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Hello everyone! With you, Graham. And, uh, I do n't even know how to say this, but we're stuck. Okay, no. Seriously, the unthinkable just happened. A few hours ago, for the first time since 2023, the Federal Reserve raised interest rates by 25 basis points, officially ending the era of rate cuts and posing a question that almost no one was prepared for. What if this is n't just a one-time increase, but the start of a new cycle of rate hikes? Ultimately, inflation is moving in the wrong direction again. The government adds over 2 trillion a year to the national debt. And the worst thing is that even the help of the bond market does not
produce any results. Simply put, the Fed can keep rates high precisely when the economy can least afford it. So we need to discuss what exactly happened, how it will affect stocks, the housing market, and the entire economy, and what you can do today to prepare. Because the entire strategy that investors have been using for the last two years could have just stopped working. But before we begin, as always, if you enjoy these kinds of breaking news videos, please like and subscribe. I don't know if these algorithms still work, but it's completely free, takes a split second, and as a thank you, here's a photo of a dolphin. So thank you very much, and also a big thank you to Incogni for sponsoring this video, but more on that later. So, when
talking about the current situation, we need to remember the main economic "fear" that will never go away- inflation. First, the Fed has several ways to measure how much prices are rising in our economy. At the very beginning of the inflationary cycle, we have what is called producer price inflation. For those who don't know: it measures the growth of business costs before the goods reach you, it's like inflation "in the pipeline." And, unfortunately, the latest figure was 0.4% per month and 5.4% over the past year. In addition, there is a second and most important category they look at-the CPI (Consumer Price Index). This is the same inflation rate that we all see.
A few days ago it was 3.4% again. However, this is where the most interesting part begins. As you can see from this graph, the bulk of this inflation is simply caused by oil prices. And regarding where interest rates are heading, there is another indicator worth discussing. And this is also the labor market. You see, the Federal Reserve really only has a few goals. The first is to make sure that prices do not soar to uncontrollable heights. And secondly, they want to make sure that people stay employed. And as for employment figures, believe it or not, jobs increased by 162,000 in August, more than double expectations. All of this reinforces the fact that if the Federal Reserve wants to raise rates, it now has plenty of room to do so without
affecting people's ability to find jobs. That's why, when talking about what's next and how it will affect our entire economy, we need to discuss another indicator-the stock market. I know this may seem completely illogical, but when it comes to stock prices in 2026, the bad news is actually good news. Think about it this way. All the stock market is worried about right now is lower interest rates. And anything that leads to lower interest rates is good. This means: weak employment numbers-good for rate cuts, good for stocks. High unemployment is good for rate cuts, good for stocks. Terrible economic data- good for rate cuts, good for stocks. Again, it seems counterintuitive, but any bad news means the Fed is more likely to cut rates to save the economy, which is
, yes, good for stocks. On the other hand, if a lot of people find jobs-that's bad for rate cuts, bad for stocks. If good economic data comes out-it's bad for rate cuts, bad for stocks. If something stimulates demand in the economy-it's bad for rate cuts, bad for stocks. We are officially in an environment where everything is turned upside down and stocks just want a little more cheap money as an excuse for another rise. However, there is both good and bad news about what might happen next. So let's start with the good news. At least the American economy still appears to be resilient enough to avoid an imminent recession.
Anthropic predicts 33% GDP growth by 2030 thanks to artificial intelligence. And while there is also a 10% chance of a global catastrophe, corporate profits look pretty good. But here we move on to the not-so-good news. Historically, since 1930, after a new Fed chairman takes office, the stock market September is typically the weakest month of the year for stocks, which often end the month lower than they started. And bond yields have now reached a level where they are beginning to seriously compete with stocks. Not to mention that some charts indicate that the stock may be too expensive for what we have now. Or, to put it simply, the economy may be a little too strong for the stock market at this point. Because, as I said, more growth gives the Fed
room to keep rates high for longer while inflation is still above target. Oil is back above $100, Treasury yields are approaching 5%, and stock prices are already factoring in a fairly optimistic scenario for AI. So, given the recent Fed statement, the risks to the entire economy, and most importantly, how to prepare, this is why you're here. Because this next step may catch many by surprise. Although before we get to that, we often talk on this channel about the value of money. But there's something else that has become incredibly valuable over the past decade, and that's your personal information. Believe it or not, there are entire companies that collect, aggregate, and sell data about you. And most people don't even realize
how much is already in the public domain. Try just searching for yourself on Google. You will probably find your email address, phone number, home address, relatives. This is just madness. Plus, with hundreds of data brokers collecting information about you every day, it's nearly impossible to delete it yourself That's why our sponsor Incogni is ready to help. For those who don't know, Incogni is a personal data removal service that helps erase your information from data broker sites and search engines. You just need to sign up, authorize them to work on your behalf, and Incogni will take care of the entire process, automatically sending and tracking takedown requests across over 420 sites.
