The Fed Will Be FORCED to Lower Rates , Here's Why
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- Опубліковано 26 вер 2024
- Ken and Danille McElroy discuss the current economic landscape, highlighting why global central banks are cutting rates and why the FED might soon follow. They delve into the implications of rising unemployment and slowing consumer spending on the FED’s decision-making process.
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@LeonardoScott *From your point of view, is it worth taking advantage of this possible "fall" in American inflation to invest in S&P500 shares and ETFs? Which companies do you think are good to invest in with the dollar as it is now?*
we are at 30 Trillion + debt, how much are we paying just to meet our obligation with interest rate that high? It's not sustainable....
Man, its going higher. That will help eliminate the middle class. It will all end up being heads and tails with no middle.
Correct. The Great Reset includes Higher Interest Rates for longer!!!
@rifleman42051 I think the part that people are not getting is that higher interest rates only matter to those who have to barrow money. If you can keep both property inflated and interest high... you inevitably capture the housing market and everyone becomes a renter.
Food, water, shelter, and safety. Control anyone of those and you have power.
@@GorillaStrengthEquipment Precisely!!!
We can not expect a lavish government spend for several years without economic consequences. The consequences is stagflation.
lowering rates will eliminate the middle class
over the last 4 months inflation is trending UP 3.1, 3.2, 3.5, 3.4, why the heck would the Fed cut? unless its an election helping hand for the President
I’m fuzzy on why the unemployment rate should have correlation to the cost of money. It seems to me that the cost of servicing national debt should play a much bigger role in that determination. But I’m just a plebe…
We're supposed to be so confused we don't question. Inflation is more money chasing goods. To reduce inflation of goods and services while increasing the M2 money supply just means moving wealth from the many to the very few. That's why your savings are worth less your dollar has lost 97% of its value but the share market is at an all time high.
Read Lyn Alden Broken Money.
FED has two focuses inflation and unemployment and they are responsible for both which is why unemployment rising puts them in a tough spot
It’s really like a currency issue. Most jobs created have been for migrants that are part time workers whom are living under government aid in shelters or government jobs that have no productivity and only causes more debt while full time workers that are citizens are falling because as they dedollarize international transactions by taking oil off the dollar, trading in local currencies, or dropping treasuries it raises the cost of consumption as it raises the cost of consumption there’s less profitability for businesses so a lot of those office jobs that are full time workers for citizen are going to end up being permanent unemployment because it’s not like everyone is going back under the dollar so the purchasing power of the dollar diminishes so despite individuals having wage growth their ability to consume has dropped & the percentage of the economy allocated towards consumption doesn’t change because as I said prior it raises the cost of consumption when they dedollarize so even though there’s less consumption by consumers the amount allocated in the US economy towards consumption hasn’t changed or may have even risen which means it’s a faster outflow of wealth which is currently standing last time I checked at around 71%
spot on
*From your point of view, is it worth taking advantage of this possible "fall" in American inflation to invest in S&P500 shares and ETFs? Which companies do you think are good to invest in with the dollar as it is now?*
Yes Ken. Unfortunately the FED has become a market participant generating sudden uncertainty in the name of data dependancy whilst setting monetory policy
Yes I see.
If the FED doesn't sell their Ponzi bonds, even though the ECB lowered theirs, they may have to raise.
Rates went from similar levels now to zero in a blink in 08. Same will happen here.
Ken, unemployment went up and so did jobs. Couldn't that be because full time jobs are down and part time jobs are up? People are being laid off and being replaced by part time jobs; or those laid off from full time jobs are going out and getting two or more part time jobs. Other analysts on UA-cam of the Feds reports say that is the case.
Unemployment rate is based on surveys? What is margin of error???
margin of error is whatever they want it to be
Because someone who got fired is now counted as 3 as he now has three jobs of more than 1 hour of work! 😊
First time seeing this channel. You all are doing a great job.
Long Term Interest Rates only going up. If NOT get ready for hyperinflation
So agree. If interest rates will go down housing prices will go up, all gen Z I know waiting for it to buy houses.
If the Fed waits to hit 2% inflation rate, has there been thought to what that kind of wait will do to pent up demand? Meaning, by the time we hit a 2% inflation rate, folks will have been on The sidelines so long that once the interest rates do drop because the Fed met its magical 2% number….the pent up demand hitting the market will spike the inflation rate again and perhaps very quickly and then 2% goes out the window again. So what’s the point of waiting to hit 2%???
