The U.S. Interest Rate Problem Just Got Worse
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- čas přidán 14. 06. 2024
- Inflation is biting again in the U.S. and Jerome Powell has a tough decision to make. The Federal Reserve has promised three interest rate cuts in 2024, but the data is really telling them to hold station.
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★ ★ CONTENTS ★ ★
0:00 Jerome Powell on Rate Cuts
1:15 Interest Rates and Inflation
3:40 New Inflation Data from BLS
6:30 What the Fed is Scared Of
7:30 Don't Get Excited
9:54 Political Pressures
My Podcast: / theyounginvestorspodcast
Brandon van der Kolk is authorised to provide general financial product advice in Australia and is an Authorised Representative (Number 1305795) of Guideway Financial Services Pty Ltd, AFSL Number 420367. Any advice is general & does not consider your financial situation, needs or objectives so consider whether it's appropriate for you. Read Brandon's Financial Services Guide available from guideway.com.au/NewMoney.pdf. Past performance is not a reliable indicator of future investment returns.
Contact email: hello@newmoney.contact
Note: I do not have the ability to answer all emails, but know that each email is read. If enquiring about sponsorship, New Money is currently only seeking sponsorship from established brands.
Rate cuts commence in June 2024, taking 6-8 months to complete. A potential crash, if any, might occur by March 2025. The soft landing narrative is gaining traction, making this big recession everyone is calling for less likely. With $1 million from a business sale, I'm seeking profitable investment opportunities for the next 3 years.
The financial market is a reliable choice. Diversify your portfolio with I-bonds, stocks (ETFs, REITs, dividend-paying stocks), and bitcoin. Given your budget, I recommend hiring a fiduciary to ensure you receive professional insights for a fee.
Due to my demanding job, I lack the time to thoroughly assess my investments and analyze individual stocks. Consequently, for the past seven years, I have enlisted the services of a fiduciary who actively manages my portfolio to adapt to the current market conditions. This strategy has allowed me to navigate the financial landscape successfully, making informed decisions on when to buy and sell. Perhaps you should consider a similar approach.
this is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
My CFA ’Melissa Terri Swayne’ , a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Appreciate this recommendation, hopefully I can get some insight to where the market is headed and strategies to beat the downtrend with when I hear back from Melissa.
Interesting how over 2% inflation has been a concern when central banks and the Fed begin to hike interest rates. I consider the rising interest rate to be a very serious issue since it will undoubtedly cause more investors to withdraw their money from the stock market. But then I'm still aware of certain investors that continue to earn over $365,000. Wish I could accomplish that.
Very possible! Particularly in the current market. There are several opportunities to generate excellent returns, but such intricate transactions can only be carried out by seasoned market professionals.
AGREED! Over 3 years now, I've made over 1.7 million by simply following a coach's advice. I was on the sidelines for a while watching, trying to determine the best time to get in, before I came across a coach, recommended by my wife. I was reluctant at first but I went ahead and contacted the coach. Best decision yet
This sounds interesting. My portfolio is in the red. Can you recommend your analyst, please?
Credits goes to Aileen Gertrude Tippy, one of the finest portfolio managers in the field. She's widely recognized; you should take a look at her work.
Thanks for the advice. The search for your coach was simple. I investigated her well before using her services.
I was advised to diversify my portfolio among several assets such as stocks and bonds since this can protect my portfolio for retirement. I'm seeking to invest $200K across markets but don't know where to start.
the strategies are quite rigorous for the regular-Joe. As a matter of fact, they are mostly successfully carried out by pros who have had a great deal of skillset/knowledge to pull such trades off.
Even with the right strategies and appropriate assets, investment returns can differ among investors. Recognizing the vital role of experience in investment success is crucial. Personally, I understood this significance and sought guidance from a market analyst, significantly growing my account to nearly a million. Strategically withdrawing profits just before the market correction, I'm now seizing buying opportunities once again.
Please can you leave the info of your lnvestment advsor here? I’m in dire need for one
Laila artine kassardjian' is the licensed coach I use. Just research the name. You'd find necessary details to work with a correspondence to set up an appointment
Thank you for this Pointer. It was easy to find your handler, She seems very proficient and flexible. I booked a call session with her.
The fin-Market;s have underperformed the U.S. economy as fear of inflation hammers the prices of stock;s and bonds. My portfoliio of $750k is down to $592k any recommendation;s to scale up my return;s during this crash will be highly appreciated.
The strategies are quite rigorous for the regular-Joe. As a matter of fact, they are mostly successfully carried out by pros who have had a great deal of skillset/knowledge to pull such trades off.
Smart, If i wanted to do the same with my retirement funds too, how do i get started trading?
I'm grateful for this advice. Finding your coach wasn't too hard. I researched her well before arranging to speak with her on the phone. Considering her resume, she appears competent.
