> The difference between then and now is that interest rates are blasting through the roof along with inflation.
The effective federal interest rate is 0.33% today. It was 2.4% before COVID...
The effective federal interest rate is 0.33% today. It was 2.4% before COVID...
If valuations rose because interest rates fell, then rising interest rates will do the opposite
I believe it is actually over double that and sits around 0.84
the next 2 meetings they plan to raise it by 0.5 each meeting. and then 0.25 each meeting after that until inflation is gone.
in 2019 they started lowering it because they crashed the market by raising it to 2.5. which proves the point
trajectory matters alot.
Without real growth, we cannot have wage increases and asset price increases - one must take from the other. So far the fed has chosen asset appreciation over wage increases, we’ll see how things play out this cycle.