It's not that higher prices aren't driving higher wages, it's just that they aren't growing at the same rate. And haven't been for 50 years...
The rates are not coming down.
30t, 45t 60t 100t in debt.. At what point will it end and why does it even matter anymore? Lower the rates to 3-5%, allow the public to borrow money so they can buy cars,homes,home remodels,motorbikes,boats,weddings,jewelry,invest in business or whatever else they desire. This whole thing is a circus, a stage show
I understand what it means to refinance on the down, but what does it mean to hedge on the up?
I think he means he's buying now, instead of later, to lock in current rates, which is his hedge against rates continuing to rise.
Company revenues aren’t going up? All major companies have record profits. It’s all so the ceo can get their bonus.
No Fed Rate Cut, Tax Break ignites spending!!
They are not going to lower rates, they are going to raise rates
High interest rates often prolongs inflation because it keeps goods and services more costly
Canada home prices have been higher than us for decades.
Great show Thanks
FED must sell bonds first.
it’s a currency issue with dedollarization oil taken off the dollar and dropping of treasuries the cost of consumption increases the inflation rate which causes a faster outflow of wealth from the nation because it weakens the US currency strength and the US doesn’t manufacture what it consumes
Think about what an inflation rate of consumer goods and wages far lower than the inflation rate of currency actually means to citizens.
Hello Ken, i rely on tourism for my business, I noticed you said they are worried for summer? What is the concern? I like to know and thank you very much for the information. I like to hear more of these topics since i also trade forex.
They say they are looking for "2% over time" which iis undefined so no one knows
to hit 2% over time, or an average of 2% we need several years of deflation which would be great for those hoarding cash
How does nearly a quadrillion in currency and credit derivatives affect the system also.
they did not cut rates lol
This is almost the exact setup from 2006-2008. Don't believe me look up the prior "housing shortage" "can't find workers" "federal minimum wage increased" headlines
Nope. They can do couple rate cuts and inflation can still keep going down.
Once rate cuts start to happen, construction activity will go up. Housing will come down.
This is a fairytale land your living in
@@Okilian_tv Its common sense. As long as Interest rates are above normal and higher than inflation, inflaton will keep going down.
Always think with logic rathar than with emotions.
I'm curious how you can be sure something will still cashflow once unemployment goes up in a recession. Won't that mean a lot of evictions? And with stagflation like the 70s, people cant afford a car/maintenance/insurance/fuel to get to work so more people wont even be able to work if there are available jobs. People could end up living with family and reducing demand for rentals if yhey cant afford to work.
The thing people don’t get about inflation:
For prices to come down the input cost to create any product needs to come down… the largest operating cost for most businesses is wages… so in essence wages need to come down…
Wages don’t come down when you’ve a skills shortage and an unemployment rate
prices wont come down but instead the goal is to stop them from keep going up
When the Fed capitulates and accepts higher than their stated 2% target inflation and cuts rates into an inflationary economy they will surrender all future credibility.
You guys are assuming that the govt is telling the truth about employment numbers. They are not.
Accepting high inflation is the same of accepting recession. So, lets recession roll so prices get back to normal
Only up from here even when it breaks
They better not cut rates . They should raise them . Unless you want your money to be worthless . Inflation is up fuel assets services are up . Unless there is crisis then they to lower them . I think everything is messed up in the economy now .
Mass immigration means wage suppression, the economy grows through consumption, more people buying stuff they don't need while investors get richer. Consumer defensive will always have a spot in my portfolio
REALLY?! ...... 5 minutes of un skippable, intelligence insulting ads before I can even watch the video? The video content was good but not sure worth sitting through 5 minutes of ads.
Can't be lowered yet. Inflation hasn't dropped to 2% & unemployment is low
Unemployment went up. 4% as of right now was at 3.6%
Election year
Inflation was below 2% just a few years ago. We are percentage wise still over 100% higher in the inflation rate which is eating your lunch every year unless you are getting at least a 4% raise year over year to keep up.
Add to that the massive deficit spending that is now pumping in and the treasury was force to start QE because demand for US debt dropped off a cliff...
