The FED Just Crashed The Market | Major Changes Explained*

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THE SEPTEMBER FEDERAL RESERVE MEETING:

They said, that we’re most likely to see ANOTHER 75 basis point rate increase at their NEXT meeting in November, along with another 50 basis point hike in December, putting us at interest rates note last seen since prior to The Great Recession.

In addition to that, they ALSO made it apparent that they expect 2022 to see next to no GDP growth, at just 0.2%…and, have revised every single projection DOWNWARDS…implying that our economy is likely to slow down FURTHER than expected, potentially bringing us through an economic recession.

Because of that, they mentioned that a “SOFT LANDING” will be challenging, and will ultimately depend on how long prices stay high – after all, they understand that inflation is largely driven by supply shocks and various other factors that they have absolutely no control over – so, the longer those issues persist, the worse it’s going to be for OUR economy.

Jerome Powell also said, that it’s also important that they hike rates NOW while earnings are still strong, employment is still high, and the economy can absorb some of the “shock” – than wait too long for the economy to overheat, and then – it’ll be much more difficult to get under control.

In addition to that, they ALSO mentioned that the unemployment rate is LIKELY going to increase in their effort to “restore price stability,” going from 3.8% to 4.4% next year…and, we’re probably going to see fewer job openings until they begin to reverse course…in 2025.

In the mean time, they don’t intend to front load more rate hikes than necessary and “shock the market” to “get it over with”….but, they did say, that the housing market is likely to go through a “correction,” while prices “reset” to a new normal, following higher mortgage rates.

In terms of how much a correction we might see…by definition, it’s a decline between 10 and no more than 20% off peak prices…so, if he’s correct…we could see housing levels come back down to where they were at the beginning of 2021.

OVERALL, though, this entire meeting was rather BEARISH, with a very clear message that: rates are going higher, they’re STAYING higher – for longer…and unemployment is going to INCREASE. This was a very different message than his previous meetings, where – it was mentioned that they’re “committed to fighting inflation,” while waiting a rosy outlook for the future…but this time…not so much.

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