BREAKING: Federal Reserve JUST SLASHED RATES – Massive Pivot Ahead!

What's up you guys, it's Graham here, and you better get ready for what just happened. As of a few hours ago, believe it or not, the Federal Reserve just lowered interest rates for the first time since last year, officially marking the end of the most restrictive tightening cycle in history. Yes, you heard that correctly, the money printer is turning back on once again. And that means there's going to be some pretty serious implications across just about everything, from the stock market, the housing market, the national debt, and even the value of the U.S. dollar. So given these shocking new updates and their brand new predictions, as of today, let's talk about exactly what just happened, what the Federal Reserve just said, the impact this is about to have on everything money, and then finally, how you could use this information to come out ahead profitable. Because there's a lot going on under the surface that very few people are talking about. Although before we start, if you appreciate these breaking news videos like this, it would mean the world to me if you hit the like button or subscribe if you haven't done that already. I know it's stupid to ask for it, but it does help tremendously, and as a thank you for doing that, I will do my best to read and reply to as many of your comments as I can. So thanks so much, and also a big thank you to the Gemini credit card for sponsoring this video. But more on that later. Alright, now in terms of what's about to happen, let's talk about the topic on everybody's minds, and that would be interest rates. Even though our economy is so far overall still healthy and GDP is continuing to grow, Jerome Powell finally admitted that the downside risks are rising, and as a result, he recently said that conditions allow us to proceed carefully as we consider changes to our policy stance. This is completely different from what we saw a few months ago, prior to shockingly low job numbers when the Federal Reserve strongly resisted these rate cuts. Even now, we have inflation creeping back towards 3%, revised job numbers that continue to decline, and a weakening U.S. dollar, leaving people wondering, why all of a sudden is the Federal Reserve cutting rates now? Well, like it or not, it all has to do with one topic that's been grossly underreported, and that would be jobs. Like I mentioned earlier, the Federal Reserve is in charge of maintaining policies that promote a healthy labor market, or I guess in other words, an economy that keeps people steadily employed. And as it turns out, a lot of people are falling behind. For instance, the Bureau of Labor Statistics just revised their job numbers down by the largest amount on record, showing a loss of a million jobs, more than they originally expected. They even said that this is more than 200,000 deeper than economists predicted, and it's worse than the 2008 crisis levels. This is why some experts have now begun to say that the Federal Reserve is too late to cut interest rates, and that a lot of this could have been prevented ahead of time had they eased their policies and cut rates sooner. On top of that, others believe that the Fed rate cuts now signal that 3% inflation is the new 2%, meaning they're never going to get prices to come back down to where they were before. Although in terms of lowering interest rates even further, and potentially causing even more inflation, unfortunately, there is one thing getting in the way, and that would be the 10-year Treasury. See, here's what most people don't realize. The Federal Reserve is in charge of controlling and managing what's called the Federal Funds Rate, which is basically the interest rate that banks pay other banks any time they lend each other money. This is important because the Federal Funds Rate impacts what's called the short-term Treasury Yield. And yes, if that sounds confusing, think of it like this, because it's very important. On a very broad level, the United States borrows its money by issuing what's called Treasuries, which is basically a fancy word of saying it's an IOU that promises a certain rate of return over a certain period of time. In this case, when the Federal Reserve lowers the Federal Funds Rate, like we just saw today, these short-term Treasury Yields don't need to pay you out as much money, and as a result, they go down. Good news, right? Because borrowing gets cheaper, mortgages go down, stocks go up, right? Not so fast. When it comes to that, those factors are all influenced by what's called the Ten-Year Treasury Yield, as you can see right here. And this is entirely dictated by market supply and demand. That's right. If investors believe that this is a good deal, bond prices go up and the yield goes down. But if investors think that inflation isn't over, or they're pessimistic about the economy, or they just lose faith in the United States, bond prices go down and interest rates go higher, pushing every other interest rate back up alongside with it. And if you think this can't happen, it already has. As you can see, despite the Fed cutting interest rates throughout 2024, mortgage rates didn't budge. In fact, they briefly went even higher because investors feared a return of inflation. The same thing also occurred throughout the 2001 dot-com crash, and also through the early 1990s rate cuts. In each of those, mortgage rates weren't really affected. And even though they trended downwards, that was more of a reflection of lower inflation expectations and an improving economy than what the Federal Reserve did. That is why some people believe that, sure, even though the Federal Reserve lowering interest rates could be a sign that more free money is going to be flooding into the economy and sparking a new wave of spending, practically, if inflation remains high or the economy suffers, the interest rates that matter the most could remain unchanged or even go higher if the United States starts looking less appealing. And this is where a lot of the trouble begins. Like on May 16th of this year, Moody's downgraded the U.S. in terms of their future outlook, going from what's called a triple A rating to double A1, meaning that investing in the United States is no longer as enticing as it used to be in the past. On top of that, Moody's has pointed out that Congress has continuously failed to reduce the national debt and excessive borrowing. Over the next decade, they expect larger deficits as entitlement spending rises while government revenue remains broadly flat and future performance is likely to deteriorate relative to past performance. That's why they project that by 2035, interest payments will make up 30% of the total budget, which is insane. Now, even though the United States has never defaulted on its debt and realistically probably never will, this does suggest that the U.S. will have no other choice other than to continue printing more and more and more money. And if fewer investors are there to buy that debt, the 10 year treasury could continue to remain high. And that is where a lot of the problems begin. Although before we go into that, here's the reality. The more money the government prints, the less each individual dollar is worth over time. That's why I personally think it's so important to diversify and even earn assets that aren't historically tied to government debt like the dollar is. 