ladies and gentlemen the Federal Reserve just cut the interest rate by 0.5% and that's an incredible surprise so the whole stock market should be reacting to it very positively right no not really right so let's see what uh the reactions are and more importantly what Mr Lou Will predict moving forward so watch until the end so the Federal Reserve Open Market Committee yesterday make an announcement that they will cut the interest rate by 0.5% and that's a very surprising thing to me although half the market actually predicting that already and the other half say 25% that's a a big surprise to at least half the market then why is the whole stock market begin to decline so let's watch on shall we as usual these are my usual disclaimers and let's go jhum power and his Federal Reserve Open Market Committee all met for two days and they did two important things number one is they make a decision to reduce the federal funds rate by 0.5% 50 basis point that's the first decision the second thing they did was they actually made a prediction of what they think will be the interest rate moving forward we call that the sep right uh summary of economic projection and I'll talk about it later in the talk the most important thing is how did the market react to this surprise well unfortunately the market was very turbulent yesterday and it ended up lower so if you see it initially the stock market went up S&P 5 went up and then when it close went down same for the NASDAQ and even the TLT which is the bonds okay also went down closed slightly lower than it was so that's a that's quite a surprise to entire stock market and and quite a few people asked me Mr Lou why why why why why why why right I thought you say you know interest rate cut everything should go up that kind of thing so in order to understand the entire Market let's see what jome power says first shall we jome power made a few very important statement the first statement that he made was the US economy is strong and the labor market has cooled down he don't see any risk of a recession in the US economy although there are people who say that you know if you don't see any risk why you cut by 0.5% but uh we'll talk about that the key thing is inflation has substantially eased from The Pick of 7% to an estimated 2.2% right now in August they have a dual Mandate of maintaining maximum employment and low inflation and this is right now becoming very important to have a balance between the two clearly specifically there is a lower risk of reinflation right now now he don't think that inflation will reignite again but there is a higher risk of increasing unemployment they want to react right now before the balance go our back to the other direction that they cause unemployment then the question why they cut 0.5% not 0.25% well they have basically gained a lot of confidence that inflation is now moving in right direction and their labor market is a lot less tight than before the pandemic I'll quote him the labor market is actually in a solid condition and Our intention with our policy move today is to keep it there but the choice to move big at the start of the easing cycle shows that the Federal Reserve is willing to take stronger action if the labor market deteriorates further says one of the economist basically they are very confident inflation is going down down down down down and keeping low so with that you know they they can be more forceful in uh having an interest rate cut so I think that's good uh essentially for all the financial markets so even I was surprised by it right because traditionally 0.5% cut are being instituted when there is a bad economic environment like 2000 financial crisis or or or or covid or something like that right so 0.5% in a normal time like this you know seems like a big surprise so I lost a b to my friend Mark who is um who is adman that there'll be a 0.5% can I I was so confident and that I actually uh lost lost a bet right so because I lost a bet I have to help me relay a message to his wife online to everybody that you know know Mark loves his wife Jalene tremendously right very very much right so um so this is a very important message that I have to deliver for him because I lost the bet Jokes Aside you know 0.25% out the window but I think most importantly is that you know this is a very nice surprise more importantly the Federal Reserve Open Market Committee predicted what the interest rate would be for the rest of 2024 25 and 26 and these are what we call a summary of economic projection so the Federal Reserve did a Dot Plot right so get everybody to do a independent plot and see where the interest rate is going and this is the average so by this year they predict that there'll be um we end at 4.4% which means that there could be another 0.5% cut or two 0.25% cut and in 20025 you go down to 3.4% and 2026 to 2.9% this is where the projection is for those people who are doing refinancing for your homes and things like that just take note that interest rate trajectory is coming down and down and down so as I said you know the key is to focus on 2024 because we do expect another 0.5% cut and some of the analyst are already being bullish and say that you'll be even 0.75% cut and there are two more meetings uh in November and December let's see how it goes but certainly interest rate cuts are generally good news for the stock market and for the bonds market so what are the implications for all of us who have invested in the financial markets the stock market and the bonds Market have went down because in my opinion all these cards are more or less facted already stock market usually sell on good news and that's a very common phenomena for those people are very upset over yesterday's results don't worry okay generally we are seeing a projection that's going to go for both markets and we just got be B patient so this is my prediction soon okay in the short term we were likely to see an adjustment moving up in both markets be the bonds Market or the stock market but this is not just good news for the stock market and bonds Market this is also good news for property for cars for reads may be slightly bad for the banks the banks would then collect less revenue for the interest rates and this is not uh something that is good news for the banks but our banks are quite well Diversified so this one is unlikely to hit our banks in a hard way generally speaking you know it's good news for most borrowers and for lenders you know is generally bad this is a very important news we have been waiting for two years since 2022 for this to happen this is a very important Milestone of the modern financial times that we are in right now that we have decisively defeated inflation it doesn't mean that prices have gone down but the rate of increase have gone down tremendously to a comfortable level and it's probably good times moving forward generally speaking of of course the market would be hit with unexpected news and storms and things like that so volatility we expected there but I would say that the trajectory right will be a a curve that's moving up with a lot of volatility in between so for those people who have waited uh patiently for long enough congratulations the markets are now in your favor okay continue to yield the fruits and be happy for those people who haven't just uh learn from this experience and when the next time it comes uh just be aware and react accordingly okay thank you for watching and I'll see you in a day or two bye-bye so this is Mr Lou again I didn't realize after I finished the video that the whole stock market is now railing on the Futures Market the S&P 500 is uh registering a 1.6 1.7% you know uh positive and is set to break alltime high again so so I just want to say that you know it looks uh very promising uh let's see what happens tonight shall we okay um I think it's all good days moving ahead see you bye-bye