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another rate increase in March and it's possible to have another one after that depending on how inflation numbers go and they're going to hang out at an interest rate level at five percent or more this year until they get confirmation that inflation is coming down I think what what's happening is that investors are Clinging On to any hope that inflation really is coming down much more shocked that's when a Jerome Powell talked about disinflationary forces taking hold what's happening with inflation what's happening with the economy U.S federal bank chairman Jerome Powell said that more rate hikes are likely in order to bring down inflation so are we going to see more hawkish rate hikes can the FED navigate a soft Landing what is the inflation expectation for the upcoming months and how will it all affect the market and investors in today's video Ray dalio has discussed inflation interest rates and the economy he has also shared his viewpoint on the fed's latest remarks and what investors should expect from the market ahead so to know more details stay tuned till the end of the video also don't forget to subscribe to my channel for more videos on economy crypto and Market let's dive into the video now you saw what Jay Powell said yesterday I think we're all trying to make sense of of where we really are okay well I mean these things happen over and over again we're now in the 12th and a half cycle you know these Cycles you know how the Cycles work your 12 and a half Cycles since 1945 1945 was the New World Order you know new monetary system and you know what happens so let me take you through it quickly you provide you get a funky economy weakness and so on so what we had of course in 2020 with the combination of covid and then also the move from the right to the left it was a distribution of wealth and so how did you do that government had to send out a bunch of checks and the Federal Reserve where'd the government get the money from the Federal Reserve lent it so we have an imbalance and of course that put a lot of money in the system you've got the demand you've got the cycle classic cycle right stimulation credit becomes debt then you have inflation then you have a tightness monetary policy and so where are we Jerome Powell has been eager to remind investors that the economy is still deep in the throes of a battle with high prices and a potential slowdown but he took a different point across when he took to a q a with reporters Wednesday after raising interest rates by 25 basis points the FED raised its benchmarked interest rate another quarter percentage point to a target range of 4 4.5 to 4.75 percent following the move Powell says he sees some signs that inflation is Cooling in the economy but added that the Central Bank needs to keep up its guard markets widely expect the FED to raise again in March and once more in May before pausing to assess the impact that the higher rates are having on inflation and the economy let's get into the next clip to hear more from Ray dalio also be sure to give a big thumbs up to this video so we now win a classic spot where we've got a relatively High real interest rate real interest rates went from minus 175 basis points to plus right 175 basis points right you've got a cash rate that's relatively High cash used to be trashy cash is pretty attractive now you've got an inverted yield and then again you said trash is now more attractive cash cash is trash is what you used to say yes crash was negative right one and a half two percent rates terrible now cash is relatively attractive right so it's attractive in relation to bonds it's actual interactive around shielded stocks you have the classic movement of course as rates go up and money becomes tight you lose the parts of the economy the parts of the market that are the bubble parts that needed the cash flow right right so you're seeing it reflected in um not only you know long duration stocks those that didn't have cash use so you see the tech stocks come down all of that come down you see private Equity you see Venture Capital because they needed cash all of that comes down and then so you're seeing a very very very very classic that we've seen these things for 12 and we're halfway through a 12 or 13th cycle right but what's also happening in that cycle is since 1945 is that we then have the accumulation of a lot of debt and money okay so we deal with things like the debt ceiling that's the only matter does it matter how much debt we have and then you have a situation where there's used to be a free market supply demand but now you've got the Federal Reserve who is now taking it buying it on the balance sheet so it's not the supply demand so you've got that Dynamic very very classically going I don't think people are paying enough attention to the big cycle there are these short-term Cycles since World War II they've averaged about seven six or seven years plus or minus about three years that's what we're in a classic one of those but we keep building up the debt and then there are issues in terms of the the issue of the dollar and what's happening in terms of the world and the value of money the FED spent much of last year using a combination of words and policy actions to create higher borrowing costs for companies and consumers in the hopes of slowing spending and bringing demand more in line with Supply inflation has been a massive issue for nearly every major country in the past year or so while inflation is slowly declining it has caused the debt of the U.S and other countries to soar Ray dalio also highlighted that quote cash used to be trashy but cash is pretty attractive now end quote according to him cash is a better investment than stocks and bonds as the FED sticks to its rate hike plan talking about the narrative around digital currencies and crypto the sentiment around crypto and other digital currencies is likely at an all-time low because of the recent collapses of FTX Celsius Network LLC block fi and several others but Financial conditions have loosened since the fall including a 16 percent rise in the S P 500 since mid-october Bitcoin is up as much as 50 percent since its November lows and there has been a drop in longer term interest rates meaning there might be some opportunity there for investors as sentiment rebounds we first start off with what is the level that the inflation rate will settle at then how much higher do bond yields have to be and then um what will short rates be relative to those so just to give you the quick answer I think we're going to have an inflation rate that is probably in the vicinity of five percent ish but it's a very uncertain inflation rate because of all the shops that we have around it but let's say four and a half five percent is probably what it settles at down at after this tightening at the real rate in other words the rate above inflation that the interest rate is now at is in the vicinity of one and a half percent a little bit higher than that so that would mean that there would be probably approaching a six percent risk-free rate and the Federal Reserve will put the short-term rate up toward that level that level of interest rate is very harmful very damaging to the economy but what the Federal Reserve is trying to do is balance those you know having an interest rate that's high enough for the Creditor but not so high for the debtor and so um I think what you're going to see is a slowing of the pace of the rise but an approaching let's say over five percent probably in the vicinity of five and a half percent and that'll have um an effect on all markets it'll have a negative effect on stocks because it has um of course his interest rates go up they compete and then there are the challenges with his repeated mentions of disinflation Powell was Keen to reinforce the idea that price pressures are abating despite his reminders that it was at an early stage and a couple of more rate hikes remained likely now financial markets are pricing in fewer fed hikes than officials themselves expect in 2023 while curbing expectations of rate Cuts later this year that Powell and his colleagues do not Envision at all so what do you guys think about the Fed rate hike will they be hawkish or dovish in 2023 will inflation go away in 2023 how will they affect the market and Bitcoin prices let me know your thoughts in the comments below for more videos like this be sure to subscribe to my channel you can also hit that Bell icon to never miss any video also be sure to like and share I'll see you guys in my next video adios and thanks for watching
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