Since meeting Expert Jennifer, I now agree that with an expert managing your portfolio, the rate of profit is high, with less risk.
I even thought I'm the only one she has helped walk through the fears and falls of copy trading.....
I see the rising interest rate as a very big problem, as more investors will definitely pull out more money from the Stock market. This might have worked when I was still invest-ing with a couple thousand dollars, but it is more difficult now to decide whether to pull out more than $365k from my port-folio. I know some inves-tors still make that despite the strong bear market. In wish I could pull that feat
You have a very valid point, I started investing on my own and for a long time, the market was really ripping me off. I decided to hire a broker, even though I was skeptical at first, and I beat the market by more than 9%. I thought it was a fluke until it happened two years in a row, and so I’ve been sticking to investing via an analyst.
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’AILEEN GERTRUDE TIPPY” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
The way I look at it I'd rather be out a year early than a day do late. 2008 was a great example of why. And this time period seems just like that on but worse.
Do you think it's a good time to consider selling some stocks, or is it better to hold onto them for the long term? I’m considering rebalancing my $2M portfolios, So I'm curious about the best strategies to invest this year.
I guess it's important to reassess your investment strategies based on current market conditions. You should also consider a market expert to guide you.
Accurate asset allocation is crucial, and some people utilize hedging tactics or devote a portion of their portfolio to defensive assets in anticipation of market downturns. Expert advice is essential for attaining this. This strategy has helped me maintain financial security for the past five years, earning approximately $1.5 million in returns on assets.
Accurate asset allocation is crucial, and some people utilize hedging tactics or devote a portion of their portfolio to defensive assets in anticipation of market downturns. Expert advice is essential for attaining this. This strategy has helped me maintain financial security for the past five years, earning approximately $1.5 million in returns on assets.
Opting for an inves-tment advisr is currently the optimal approach for navigating the stock market, particularly for those nearing retirement. I've been consulting with a coach for a while, and my portfolio has surged by 85% since 2022
Please can you leave the info of your lnvestment advsor here? I’m in dire need for one
Market declines, soaring inflation, a significant increase in interest rates by the Fed, and rising Treasury yields all point to additional losses for portfolios this quarter. How can I profit from the present market turbulence? I'm still debating whether to sell my $125k ETF/Growth Stock portfolio.
Concentrate on two main objectives. First, keep yourself safe by knowing when to sell stocks in order to limit losses and maximize gains. Second, get ready to benefit from market changes. I advise consulting a coach or other professional for advice.
I agree, before the pandemic got real serious, I used to handle all my investment and I was pretty good at it, fast forward to post-pandemic and my-portfolio is steady in the red with profit rate down to the lowest, that's when I touched-base with a coach I saw featured on businessweek, who restructured my portfolio and over the last couple months, I've made over $700k from initially $120K
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
Finding financial advisors like ‘Vivian Carol Gioia’ who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Well-done. Vivian Carol Gioia appears to be highly knowledgeable and very qualified, came across her consulting page just after inputting her full name on the web. In fact, Ive seen commentaries about advisors, but not one looks this phenomenal.
The FED missed an opportunity. They should have raised rates. It would have cooled the huge speculative bubble in equities. Instead we face a Volcker scenario with no way out since it will explode US debt and lock in massive budget deficits long term.
They should have raised rates.... in 2012.
Exactly
Volcker had the room to take interest rates to a high of 20% to stop runaway inflation for one reason .. we had a National debt of less than $1 Trillion Dollars. Today that debt is $35+ Trillion and rising by $1 trillion every 3 months. They could sell all the U.S. gold, 8000+ metric tons and couldn’t even pay the interest on the debt for a year. They’re long past the fixing this by decades and they know it. It’s not my opinion it’s histories.
I agree, due to the high debt level cutting rates sooner could prove why worse than in the '70s
They need to run the deficits up and up to the sky. There's a lot of profit in war.
I stand on the fact that recession is pushed by Uncle Joe and his crew, even though i own a $230,000 portfolio, high inflation is stressing me about retirement. Looking for short term profitable investment opportunities to supplement my monthly income.
@@DanielPanuzi Speaking from personal experience, I would say engage professional guidance. Not sure where you get an experienced one, but if your knowledge of the market is limited, it seems like a good bet.
@@DanielPanuzi Starting early is the best way to build wealth, investing remains a priority. I learnt this when I got disabled from an accident, I had to reach out to a financial planner who devised a plan for me to live off dividends from my investments. I earn enough from home and live comfortably with her help.
@@Angelavaldess Glad to have stumbled on this comment, Please who is the consultant that assist you and if you don't mind, how do I get in touch with them?
@@Angelavaldess Hi, can you recommend a trusted fellow i can reach out to? I think that is the right thing to do.
@@ericmendels Sure, the likes of the popular lady Alicia Estela Cabouli does a good job. Just look up the name, you’d find details on the web to set up an appointment as she offers free consultations from first timers like yourself.
