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WHAT HAPPENED TO THE STOCK MARKET?

We’ve had a rollercoaster of a week in the stock market with stocks going down thanks to Target and Walmart bad earnings, then the stock market went up thanks to Costco, Macy’s, Nordstrom and the Dollar tree Store reporting good earnings then the stock market fell because now we have to come face to face with the final boss.

WHAT HAPPENED TO SOLANA?

We got a shutdown of a major network in crypto called Solana which is a competitor to Ethereum and they just suffered an outage.

HIRING FREEZES HAVE STARTED:

Coinbase, as well as Gemini is starting to cut 10% of its workforce because according to them the crypto winter is finally here. B

INFLATION CONCERNS:

Concerns about inflation thanks to energy prices reaching an all time high are back. Now predictions estimate gas prices will nationally reach $5 a gallon soon.

PERSONAL SAVINGS RATE:

The thing that has people really worried - is the United States personal savings rate just reached the lowest level since 2008.

QUANTITATIVE TIGHTENING:

When the central bank buys those assets - it “modulates” their prices and therefore their interest rates because by buying the assets - the prices goes up and it allows the Fed to keep the rates low in order to stimulate economic growth which is what we had to do and why we saw mortgage interest rates drop to crazy low levels and real estate appreciated by 30.4% in the last two years.

Now that they want to slow inflation down, they have to reverse the engine by selling off the assets they bought because by selling them - their prices go down - and therefore interest rates go up and that’s how they drain the liquidity out of the system.

HOW LONG WILL THIS TAKE?

On June 1st - we’re going to start with $47.5 billion with $30 billion going toward treasuries, and $17.5 billion going toward MBSs. After 3 months of selling $47.5 billion - starting in September - we will double it to $95 billion a month with $60 billion going toward Treasury Bonds, and 35 billion toward MBSs.

Citigroup believes that they're going to sell until reserves drop somewhere around $2.5 trillion which will be at the end of 2024, and Barclays estimates it’s closer to $2 trillion.

WHAT WILL HAPPEN TO INTEREST RATES?

Guesses range anywhere between .25% and 1.25%.

IS THAT WHY THE MARKET IS SO VOLATILE?

Yes. There's no much historical data to compare to and that’s why some people sell out of all their investments, some people buy more bonds, some are selling crypto. It’s the cloud of uncertainty that affects everything - not just stocks and bonds - but real estate and crypto and everything in between.

WHAT ABOUT PERSONAL SAVINGS RATE?

Yep, it just dropped to the lowest levels since 2008. Watch the video to find out what it means!

SOURCES:

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.