URGENT: Federal Reserve STOPS Rates Hikes, Prices Fall, Major Pivot Ahead!

Let's discuss the Federal Reserve Rate Meeting in 2024, their summary of economic projections, and what this means for real estate, stocks, and your money - Enjoy! Add me on Instagram: GPStephan

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LATEST INFLATION REPORT:

Headling CPI decreased to just 3.3% per year, driven lower by the fact that oil and groceries are rising - year over year - at a much slower pace. All items - when averaged out - increased by NOTHING in May, which signals that inflation is continuing to move in the right direction.

More specifically: Energy prices fell by 2%, new cars fell by 0.5%, all items LESS food and energy only rose by 0.2%, and Shelter rose by 0.4%. Core CPI declined to 3.4%, down from 3.6% last month.

THE STOCK MARKET:

As Marketwatch reported, for the first time since 2000, just three stocks make up 20% of the entire SP500 - and that’s Microsoft, Nvidia, and Apple. This means that - despite the fact that nearly 40% of the entire index is negative for the year, just a few very large companies are responsible for the majority of our new highs.

Even though this certainly could be cause for concern, a separate analysis found that a few companies leading the market could actually be a good thing for future profits. That's because, since 1950, rising concentration led to even higher returns, especially since THOSE were the companies generating the most revenue.

A Goldman Sachs representative also recently said that “A wall of money” from passive equity allocations will pour into the stock market in early July.” It’s also worth mentioning that - since 1928 - the first 15 days of July have been “the best two-week trading periods of the year for equities. The S&P 500 has been positive for nine straight Julys, posting an average return of 3.7%. The Nasdaq 100 has an even better record, posting gains in 16 straight Julys, with an average return of 4.6%.”

HOUSING PRICES:

Overall, Median housing values increased 6.2% year over year, to almost $434,000, which is the highest amount - ever - on record. On the bright side, there are 10% more listings on the market today than a year ago, giving buyers more inventory to choose from.

This has resulted in almost 43.9% of homes going under contract within the first two weeks of being listed (down from 46.9%, a year ago) and 18% of sellers were found to have cut their asking prices, likely because they wanted too much money in the first place.

Zillow has revised their 2024 projections and now anticipates that housing prices will only rise 0.6% for the rest of 2024, and actually decline by 0.9% over the next 12 months. As they say, an uptick in inventory “is causing some listings to linger on the market for extended periods, resulting in more negotiating power for buyers.”

SUMMARY OF ECONOMIC PROJECTIONS:

According to their projections, they forecast core inflation subsiding to 2.8% by the end of the year, falling to 2.3% by the end of 2025, and then finally leveling off at 2% by the end of 2026.

In addition to that, they believe that the unemployment rate will begin to uptick slightly in 2025, to 4.2%, and that GDP will remain in the 2% range.

However, when it comes to interest rates, this was the largest change: They expect to keep rates in the 5.1% range in 2024, which was significantly higher than their March Projection of 4.6%. In fact, they’ve signaled that they expect rates to stay higher - for longer - even throughout 2025 - at 4.1%.

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