Interest should stay up for longer.
Interest rates will have to stay up. Cutting rates now would clearly reignite inflation.
And possibly increase
The US government cannot afford the current interest rates on its government debt. If US interest rates stay that high for a while it will be the mother of all debt crises.
The Fed is independent from the US government and will stick to it's goal of reaching 2% inflation and near full employment. Based on past history the Fed lowers rates a significant amount AFTER a financial crisis or unemployment spike of some kind.
@@sunilpatel3739🤣🤣🤣 Political Reserve is independent in name only buddy
@@prolific1518your a nobody who’s trying to make big claims 🤡
@@sunilpatel3739😂😂😂😂😂😂 clown. Are you actually serious? 😂😂😂😂
@@sunilpatel3739 Why 2% inflation rate? My goal has always been a 0% or negative inflation rate. Who in their right mind wants to pay more for the same things every year.
March was pushed out to June, June will be pushed out to the fall. Next thing you know it’s 2025 and no rate cuts.
I hope so! Then the real estate market can cool down and I can buy a condo in florida
They will cut it after the elections.
I also can’t watch business news anymore, that’s all they talk about, rate cuts, rate cutes! Ugh it’s not happening yet
Well..thats good for the world..until those early rate tightening effects sufficiently digest to the entire economic system and fully cool down the sticky inflation..let patience runs till 2025..
No way the market lasts that long lol
Absolutely love it!!! I'll have to be financially stable in every sense before purchasing my first supercar. The best thing to do with your money is to invest rightly because money left saving will end up with no returns
No doubt being financially free and able to afford these luxuries cannot be overemphasized, making smart plans and setting up diversified investment portfolios is quite essential.
you don't need that much, as long as you have 250k to 350k in cash, and earn at least 40k plus is fine. It not like you are going to pay the car off, get the car, drive it for a year or two then get something else. You don't need millions of manov to oniov nico thinnc.
Most people miss it but the secret to retiring comfortably is finding a way to make returns while your money works for you. My Dad, as i remember started saving for retirement quite late but I know he was making more than 10k returns from his investments monthly and it was completely passive
I started investing on my own, but I lost a lot of money. I was able to pull out about 200,578 after the 2020 crash. I invested the money using an analyst, and in seven months, I raked in almost 673,000
@@ericbergman7546 Please could you guide me on how to get in touch with your consultant? My funds are being eroded by inflation and seek a more lucrative investment strategy to effectively utilize before I consider retirement.
Why is there the expectation that interest rates will go down? Interest rates now are near their long term average of 5.42 percent from 1971 until 2023. With interest rates near zero for so long the Fed did not have "any bullets in its guns" to use to further lower interest rates to stimulate the economy. Now it has the ability to stimulate the economy but probably will not waste lowering interest rates unless growth falls and unemployment rises. Folks need to get used to long term interest rates in the 4% to 6% range. Addicting people to near zero interest rates for so many years was an aberration and morally questionable.
Correct. Near zero rates is complete insanity.
There must be some cost to money, or every stupid speculative nonsense idea and terrible government policy moves forward.
Every great entrepreneur understands risk and knows how to be cautious.
Near zero rates allows terrible entrepreneurs to do all kinds of ridiculous things, like buying up dozens of condos to use as AirB&Bs.
Good business people focus on increasing sales.
Terrible business people throw money at everything.
Agreed. Fed should hold the rate. The housing market is way too hot and still not cooling. This important sector is currently priced out of reach for most of us. Hold the rate!
@@pokergeniusordonkey6517Spot on about throwing money around. We're in a state of reckless speculation fueled by cheap money. Note how Wall Street rallies after every FOMC meeting. Inasnity
Questionable? Question asked and answered: it was incredibly dumb and short-sighted. Now we’re all paying the price for it now with inflation and the out of control housing market. Fully agree with you.
They raise “until they break something”. Powell has piled on 500+ basis points and cannot get UE rate above four, never mind five, percent. He should be raising here.
Its crazy that just the INTEREST is a trillion dollars a year
The "it's not a household" crowd ignores we have to service the debt. It's also funny to measure the debt to GDP when revenues are a fraction of that.
And growing every day.
Yup and Governments have no desire to reduce their spending or even consider balancing the budget. Currency devaluation will be the hidden tax they are willing to pass on to their Citizens.
No it's not.
It's about $400B
@@Bunny.8iyour way off. It’s pushing 1 trillion
Whoever is doing your charts for you, needs a raise asap!!
Hands down the best segment in this video.
Way to fuel inflation further! But yes, agreed. 😂
just a flat document image put in 3d space in after effects, and a virtual camera
America is currently plagued by the hydra-headed evil duo of inflation and recession. The worst part about this recession is that consumers are racking up credit card debt. In April alone, credit card debt went up 20% while rates have doubled in a year. Inflation is so high that consumers are literally taking debt for basic life necessities. Collapse has indeed begun..
