumer expectations for short-term inflation fell to the lowest level since April 2021, 3.9 percent for next year, which It means the Fed's plan seems to be working as I think about everything that's going on.

Let's talk about the increase in unemployment at first glance. Yes, it is shocking to see how many jobs have been lost in recent months, but in many of those cases those companies also hired so many people over the last few years that the cut still leaves them with more people than they had. before the pandemic, so from my perspective it seems like these companies were forced to increase their staff when times are good, but reduce some of that when times are bad and that means there is still room to cut still more if necessary or are they going to play month by month to see what happens in terms of inflation, although it appears that employment has mostly recovered to where it was before the pandemic and wage growth is practically back on track. normality, suggesting it is no longer a factor driving prices higher, although other than that I am concerned that after this most recent rate hike there isn't much more optimism to look forward to.

I mean, I'm sure we'll make some good profits and we've got China reopening, but there's still a question that the FED may have to raise interest rates a little more due to increased demand and inevitably that will weigh on the market. , plus many investors are starting to use cash. as an investment within money market accounts because it currently pays over four percent and that is relatively risk-free when compared to stocks or real estate, so only time will tell how that plays out or if stocks have to fall further to entice those people to buy again in general, although I think it is a step in the right direction and we could well be heading towards the end of the rate hike cycle as both England and Canada are expected to reduce its scale in the coming months, but let me know what you think.

I read all the comments and am curious to see where you are investing and what you think will happen for the rest of 2023. That being said, thank you very much for watching, as always. You can add me on Instagram and don't forget you can get free stock worth up to a thousand dollars with their sponsor republic.com Below in the description when you make a deposit with good old Grand and them. We are also opening it up so you can buy treasures directly from their website instead of going through the direct treasure site which is quite confusing, so if you are interested the link is below in the description, enjoy, many thank you.

And until next time