Transcript
Hello, everybody, welcome to Thursday, S&P 500 was up about .2%. Today, we did break into 3500. On the S&P, we didn’t end up there, but we got there for the first time ever. And the big news today really had to do with the Federal Reserve. So the chairman came out today and said that they’re changing their target for inflation, historically, they have kept it at 2%. So they’re trying to keep inflation at 2% or lower. In order to do that, you often have to raise rates quite often quite quickly. So they’ve now moved that target up to 3%, which I know doesn’t sound like much, but it gives them a lot more room where they don’t have to raise rates, and especially in this environment, where they don’t have to raise rates as soon.
So now the expectation is that this, basically, zero rate environment for the Fed funds rate would continue for quite a few years here. And so that’s important to know, if you haven’t refinanced a mortgage, I might wait a little while because I do think rates will come down even further in the mortgage market, but going to be some great opportunities here to lower your costs. But really, in terms of the stock market, the reason it’s important is because two things.
Number one, it’s everything’s competition for the money, you know, when you can get a 10% CD, and you’re gonna make 10 or 11% in the stock market, why take the risk of the market just by the CD, but when you’re getting a CD right now, Five Year CDs are less than 1%? Well, nobody really wants that. So maybe the stock and bond and real estate market is a better place to go. It kind of creates this, you know, lack of competition.
But more importantly, there’s a tremendous amount of money sitting in money markets, and banks and whatnot. And some of that starts to flow out when those rates get that low into the stock market, and so creates another resource of money coming in from the sidelines. And that’s significant. And so, oftentimes, what the Federal Reserve does is super important to what’s happening to the stock market, so it’s worth paying attention to that. So that’s what’s happening today. Looking forward to seeing how this plays out tomorrow, and I will talk to you then thank you very much.