Zero rates are how they handle catastrophes. Amazing that's become the expectation.
That's literally been the idea for like a century now...?
@@tHebUm18 The fuk are you on about? It has never hit 0% in its history until recently.
Because it works!
@@tHebUm18 Fed rate has never hit 0% until recently. It has never been the case for century.
No they don’t. There has never been a zero interest rate before Covid.
There is no reason to cut interest rates just yet. Based on the performance of inflation in the 70s and 80s, cutting interest rates too early could cause inflation to go right the way back up if we haven’t gotten to a low enough point yet. It’s worth the wait, based on the historical data.
Well… there is a reason. It’s an election year. Also the interest alone is one trillion dollars per year. The US way over did it with spending during Covid and cannot afford the interest on their spending
They have to cut. They have debt coming due that they will have to refi at much higher rates. We already pay over a trillion just in interest payments. If they don't cut before they refinance, it's over. Regardless it's over, they are just delaying the inevitable.
Central bankers' power comes from inflation.
1:55 The economy is not thriving. There are huge layoffs in industry every month. It's not an economic boom. It's a speculative hyperbubble, period. Industry has left the western shores.
This analysis ignores global economic conditions. Our economies are globally synchronized. Asia and Europe are already in recession and facing currency crises. Rates WILL be coming down and that's not a good thing, its because they have no other choice. The fed will choose 4%+ inflation if it means preventing a global depression and a global monetary liquidity crunch.
it is interesting how we are starting to see more discussion of using the 1970 inflation metrics, because, by those measures, inflation is still wildly out of control.
"When the economy is doing too well, prices go up" No. Prices tend to naturally go down in a thriving economy, via technological progress and mass production that easily scales to the demand, which can only grow so much per unit of time. An iPhone 3G now costs a few bucks, imagine how much would a Snickers bar cost before the industrialization of food. Prices go up when the government throws freshly printed cash at the economy, at a much higher rate than its output, causing more units of currency chasing the same amount of goods and services.
Inflation is NOT a natural symptom of ANY thriving economy. It's the product of Keynesian economies on overdrive, where economic growth is driven by national debt and inflation of the money supply.
Great point. Most people don't realize how deflationary technology is. Today one farmer can generate the output of 50 of his 1920 farmer peers.. yet food cost are up.
Agree … Keynesian economics or another way of saying it is MMT (Modern Monetary Theory) aka .. Printing currency out of thin air.
@will4417 NAILED IT!!! Thank you.
Bingo, you are smarter than these so called PhD s working at the fed.
Great point
Yup. We’ll know the system is truly corrupt if they lower rates soon.
I think we already know it but yes I’m sure they will lower rates regardless of how high inflation gets
Agreed The Fed is supposed to be completely separate from the president. I remember the fed saying they were going to raise rates in 2019 like they should have and then Trump blasted him and then he didn't raise rates like he should have so we wouldn't be in the mess we are in now.
@@MyExcellentOpinion yep.
@@MyExcellentOpinionthink that all had to do with covid. The Democrats wanted to do lockdowns. Trump wanted to stay open. I think he got tipped off that the Dems also wanted to do stimulus checks so he wanted to beat them to it. Then Dems gave more anyway and made the pandemic last three years. It's during this type of political warfare when interest rate were brought back down and that caused inflation so rapidly.
is the USD continually debased? Is your value continually siphoned from you via the cantillion effect? yes. Should we be forced to use "money" that intentionally melts away in our hands? no.
But lower rates doesn't mean corruption. It means the global monetary system is in crisis and more USD needs to be printed to meet global demand else the world economy falls apart like its starting to. The fed is a reactive agency. Inflation spiked so they reacted by raising rates but high rates causes banking, economic, and monetary problems, these problems are piling up and soon the entire globe will be in recession, the fed will react to this crisis by lowering rates, they'd much rather have your currency melt just a little bit quicker than have a quarter of the world unemployed and the global economy fall apart. They're stuck between a rock and a hard place and as time goes on and with each business cycle more credit is created and the space between is shrinking
Talking about the 1970s they had to put the rate at 14%. So we can’t compare to that. They need to raise the current rate much much higher and let it sit until it comes down.
Yes but the public debt wasn’t this high in the 70s
@@Dontcallmefred Thats why they could take interest rates that high, which actually reached 20%. You can do when you have less than a $1 Trillion in debt bit not when you have $35 Trillion in debt and now growing at $1 Trillion every three months.
The Fed has skewed the inflation metrics so much it isn't an accurate gage of real inflation, its just become FED SPEAK.
Double figure rates would bankrupt virtually every western government, business and household. It may happen. The central banks may be intending to do this to bring in the new CBDC systems. It would be the biggest wealth transfer to the governing elite in history by a factor of 100 and the public will lap it up and happily forego all their property for "security."
