BREAKING: Federal Reserve Announces Upcoming Rate Cut! (Major Changes Explained)

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STOCK MARKET RETURNS:
Over the last 100 years, the Stock Market has averaged a 10.3% annualized return – but, if you isolate presidential election years, that jumps to an 11.6% return.

In terms of which political party is “better” for the stock market, it really depends on whose data you decide to look at. For instance, YCharts found that the average Democratic President achieved an 8.72% return when both the House and Senate were majority Democrat, a 15.72% with a split Congress, and a 14.55% return with a Republican Congress.

On the other hand, Republican Presidents received an averaged 11.7% return with a Republican Congress, 12.2% with a divided congress, and just 1.04% with a Democratic Congress. Ultimately, what it seems to favor – historically – is that a divided Congress is best for the markets because any extreme proposals won’t pass, so it’ll be more of the same.

HOUSING PRICES VS RENT CONTROL:
Under a new proposal, the president calls on Congress to “cap rent increases on existing units at 5% or risk losing current valuable federal tax breaks – and provide $10,000 in mortgage relief to unlock homeownership for millions of Americans.”

But, practically, Rent Control has actually been found to make the housing situation worse. A Stanford study argued that Rent Control has an adverse effect on prices for renters and works against making housing more affordable:

-Rent-controlled tenants were 20% more likely to stay in their unit.
-Renters were more likely to move elsewhere if they didn’t have the incentive of having their rent capped where they currently were living
-In the priciest neighborhoods, turnover was HIGHEST as landlords actively try to remove tenants to achieve market rents
-Landlords of rent-controlled buildings were more likely to convert their buildings in such a way that it wasn’t rent-controlled, reducing the amount of housing by 15%
-The loss of available housing drove up the prices of rental units. It was found that a 6% decrease in housing supply led to a 7% increase in rental prices. 

The net result is that, based on these studies, rent control ends up restricting the supply of new units into the market – and while some renters may get a bargain and win the lease-agreement lottery, most people never get access to low rent-controlled prices; if they do, they are incentivized to never move out because it’s so cheap, lowering supply.

THE FEDERAL RESERVE MEETING IN JULY 2024:

Even though Jerome Powell didn’t outright say: “We’re lowering interest rates at our next meeting,” they did give us some clues that give the option to reduce rates, should inflation continue on a downward path, and if they decide it’s the correct move to make.

To me, this is something that will likely take another year or two to “completely normalize” or get to a point where the federal funds rate hovers around 3.1% – which, they’re currently projecting to occur in 2026.

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