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Interest Rates Could Start Coming Down Soon

Hello and welcome to our Market Alert video for today which is January 26 2024. And a couple of things here you may be wondering what the I M can nothing is for those of you who’ve seen the Barbie movie in it can feels a little inferior to Barbie feels like he’s just an accessory. So he gets himself a shirt that says I am Kenough. And since my name is Ken, I thought you know what I am Kenough. Dang it. The other thing you may notice is that I’m standing, I have a new stand up desk. And it’s crazy. But this was Darlene, my executive assistants idea. And when you stand I actually think you are you’re more clear thinking I think it’s it’s more conducive to conversations. And who knew that you could stand all day, I’m standing now eight hours at a time. And it’s fine. It’s important you have a little thing under your feet, though, because it’s softer, and it’s lumpy. And it’s got tennis balls in it and all that so that your feet are moving and you don’t stand in one place the whole time. So anyway, that’s my life right now. Let me go over with you what happened this week, the important number that came out is the PCE deflator, which is the number that the Federal Reserve is apparently their favorite inflation gauge. And it now has a two in front of it, meaning that inflation has come down under 3%. And it’s in the to the high 2% range. Why is this important? Well, because the Fed wants to get it down to 2%. When they get there, then they’re going to say that the job is done, and they’re going to start lowering interest rates. So what we’re seeing right now is that it’s very possible. And for those of you who watch these videos, you know that a couple of weeks ago, when we talked about how inflation is calculated, we said there’s a very high probability that we’re going to see inflation go down every month now all the way through May, and could be down in the low 2% range. So now the big debate becomes does the Fed start lowering interest rates in May? Now they’ve said the Fed Jerome Powell, the Federal Reserve Chairman said we don’t want to make the same mistake that Paul Volcker made back in the 80s, which is to declare victory over inflation too soon, start lowering interest rates too soon. And then what he had to do was start raising them again, which caused all kinds of havoc. So they don’t want to do that. So how long are we going to be at that 2% range before the Fed decides to lower interest rates? Well, it’s an interesting debate, because if they wait too long, then those high interest rates could squeeze the economy even further, we can see inflation go down to zero, and maybe even go negative, which is a whole nother can of worms. So what they might start doing is saying, Well, I know we said we wanted to wait not make Paul Volcker’s mistake. But we’re gonna do it anyway. Because we’re convinced the trend is in place, and we’re going to see a solid economy and lower inflation. So it still looks like inflation is going to, or rather, interest rates are going to start going down maybe after May in somewhere between May and July, we’ve said it was going to be August. So it may be sooner than that, be that as it may, that will be well received by the stock market. Because if money is cheaper, companies can borrow and grow more cheaply have higher profits. Consumers can buy houses and cars more cheaply, they have more purchasing power. And all of that is good for profits, and therefore for stocks in our view. The other side of it is of course, if they lower interest rates, bonds tend to do well we’ve talked about that dynamic many times before. So this year is shaping up unless something new comes along to be a year where we have stocks and bonds going up at the same time, which is very unusual. Normally, they tend to go in different directions. So we still continue to think that 2024 is gonna be a good year. So for those of you who are SCWPerS, members of SCWPer Nation, congratulations, we’re starting a new thing. What we’re going to do is we’re gonna now give you a number. So for example, I was talking to a client just the other day, they’ve been clients now for almost 12 years. And I said, When did you retire? You said, Well, I retired in 2012. I said, Oh, okay, so you are a SCWPer ’12. And they just laughed. They thought that was hilarious. So we’re gonna start giving you a number. So make sure you tell your RP, your Retirement Planner, what year you retired, so that we can put that in our system. At some point, we’re going to start having shirts and coffee mug, we’ll make you SCWPer ’12 and we’ll give you swag and all that kind of stuff. We’re looking to do that later on this year, hopefully, but we want to get all of your retirement dates into our system so that we can celebrate you and the fact that you are now a SCWPer and of course As we say, we want you to go out there and SCWPer your little tail off. Okay, we want you SCWPering all over the place. So for those of you who are not SCWPerS yet, we’re going to do our level best to get you there. We hope we’re helping you to have peace of mind with our strategy and with all the things we do for you. That’s our goal. We want your money to last as long as you do and we’ll always do that. So share this video with as many of your friends and your family and business associates we’d love to do that. Download the podcast. We had 250,000 downloads last year. Oh my gosh. So our goal this year is a million. Wouldn’t that be fun to celebrate a million downloads? So download the show if you don’t know how to do it, have our CSA or RP work with you. It’s very, very simple takes 14 seconds. So thanks for watching this video and we’ll talk soon.

Please note: transcript has been modified after the time of recording. 

Economic indicators and stock market performance cannot be predicted. Opinions expressed regarding the economy and the stock market belong solely to Ken Moraif on behalf of Retirement Planners of America and may not accurately portray actual future performance of the economy or stock market outcomes. Opinions expressed in this video is intended to be for informational purposes only and is not intended to be used as investment advice for individuals who are not clients of Retirement Planners of America. All content provided is the opinion of Ken Moraif, CEO and Founder of RPOA Advisors, Inc. (d/b/a Retirement Planners of America ) (“Retirement Planners of America”, “RPOA”). ©Copyright 2023