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The link is also in the description below, and they offer a 30-day money-back guarantee, so anyone can try the service without any risk. Once again, link in description, code-Graham. Thank you, and now let's get back to the video. So, about what's happening, the impact of higher prices on our entire economy, and most importantly, what you can do about it. There is another aspect of our economy that is taking an incredibly hard hit, and that is the housing market. Although on a general scale, average home prices are still higher by about 3% year-on-year. Surprisingly, we have seen a surge in new listings over the past month, and housing inventory on the market has reached a 6-year high. Why? Well, consider that over the past few months, mortgage
rates have risen from a low of 6% in February to almost 7% now due to rising oil prices and higher inflation. So there are fewer buyers on the market, sellers are eager to put their homes up for sale by the end of the year, and with more options, buyers have plenty to choose from, which could lead to a drop in prices. After all, over the past year, prices in Austin, Texas, have fallen by 8.1%, in Clearwater, Florida by 5.6%, in Memphis by 4.1 %, in Oakland by 3.9%, and in other cities there has been a decrease of 2-4%. This has all happened in the last 12 months as more and However, although prices are falling in certain regions, this does not mean that we are facing a housing market collapse in the near future. On the contrary, they say
homeowners have record levels of equity, and supply remains tight. What we are seeing now is normalization, not collapse, as the market adapts to new economic realities. For buyers and sellers, it is a market full of opportunity and stability, not instability or uncertainty. Although, when it comes to what the data suggests is most likely to happen next, strangely enough, there have only been a few instances throughout history where interest rates have risen and house prices have fallen. In fact, as you can see in this chart, in most cases, interest rates are rising and home prices are rising as well. And it's likely that home prices will fall if interest rates fall. How is this even possible? Well, when it comes to the housing market, interest rates are
only a small part of what drives demand. And usually, when interest rates rise, it happens in a strong economy that can withstand rate hikes, which is also good for the housing market. On top of that, when inflation is high, again, as you can see here, it's good for the housing market. But when interest rates fall, it's usually a sign that the job market is weakening, our economy is slowing, and inflation is falling, which can lead to lower prices. While most people assume that lower interest rates simply mean more affordable monthly payments if prices are rising, that's not always the case. Again, I know this sounds strange, but similar to how bad news is good for stocks, for the housing market, good economic data and high inflation are
positive factors. So the better our economy does, the higher home prices will remain, regardless of what happens to interest rates. It is worth noting separately: if we see a downturn in the housing market, it will not be due solely to interest rates themselves, but rather to general economic data. It looks like AI will destroy us all, and that's important to remember. So, the more you know. Anyway, what the Federal Reserve just said, what it means for you, and what's likely to happen for the rest of the year-that's what you came for. Raising the rate. As I mentioned earlier, a few hours ago the Federal Reserve unanimously decided to raise interest rates by 25 basis points. From their perspective, inflation is still high, employment remains
stable, and the economy can easily withstand higher interest rates without suffering a complete collapse. And look, if stock prices fall at the same time, then so be it. These are just the realities of life. In fact, the market had already begun to price in higher interest rates even before the Fed voted to raise rates. And this is where things get really interesting. You see, the Federal Reserve only controls short-term interest rates. Essentially, these are the rates at which banks lend money to each other. But these long-term rates, which determine mortgages, business loans, stock valuations, and the economy as a
whole, are largely driven by supply and demand in the open market. And they have grown significantly recently. How exactly? Well, investors are increasingly worried that inflation is getting out of control, so they want compensation for the additional risk. And because of this, profitability should increase and prices should fall. In addition, other countries have started selling their assets in the US to raise additional capital, which is pushing these interest rates up even further. This means that the Federal Reserve didn't even have to raise rates because the market did it for them. Separately, today was the day of the release of economic forecasts, when the Federal Reserve shares its expectations for future rate movements. And today they
expect another rate hike by the end of the year, and then plan to keep them high for almost all of 2027. That's why, regarding what is happening and what can be expected in the future, I have my own thoughts. Overall, I'm leaning towards one of two scenarios happening. Or we enter a period where government debt becomes unmanageable, inflation rises, rates remain high, and the market experiences wild volatility. Or, as Anthropic believes, artificial intelligence will soon lead us to a new era of productivity, where we can achieve so much that we simply grow to the level of our grades, and even more, without any crashes or serious problems.
According to their modeling of the US economy, if AI delivers even modest gains, it will add a few extra percentage points to our GDP every year. And in a significant or extreme case, our economy will grow by an additional 30 %, which is a huge figure. The downside to this is that, yes, if this happens, they predict a significant increase in unemployment, but the hope is that in the long run, all those laid off will find new endeavors and opportunities that we haven't even thought of yet. Although it is a great hope, if we are not all destroyed by then. Whatever the case, regarding our economy by the end of the year, to be honest, everything we see now is already priced in, because the markets are looking to the future.
They don't care what happens today. They are only interested in what will happen in the future. And that's why we should keep a close eye on inflation, oil prices, the Middle East conflict, and expect much more volatility until we see some sort of resolution. I know this is not what most people want to hear, but this is why you should prepare for significantly more volatility and instability in the markets. And, oddly enough, sometimes this is also the best time to start buying. Remember: you get the best prices when everyone thinks the economy is doomed, things are getting worse, and everything around is ruined.
This was the case in April 2025, at the beginning of this year, and throughout 2022. So again, stick to your usual plan, invest gradually, don't be afraid of volatility, and, above all, hit the like button and subscribe if you haven't already. So thank you very much, and also if you want early access to videos like this, as well as the bonus content I post every week, feel free to become a channel sponsor. And if you join, you can also send me your own questions, which I will personally answer on the channel for all other participants. So, if this sounds appealing, feel free to join. Thank you very much, and see you next time.