Too many inflationary pressures to be able to drop rates.
Inflation is still increasing from its low.
Inflation does not matter
Once unemployment ticks up that is what matters
Believe especially in an election year
Why is ken wearing a black rock shirt?
Many international banks had negative rates and US didn’t. It’s an election year and rates won’t get cut till after the election.
Fed will cut rates in July
2% was just an invented number
Feds can not lower rates unless the economy completely tanks.
Otherwise, inflation will skyrocket.
Government spending is out of control and since treasury demand dropped off a cliff they were forced to started QE again to avoid interest rates getting out of control.
Both of which are inflationary.
Higher inflation doesn't mean higher home price
Unless there are cracks in the banking sector or unemployment spiking significantly, then I don't see them cutting rates this week either. To avoid a repeat of persistent inflation or it coming back, you'd be so cautious to cut too soon (lessons from the 70's and early 80's). The cracks are showing in the lower middle class and poor sectors of the economy, but its not until you have the banks shake that the Fed or the Gov actually care. Cutting rates means more liquidity into the economy, liquidity translates into spending. Also... hard assets and ownership of high quality companies is critical as the Ai revolution picks up steam. When Ai takes full blown form in this country, you'll see unemployment spike like never before. So, the land owners and owners of companies will benefit the most. If you own nothing, you're in trouble. Gold is like hanging out in the penalty box of a hockey game, you're sitting on the sidelines missing the action, yet you can still potentially win.
You presume that they want the system to continue.
They know the system is at its end, they’re intentionally crashing it.
Your assumptions are incorrect.
Homeowners inflation should be rising a good bit in regions other than Texas and Florida these next couple years. Especially California. We've had minimal fires with this El Nino, but the coming transition to LA Nina will burn all this growth and houses with it. Buckle up buttercup!
Look at the business birth/death estimate of 230,000
Fed cuts coming by fall and next year
doubtful
After they've missed the window of catastrophic failure of the system
I've been saying since 2020 3-4% inflation will become the new norm.
It will be 25 dollars for a Taco Bell burrito soon …..😮😮😮😮😮
The FED is increasingly Dovish and interest rates will dive, but for political reasons, not technical ones. That is all reminiscent of the 70s and 80s, with waves of inflation followed by interest hikes and premature cuts. The one variable that is different today is the level of national debts. Japans debt is 240% of GDP, Italys is 160%, many countries have 140% and so on. So fiscal dominance kicks in. I see this as a period of impoverishment of the middle / lower classes ahead and a challenge for those that did everything right to keep their purchasing power.
Argument about detail rather than government debt/spending. The elephant in the room.
Maybe the black swan will be from the banks? 🏦
thats a factor
probably the wage price spiral
Banks seeing the reality of the Data before the fed.....weird
Just do me a favor. Keep Jerry!!
What is the minimum cash flow you will accept for residential?
Do you have a cash reserve before purchasing? How much?
$300
Won't be a rate cut until Sept...
I dont see that happening. The Fed is reactionary and interest is going up. If they cut anytime soon then we have hyper inflation(great Depression) milk will be 5x the price. the only thing they can do is wait for unemployment to go up and stocks start dropping. Prob a few bank failures then they will start cutting.
To make extra cash, A little drug dealing never hurt anyone
You just predicted that housing prices will continue to rise because of the influx of immigration. Well, that is counterintuitive to lowering interest rates.
they wont have a choice with pressure from other countries and employment continuing to go down, no matter what their employment numbers say, look around businesses are making cuts and freezing hiring
@@DanilleAZRealEstate while I agree, businesses are failing, the immigration numbers are going to force prices or government intervention due to demand for housing. I’m most scared of government intervention.
Commercial loans is what’s going to bring the house of cards down this time.
Adjustable rate mortgages only went away in residential lending after the 2008 crash. Commercial lending IS adjustable rate. I own apartments here in Ohio. I had a broker reach out to me and said he’s got a seller needs to get out in 6 months. His current rate is 3.9%. In 6 months his rate will go to 7.2%. Of course from a buyer perspective is “well I take it it’s not going to cash flow” or at least you Bigger Pocket guys love your 18% cash on cash returns and anything less you’re out 😅.
If you’re not going to cash flow neither am I. See everyone over complicates things. And btw you need to lower your 2.2m to 1.5m for me to cash flow at 18% cash in cash or I’m not buying either.