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What's even more apparent is that we're quickly noticing a very big divide in the housing market between those who locked in historically low mortgages and those who bought in the last two years. Like, as you could see, the average existing interest rate on California mortgages is currently at 3.8 percent versus new mortgages coming in at 6.6 percent. This means you have one segment of the market locked into low interest rates and refusing to move, while the other is paying double for an identical house. Given that when a home is listed, buyers now have more room to negotiate. They can afford to be pickier because there is more to choose from. And when you look at the overall buyer pool today, there are fewer people willing to pay today's prices that haven't already purchased something. Of course, in terms of whether or not lower interest rates are going to positively affect the housing market, the answer is, it depends. Unfortunately, like I mentioned earlier, the Federal Reserve does not have a direct impact on mortgage rates. Instead, those are influenced by the 10-year treasury yield, which are dictated by market supply and demand. That's why there's a good chance that mortgages will remain relatively unchanged for the near future, unless the Federal Reserve starts buying the 10-year treasury yield in an effort to pump more money into the market and drive those yields down, which at this point, nothing would surprise me anymore. Plus, if they actually did do that, it's probably a sign that investors have lost faith in the U.S. economy, and it's a bad sign. Anyway, barring the Federal Reserve purposely stepping in to bail out the housing market, realistically, housing prices will continue to soften as more inventory gets listed on the market and prices might begin to decline relative to inflation. On top of that, national home prices have remained fairly stable, so it's unlikely we're going to see a crash, but a softening is definitely something that's in the cards. Although a bigger problem right now might actually be the stock market. Unfortunately, we have a few variables all affecting stock market performance, with the first being treasuries. Like I mentioned earlier, for the foreseeable future, the long-term treasury yield is going to act as the barometer for our entire economy, because this is seen as the risk-free rate of return that every other investment is compared to. Like, to put this into context, if the 30-year treasury offered a risk-free, guaranteed 10% rate of return, why would you invest in the stock market, where you might get an average of 8%? Or why invest in real estate for a 7% return, when you could invest in this with no risk or work whatsoever? That's why the more these long-term yields offer, the cheaper other investments need to become in order to compete. And this is what brings us to the first issue. Treasury yields have been rising. In this case, investors are worried that deficit spending is growing out of control, core inflation is back near 3%, and if the U.S. dollar loses some of its appeal, the market could fall because treasury yields will rise. The second we have, concentration risk. As you can see, the top 10 companies now make up 40% of the entire S&P 500, and even crazier is that Nvidia now has the biggest weight in the S&P 500 of any individual stock since the data began in 1981. This is bringing us to a very close comparison to the early 2000s dot-com bubble, where at the time, the top 10 companies made up just 25% of the index, which, hey, back then was a big deal. However, even though market crashes have historically followed periods of high market concentration, like we're seeing now, the data actually shows that market concentration alone doesn't predict future stock market performance. Why? Well, sometimes market concentration is earned by fundamentally strong companies who make a ton of money. While other times, it's fueled by speculative mania about to burst. That's why a more reliable indicator of a market bubble is simply how fast the market concentrates. And the faster this occurs, kind of like what we're seeing with Nvidia, the more vulnerability there is for a drop. Of course, that's not to say that we're due for a crash or that the market will just keep going up indefinitely, but it is a reminder of why it's so important never to put all of your eggs in one basket, and preferably to diversify across as many different asset classes as possible. Although, in terms of what Jerome Powell just said, and what this means for you, here's what you came for. As of a few hours ago, the Federal Reserve cut interest rates by 25 basis points, mainly due to one segment of the market that's really beginning to suffer, and that would be jobs. As you can see, for the first time in four years, the United States officially has more unemployed people than there are job openings. And this means lower interest rates are coming to the rescue. After all, if businesses have cheaper access to capital, the more likely they are to reinvest, the more money people should have left over to spend on everything else, and the more this should help prop up the entire economy. Now in terms of where these jobs are going, it appears as though AI does have some effect. Like even the Federal Reserve said that industries which use AI are seeing a higher unemployment rate than those which don't, so that's something to consider, especially now when one person is able to do a lot more work than they were previously. Although in terms of what else Jerome Powell just said, overall, he was a lot more cautious about the economy than in previous meetings. He still mentioned a concern of whether or not tariffs would have an impact on inflation, and that's why they're taking it meeting by meeting to determine what's going to happen next. However, in terms of where they expect the market to move over the next few years, today is where they release what's called their Summary of Economic Projections, which details exactly what they anticipate to happen in the near future. And now the Federal Reserve has made it clear that they expect to cut by another 50 basis points by the end of the year due to growing job uncertainty. On top of that, they're predicting that inflation will remain above 2% throughout 2028, suggesting that their plan is overall to cut aggressively in 2025 and then take it a bit slower throughout the next year depending on the data. Beyond that, Jerome Powell went on to say that today was a risk management cut, and that job growth was below break-even, so the market currently believes that the Fed might be too late to cut interest rates, which is why everything has begun selling off towards the end of the day. So overall, in terms of what I think, look, the jobs numbers were pretty bad, and it's not surprising the Federal Reserve is stepping in to rescue the market, even though they're doing that at a time when asset prices are near an all-time high and inflation remains elevated. This is going to be a really unique spot for them to be in, because on the one hand, if they lower interest rates too much, they risk inflation coming back, but if they wait too long, they risk the unemployment rate rising. It's going to be a really delicate balancing act not to hurt one for the sake of the other. That's why I wouldn't be surprised if we see another small rate cut when they meet in October, and maybe another one when they meet in December. I'm fully expecting them to take it a bit slower than expected. And with Powell's term ending, May of 2026, next year could be very interesting if Trump appoints somebody who pushes for even more rate cuts than we're seeing today. But please let me know what you think of this down below in the comments section. I will do my best to read and reply to as many of you as I can, and if you haven't done it already, hit the like button, subscribe. Thank you so much. And until next time.