People don’t realize how much GDP per capita china co tributes the standard of living of Americans and many other people around the world. The chinese communist party destroyed their economy. Now there is too much money chasing fewer hair dryers, clothes, food, electronics, furniture, building materials etc that much less of is coming from China now.
Good video - when are you gonna do the exact same video for the Australian economy/inflation environment?
Thanks for a great video, would massive layoff cause the interest rate to go down? There has been a lot of recent reports indicating the Tech industry is going thru layoffs.
Nobody gets it, massive uncontrolled government spending is the problem. Billions upon billions of $$$ on non-essential "pet projects". Something you failed to mention.
Im not suprised he didn't mention it, nobody bothers to talk about the madness in the fiscal spending.
Great video, very well done!
They just borrowed another $1.2 trillion and it was $1 Trillion a hundred days before. There borrowing more each time because the interest payments are compounding. As soon as the deficit hits $50 Trillion there repayments will be $216 billion dollars per hour . . . W T F !
Problem is that Powell is trying to appease the stock market at the same time, so in his talks he does the walking on egg shells narrative. The Fed shouldn't be trying to appease investors minds that's not the job of the Fed, but its obviously the case.
no he's trying to appease global monetary markets. If USD doesn't print to meet global demand for safety and liquidity then you have a liquidity crunch and the entire global monetary system falls apart like its starting to.
Thank you, this was a great video.
It's really too bad that JP doesn't jawbone Congress to reduce spending, to reduce the need to inject more money (via debt) into the economy.
5:04 Core inflation high is really bad. It's just not come down significantly. Basically energy prices corrected since mid 2022 and it appears they are now in a new uptrend, that can easily send headline CPI back higher than the nearly 4% core number.
Until the Federal Government stops spending and creating money faster than the higher interest rates are pulling it out of the economy, inflation is going to continue to be flat. Either rates need to go higher or deficit spending has got to go down. Prepare for no cuts this year.
prepare for cuts. The global monetary system is falling apart. Fed will need to cut to save the world from a potential depression.
@@tann_man You're probably right that they will be forced to cut soon, so be prepared for the rate of inflation to increase again. In fact it will probably go nuts as the Feebs decide they need to stimulate the economy again.
Very well explained!!
Thank you for this info!
With all debts mathematically impossible to repay, does that not make the currency worthless.
Excellent vid.. keep up the good work lad
Compare to the 1970, the US is printing a crazy amount of money undermining the high rates that history might not be a good indicator.
The US money supply has literally been shrinking since like mid-2022 AKA the US is doing the opposite of printing money. Quantitative tightening. Quit listening to idiots that say the US is printing money.
They aren’t printing you have to look at m2 charts showing the fed basically burning their balance sheets.
@@tHebUm18could we be seeing the after effects of many years of excessive printing and QE NOW?
@@tonycamaj4560 Kind of irrelevant to my comment--it is factually false that we've been printing more money than has been being taken out of circulation for a year and a half now.
In fact, if you look at the charts, with all the QT the US money supply is nearly back to pre-pandemic levels (factoring in interim economic growth).
Pretty sure economists are putting more of the blame on the supply chain issues reducing quantity of goods to consume causing the booming inflation than the money supply, but the money supply was definitely a contributing factor in keeping demand high despite the economic damage of the pandemic--but, also, it was a factor in keeping the poor/unemployed able to feed themselves so you win some, you lose some; it's hard to target aid in a once-in-a-century crisis.
One item I buy at my local grocery store increased in price by 21% last week. Up over 100% in last 2 yrs. Of course I did not buy. Inflation is way higher than these nuts admitted.
IMHO
Good video. Very enlightening.
The rising interest rate can surely control inflation, but won't prevent erosion of the eroding purchasing power of the US dollar. I have learnt my lesson this time. The banks can't be making money off my money, while inflation eats into it. I have set aside 650k to invest in the stock market now, since that keeps up with inflation, but I don't know how to get started.
Gary Stevenson has a much better take on inflation IMO.
The general public didnt spend more when governments around the world were putting that money out. It was a hold over because those people were furloughed or laid off entirely. All of that money eventually ends up in the hands of the businesses and business owners - and because the govts didnt put out a profiteering tax to withdraw it from circulation, the rich got a massive wealth injection from those govts effectively.
Its greedflation. The wealthy can spend more, and so they raise prices while those of us at the bottom end of the scale can't really afford those increases.
You are crazy Americans are broke and maxed out on mortgages, credit cards and insanely high apr cars. It’s so bad that people are buying groceries on buy now pay later. Interest rates need to stay where they are and loans not given to these psychopaths with 100000s+ debt. People are so crazy some will take loans out on a credit card to throw it at bitcoin or sport gambling to try to ink out a profit. No loans are immoral and Americans need to be held accountable.