Pick your poison.
US govt wont be meaningfully lowering rates anytime soon. Stranded equity for anyone that has it assuming they stay employed.
I wanna know why the coat if everything but labor costs go up how can they raise prices of everything but not wages
Help! I owe 80,000 on my condo worth $850,000 dollars at 8% interest. Should I refinance the loan at a lower rate? Or pay it off at 8% in a year or so?
We are not getting a fed cut on rates. This country has a lot of problems that are not being addressed.
Election year
They’re gonna lower rates. But it’s too early. Inflation will skyrocket.
Employment numbers will include door dashers .. so 1 person could have 3 jobs . The books are cooked
KEN YOU ARE GREAT! Did you know that the PEDRO DOLLAR IS DEAD? hyperinflation next 1000%-4000% 🤯
AI on Austin...please tell us a story on what Harris co tax assessor is doing there. Interesting...
Admit it texas. U need to get prop 13
Nominal wage growth is up real wage growth (which accounts for all the money printing) is down and has been for years. The monetary system is on stilts right now.
Instead of throwing people off their lively hood why not remove a little cash out of the economy?
Interesting that house prices and stock markets tanked during high inflation. Why doesn’t high inflation causes asset prices to increase.
Maybe 2026 we will see 5%. But thos 3% no more
🤦🏼♀️
How important is cash flow when putting no money down? If the tenants rent is covering the loan, expenses and some extra cash after everything’s paid, does a lot of cash flow even matter? Technically you’re making long term money from the rent paying off the loan and building equity. If you add potential appreciation to that, it’s even more being made. Your ownership of the house is increasing each year and you did nothing but take other people’s money.
Any events in California?
Of course. Because raising interest rates doesn’t slow or reverse THIS kind of inflation. I say “this kind” because a pandemic, a shut down, a quiet quit workforce, a “stay home and stay safe” world, and of course the covid money for the population AND the companies is what drove this inflation. And NOT the same thing as say the early ‘80s inflation.
Great Let's start mouse-clicking trillions out of thin air again Cause it worked so well before, right ? Duh
I don't get it why you talk about gold and real estate ignoring the stock markets. seems you are not professional enough.
you sound mad
First 🏆
The fed should not lower interes until housing prices get normal. 🤬
Hoi cant compare economics of other countries . The Margot 🤬🤬🤬
This is some of the worst financial advice and the woman doesn’t know what she’s talking about. Cash out Refinancing and resetting your amortization table to 30 years is the dumbest idea ever. DONT DO IT!!!! Banks make all their interest on the loan in the first seven years!!! If you want to pay for your house ten times over then follow her advice.
They are not going to lower rates, they are going to raise rates
Why are you wearing a black rock shirt?
And with Jolly Rogers?
It’s all about the liquidity
Fed didn’t say they want 2%. They said 2% average over time. However they have not given any info on how they calculate the 2% average over time. This is why no one can predict what Fed will do.
3 month and 6 month spans that project to 2% over a year is one I've heard mentioned.
So 1% worth of increases in a 6 month period for example.
Powell says every meeting that they need to see it "sustainably heading towards 2%". That is what he means.
The jobs created in the government higher pay. Not for general jobs. Small businesses closing, lots of layoffs in big companies ie; Amazon 🇺🇸
If you can't be middle class in America, it's better to be an immigrant to another country.
Great show! Thanks!
Lol Ken's Black Rock shirt. The antihesis of the everyday man I think he is trying to help with his content. And as if we needed more reminders of how wealthy Ken is and how out of touch with the masses. I remember that one time he didn't even know about the 250/500k cap gain home owner exclusion.
I love the content, but he should seriously consider toning it down at least sometimes. Maybe time to hire a PR person or just ask Danielle to weigh in.
I actually think the point of the channel is for folk thinking big, or who already have a portfolio. There is a lack of those channels. However there are plenty for folk just getting started already.
@@jameswalker366 How many tens of millions do you have to have before you start repping Black Rock?
@@erickillian313 Well, it certainly demonstrates credibility. I think that is the point. Whether you focus on a small goal or a large goal, the effort will ultimately be the same, so why not focus on the large goal?
well to be fair it is a golf club in Idaho.....
They will print before they cut rates