The Federal Reserve is making history, folks…
That’s right, we just got big, back-to-back interest rate hikes, and there could be another on the horizon.
What does this mean for the markets, including equities, commodities, real estate and currencies?
Well, Wednesday’s market reaction was very similar to what happened after the last interest rate hike.
The day of the announcement, the market rallied like crazy only to be followed by a day of red across the board.
That’s more or less what we saw yesterday… a broad market selloff.
Consumers Are King
Now, looking more closely into how higher interest rates hit the average US homebuyer, it becomes very telling for the greatest supporter of the economy… the main street consumer.
Without the consumer, the economy does not exist.
The average consumer is buying a $500,000 home today with a 20% down payment.
That means they’re looking to mortgage $400,000 over a traditional 30-year fixed-rate mortgage.
The additional 0.75% tagged on that mortgage over the 30 years will cost the homebuyer an additional $84,240 on that $500,000 home.
That is a very rewarding year’s salary, my friends! That’s a lot of bread!
Main Street Hit
That’s money the consumer won’t have for retirement, college funds or new vehicles.
That’s $85,000 on just this interest rate hike. Look back to where we were just 18 months or so ago…
If you’re going for a mortgage today, that $85,000 is multiplied compared to how inexpensive money was to borrow just a short time ago.
What do you think this is going to do to the value of your home and real estate as a whole?
In my view, a “buyer’s market” will be upon us soon enough.
When you take money out of consumers’ pockets, that catches up to money spent on main street and is ultimately felt by Wall Street and everywhere in between.
The Chandelier Way
My friend and colleague Josh Martinez has a solution for the little guy just starting out looking to book some daily profits.
He has created not only a tool but an entire strategy around his Chandelier Trader system.
The other morning, he hosted a live demonstration of the system. While I was having coffee, I decided to join in to check on his success.
Boy, was I shocked when I saw what was going on in his trading room.
Not only was he making money, but his students — one after another — were sharing how much they’d all made as well.
I was blown away.
I hope to see you there!
Rules to Live By
“Death is not the greatest loss in life. The greatest loss is what dies inside while still alive. Never surrender.” Tupac Shakur
Until next time, I wish you a beautiful and blessed day!
Yours In Trading Success,
Anthony Speciale Jr.