Yep and when they drop rates we're going to see a massive increase in house and asset prices. The whole cycle will start again.
They sure are buying a lot of food and renting a lot of homes, If G.S. were correct you would think luxury items would go up in price not common items. The "rich" don't buy things when they are over-priced that's how we got rich in the first place.
@@peterbardsley2636 opposite. Fed is reactionary. They only drop rates in a crisis. crisis first begins -> rates are cut -> crisis worsens -> asset prices tank -> rate cut even more -> crisis resolves -> asset prices rise -> inflation comes back -> rates rise -> asset prices rise even more -> inflation even higher -> rates go higher -> lag effect kicks in and inflation cools -> crisis first beings. repeat.
Beautiful Video! I learned a great deal from this. Based on the data presented, it appears as though interest rates won’t be coming down any time soon. Too much USD in the system. Especially with countries moving away from the USD. will make it all the more complicated especially down the road.
Balanced and thoughtful analysis. Well done.
Yup. Loved it!
Thank you for going over the history of inflation and the causes of inflation. Very helpful!
"We want to see more data". Shelter is a lagging indicator (C) Sasha. If the interest rate is reduced, then shelter will come down, thus effecting the whole CPI rate.
Not necessarily
Wall Street is hoovering up homes pretty fast
Can you include other charts as well? Recession chart, price of oil chart, etc? 6:38
Nicely made video, I specially liked the highlighted chart , very clear to understand.
A really good assessment of the current state of affairs.
Completely agree.
The question is, when will JP break it to the market that rates are Not coming down this year?
Great charts. Crystal clear commentary.👍👍👍
Thank you!
thanks for the explanation
Very informative and I agree with the sentiment at the end.
They aren’t lowering mortgauge rates yet because so many homes are being built and closing on large loans at high rates , helping the banks out and not the little guy once again. If they would just lower one point now it could be 200-400 less a month for us first time home buyers . I was hoping they were gonna drop it for me but I guess not . Really let me down , be nice if they could lower one point in next few weeks really would help Americans , single person paying 3000/month for first home interest over the term of a 350k home equals 940k nearly 600k in interest over 30 year term loan , but there is a trick to dodge that interest with line of credit and pay bit payments down on principle lowering that interest by hundreds of thousands of dollars . Still isn’t easy though best of luck to folks out there, banks making big bucks poorly manage it and get bailed out unreal
This will age badly
Good video! New subscriber.
I think FED should increase interest rates.. we are not seeing the economy slowing down.. rent and property are still too high compared to salary. People are still buying homes. Theres more buyers than sellers.
I heard a good video on current social security in usa? Can you cover this in detail or no ? Thanks. Great video
but have we ever been doing too well?? it's such a scam.
‘Too well’ as in the conditions allow inflation to occur easily
Spot on.
Well said .
The inflation is that affecting people the most are energy. Food. Insurance. And they are removing those from the numbers. They need to make sure those are in there at 2% as well.
That’s the thing, they won’t. They’ll continue looking at core and say everything is alright meanwhile gas prices are rising and companies are laying off.
Great content, as usual, Brandon and team.
Keep the macro videos coming pls
The mistake was 0% rates for over a decade. the damage has done. there is no recovering from this.
You should do more macroeconomics vids bud! This is great work ⭐️💫
Can dollar breaking out can crash market?
Barry Sternlicht has some interesting views on this matter worth paying attention to. You have to look at the underlying components of inflation, how they are determined/reported, and the risks.
The biggest skew is from housing which he argues is a flawed statistic and we’re likely to see some real challenges ahead based on his data.
Can you make the same analysis about europe ?
Odd making this video without having watched the meeting itself lol
Great vid !!! do a same analysis for your country "Australia"
Per usual, kick ass video Brandon!
pls do more videos abour macro economics
Nice vid
fr bro ur on point
Clear and concise explanation. Well done! You just earned a new subscriber
Methinks June, July & Sept. Electoral considerations. 😊
Excellent take on this.
Economic investigator Frank G Melbourne Australia is following this very serious and informative content cheers Frank 😊
It’s been getting worse since 2008's GFC because they did fix anything. They only managed to make it far worse with mountains of more debt that was the cause of the problem in the first place.
We all know this is political as we know that two months of inflation and stable economic activity is making federal reserve's mandate contradicting itself if they indeed begin the cutting cycle. I don't know why we're so addicted to growth in a exponential manner and using a percentage as a gage is just flat out irresponsible. We should be using a linear approach and shift the upper bound when it's fine to do so but big companies always argue that smaller businesses should keep up or fail but we know that causes insane imbalances that we see continue to widen.
In a debt based economy there has to be expansion or everything collapses. You can have infinite debt but you cannot have infinite growth (money, trade, etc. ) to match that debt and, unfortunately, that is where the US economy finds itself right now, the inflection point when debt exponentially rises faster than the capital to pay that debt.
Like a pendulum, maybe waves that swing back and forth are the nature of things. People like to think they have control, but maybe we don't, or not as much as we think.
Great content, as usual
You did a great job on this video. Keep up the good work.
Very high quality video
Thx for great video. First time seeing your material, well done!!! It's a rare point of view online and I believe you are right. The only reason Powell is dangling that carrot of lower rates is because of the Presidential election. He'd prefer having Biden as his boss rather than Trump, the latter having critized him heavily. As you pointed out so well, between inflation still being sticky and even increasing again we can expect a 75 basis points (the 3 small cuts u mentioned) decrease at best and most likely less. I was in University mid 1980's and I believe a Savings Acct was paying over 12% interest (around 15% from memory) 1970's inflation stuck around for a long time. Mortgages must have been expensive, but at least housing didn't cost a fortune like today. Can u imagine how catastrophic that would be today? Powell doesn't want that as his legacy and I now believe rates could stay higher for longer than the market expects, unless Powell has seen signs the economy will break down and he'll be able to deliver those cuts. Time will tell
Thanks for watching!
Absolutely correct in your analysis, it's weird how people don't look at the big picture. Disregard FOMO, stay strong, keep a bit of cash, when reality hits people stocks will go on sale! #thisisnottimingthemarket
That quote from Warren Buffet blew my mind as a kid and was really a lightbulb moment for me.
The whole _"the stock market is the only place where when everything goes on sale people run out of the store"_ one.
I agree, but their past behavior has been very profitable bc the fed has always bailed them out and reinforced those instincts over and over again. The fed put is still very much alive at this late stage, sadly.
JP has never once said he'd do 3 rate cuts, annalist said that. he's just been giving speculators maybes to something he never promised to keep things stable. if he cut rates, it would jepradise the dollar's value and i don't see him doing that just to protect people's portfolios
If he spooks the bond market, game's over.
The main inflation statistic that is holding headline inflation up is *shelter* the a data point that is *directly* affected by the interest rate and is also a lagging indicator so the longer they leave the interest rate unchanged the longer it will take for shelter to drop
You'd think the guy incharge of setting the rates would analyse the data but for how he speaks and acts he clearly just looks at the headline figure
Trying to learn here, but I assume shelter is directly affected by interest rates, because interest rates will be a contributing factor in rent prices, correct? Now, how is shelter affected when interest rates lower, but demand surges and increases home prices, which would then increasing estimated rent prices people could get, which contributes to the shelter category? Data I see is that every time average mortgage rates drop below 7%, loan applications increase, so could we not see home prices increasing once interest rates lower, which would increase shelter inflation on the CPI…lagged of course.
4:07 Yes. Inflation is sticky. Month over month, it's looking worse. It bottomed autumn 2023 basically. Second wave coming and Swiss central bank cuts rates and so will the Fed. So inflation up, up up. Economy down, down down. Stock market probably up, up, up on easy money and expanding war.
Wouldn't rate increases drop the SP500?
1) CPI is not a real measure of inflation. 2) Wages proportional to inflation are unbalanced. 3) Asset prices have gone to oblivion masked by easy monetary policy for 40 years. 4) Fed options are either kill employment, corporate BKs, and a fiscal debt/tax issue OR drop rates and keep that stimulus machine going at the long term cost of majority of households not affording groceries or housing. Good way to cause a "French Revolution."
So were fkd
@@misterstapleYes. If Powell doesn’t raise rates. They have to stop/majorly slow speculation.
It is very misleading to show the chart of Indlation and Interest rate and say Interest Rates caused inflation to go down. It's at best a very poor use of common sense.
Inflation cooled down, as the rates weren't even high. It is well known that Interest rate hike take between 1 and 2 years to show up in economic metrics.
Inflation going down from 9% to 5% had almost nothing to do with Interest rates.
I agree on that. people ignore the fact that supply chain issues were getting better after covid situation and that caused the inflation to be lower
Same with Aus
The fact is, with the share of dollar based global trade reducing and shifting towards one-to-one currency exchange trading, the demand for USD in foreign countries is reducing. If the fed interest rate is reduced, foreign markets will not buy US treasury bonds. Leading to all the bonds only being purchased locally, driving up money supply within USA and resulting in inflation.
In the past, when USA reduced interest rates and printed more money, the inflation used to be spread across the whole world. Not anymore. Good luck trying to balance your (US govt) books without printing money, the way the rest of the world has been functioning forever.
It's not *JUST* because of the volatility that we exclude food/energy when trying to evaluate underlying inflation. It's also that food/energy tend to be priced predominantly by the GLOBAL market and aren't good measures of what's going on DOMESTICALLY
Also, PCE is the inflation measure that matters, particularly Core PCE. With Core PCE in the 2.x%, a Fed rate in the mid 4.x% would still be restrictive and putting downward pressure on the economy, so they have room to cut. Power keeps saying this, and CZcams people just don't seem to understand
so why do they keep telling the markets there definitely going to cut 3 times this years ??? goosing the stock market ...
Buying TMF heavy. They’ll have to drop rates soon
I don't understand why the FED can't just lower interests but continue to maintain them ABOVE the rate of inflation. maybe someone can explain this. MY understanding is that to quell inflation there is a middle grown such as lowering by .25 basis points, hence still above the inflation rate but still stimulating the economy. I personally don't see the issue in this as 5.25% is historically not a super high-interest rate I am pretty sure they were like 20% in 1980 which is totally cooked compared to a low 5.25%. Although I do understand the size of assets and real estate has balooned since 1980's which is the real problem, and I guess inflation has also compounded in relation to stagnant wage growth. Someone nerd out with me here
I agree with your video. The Fed should keep interest rates high. In fact I I don't think the inflation is coming down unless the FED keeps the rates high or even raises them slightly.
Do we even know if the rates are accurate?
US FED: Economic Inflation: Lessons learned:
The US Fed has a goal, I repeat 'goal', of 2% annual inflation. And this is on top of all the 2%'s that came before it, which turns out to be an exponential amount of inflation over time.
Most people do not have wages and benefits that keep up with the true cost of inflation, which causes many social and economic problems in this nation and in this world. Zero income is sill zero income and zero pay raises are still zero pay raises. This is also a NATIONAL SECURITY item as many nations in the world stop utilizing America's currency as a reserve currency due to in part America's currency being weaker in this world. America has less influence in this world, which allows other nations in this world to take the lead.
As a nation becomes greater, it's currency should be able to buy more, not less.
Higher inflation:
* Obviously higher prices.
* Also at times lower quantity.
* Also at times lower quality.
(And if not lower quantity and/or lower quality, then that much more higher prices).
Many rich people and large corporations have taken America's wealth and hid it in out of country bank accounts and/or invested that wealth in other nations for various reasons. This has the net effect of basically stealing America's wealth from America.
Now also, rich people and certain businesses operate on huge debt, and even the US Government operates on huge debt. These entities love higher inflation because it helps to wipe out their debt, as they pay back their debt with currency that is worth less (worthless). Additionally, things like saving's account's get next to nothing for 'normal' people trying to save money for future expenses. Those that are operating on debt get rewarded and those trying to be more financially responsible are getting punished.
America's currency system is broken and needs to be fixed.
In part, a law needs to be passed that the US Fed has to have a 'goal' of 0% (zero percent) inflation. Sure, this is going to piss off those who game the financial system, but it would help with curing some of societies' issues as well as strengthening US currency thereby strengthening America's position in this world as more nations would want to utilize the US Dollar as a reserve currency. Inflation is still going to occur due to various reasons, but we don't have to automatically have a goal of increasing inflation.
Another idea might be to give the US Fed just 1 single job: Control Inflation, (and take away their other job of trying to have full employment). Let the markets control full employment.
And for any entity that thinks economic inflation is a 'good' thing, then you must also be okay with many of life's social and economic issues as well as a nation becoming weaker in this world as it's currency eventually loses value in this world. You must be okay with poor people suffering and dying due to higher economic inflation. In part, at least some of this world's suffering and death is on you. You caused this with your higher economic inflation goals. (A man made problem and can have a man made fix with 1 simple change. Change the US Fed's economic inflation goal from 2% to 0% which would help ease suffering and death in this world.)
And if you still say that 2% inflation would be fine, then surely you would not have a problem with making a Federal law that says that all businesses all across America are mandated to increase their employee's salaries by at least 2% every year, (the 2% just keeping up with inflation, any above 2% due to the increased value of that employee).
Otherwise, it's a system set up by the rich to transfer wealth from the middle class and poor to the rich. And if the middle class and poor do not stand up for their own interests against the rich, who will?
having zero inflation for long can cause deflation which can lead to lower wages. However that does not mean the over all cost living would go down. This is because business is based on loans that pay for everything the companies needs do not reset that fast. At best the loans reset every 7 years. Rents are based on demand and how the overall building costs.
@@caradelatorre7710 And yet, any economic inflation over previous economic inflation, overtime, becomes exponential economic inflation, (compounded economic inflation). If a person does not get pay raises, benefit increases and investment increases that keep up with the true cost of inflation, the person becomes poorer over time as far as buying power is concerned. Spread this out over a nation, the nation becomes poorer as far as buying power goes. Spread this out over a global economy, the global economy becomes poorer over time. Even businesses would have to contend with higher economic inflation with their own expenses.
"IF" for example the US Fed had a goal of price stability, (no economic inflation nor economic deflation), most citizens and most businesses would be better off in a nation and in this world.
Math is still math.
@@caradelatorre7710 Also, as a nation becomes greater, shouldn't it's currency be able to buy more, not less?