Fed Cuts Interest Rates Again, But Warns of Fewer Cuts in 2025 Amidst Market Bubble Concerns

The Federal Reserve cut interest rates by 25 basis points but anticipates fewer cuts in 2025 than initially projected.

### Federal Reserve Rate Cuts and Market Outlook: Navigating 2025's Economic Landscape
* 📉 The Federal Reserve has cut interest rates by 25 basis points, raising concerns as stock markets, housing prices, and cryptocurrencies like Bitcoin reach **record highs**, suggesting **potential bubble territory**.
* 📊 Experts are drawing parallels to historical market peaks in 1929, 2001, and 2020, indicating a possible downturn ahead, with warnings of a **26% drop in the stock market by 2025**.
* 📈 Inflation remains a significant factor, currently at **2.7% year-over-year**, with food and shelter prices contributing to **persistent inflationary pressures**, despite a slight decrease in energy costs.
* 💰 The S&P 500 has seen a remarkable **30% increase this year**, but caution is advised as valuations are at **208%**, indicating one of the **most expensive markets since the 1950s**, according to the Buffett Indicator.
* 🏠 Despite high mortgage rates, home prices have risen by **5.9% since last December**, with markets like Detroit and Chicago seeing **significant gains**, while Austin and San Antonio experience **declines**.
* 🔮 Predictions for the housing market suggest a **2.6% increase in prices** over the next year, alongside volatile mortgage rates and a shift towards **smaller homes** due to changing buyer preferences.
* 💬 Jerome Powell's recent comments indicate **fewer rate cuts than previously expected** in 2025, as the Fed seeks to **control inflation while maintaining economic stability**, which has led to **market volatility**.
* 💡 The importance of a **diversified investment strategy** is emphasized, with a consistent approach to **buying into the market regardless of price fluctuations**, as historical trends suggest that **long-term growth is achievable**.

What's up, Graham? It's guys here, and we've got a bit of a problem. As of a few hours ago, the Federal Reserve decided to cut interest rates by another 25 basis points. Except this time, there's a bit of a catch. Despite the stock market,

housing prices, and Bitcoin recently reaching brand new record highs, experts are beginning to warn that we've officially entered bubble territory, to the point where now there's no turning back. After all, we have seen similar valuations in 1929, 2001, 2020 before the COVID crash,

and again today, as people throw their hard-earned money into the most ridiculous places, like fart coin, which is somehow up 50% in a week. It makes no sense. Anyway, with the recent rate cuts and market euphoria, it's more important

than ever that we break down exactly what's going on, what the Federal Reserve just said, their warning for 2025, and what this means for you watching, because this will have a direct impact on almost everything, from the stock market, housing prices, Bitcoin, and even the price of

fart coin. Although, really quick, if you appreciate the videos where I try to bring you updates like this as quickly as I can, it would mean the world to me if you hit the like button or subscribed if you haven't done that already. It helps out the entire channel, and that's

all I ask. So thank you so much. And also, a big thank you to Policygenius for sponsoring today's video, but more on that later. All right, so before we go into the biggest changes about to take place in 2025 when it comes to rate cuts,

The single biggest factor is what's going on with inflation. That's because on December 11th, it was revealed that overall inflation increased by 2.7% year-over-year. And even though this is higher than their 2% target, it is an

improvement from last year's 3.3%. And according to them, inflation isn't accelerating; it's merely just persistent. Anyway, in terms of where it's most persistent, food at home increased by 1.3%, food away from home (like restaurants) is up 3.6%, motor vehicle

insurance is up almost 13.3%, health insurance is up 6%, and hey, at least some good news: energy is down 3.2%. On top of that, it's estimated that shelter (which has about a one-third weighting in the CPI calculation) accounted for more

than 40% of the total increase in November. And in this case, the shelter index rose 4.7% on a 12-month basis, which, by the way, is the smallest increase since February of 2022. All of this implies that, as long as the Federal Reserve

holds steady or manipulates the data, everything is on a bit of a downtrend. Although none of this comes even close to what we're experiencing in the stock market. Look, on the surface, someone needs to say it: this year has been absolutely incredible for every single stock market

investor (unless you shorted MicroStrategy). I mean, for anyone who's been paying attention to their portfolio, this has been the best year for the S&P 500 of the century, being up more than 30%. And it doesn't even end there. If we go

all the way back to the 1920s, we could see that there have only ever been nine times where the S&P 500 has returned more than 30% in a year. But some experts are warning that you better not get used to it, even though, historically, the stock

market tends to see above-average returns in the years following all-time highs. Warren Buffett is taking a slightly more cautious approach as he sells massive positions and sits on his largest cash pile of all time at $325 billion. And if that sounds crazy,

just take a look at what's called the Buffett Indicator. This measures the value of the US stock market divided by GDP, and he's previously referred to this as the best single measure of where valuations stand at any given moment. With this gauge, it's suggested

that a reading of 100% is said to be fair, at 70% stocks are a bargain price, and if it's near the 200% mark, investors are playing with fire. Yep, I think you know where I'm going with this, as you

can see we are currently trading at an above-trend price of 208%, which places this as one of the most expensive stock markets since the 1950s. Of course, these days the Buffett Indicator is said to be somewhat flawed because it doesn't take into account how

lower interest rates could affect a company's valuation. But that isn't stopping experts from warning that these types of returns probably are not going to continue. For instance, one economist was quoted as saying that the stock market is in a mania that will push it

higher before a potential 26% drop in 2025. However, it is important to mention that not everybody agrees with this thinking, and just because something is historically expensive doesn't mean it can't keep going higher and higher, like most experts have been calling for below-

average returns for more than a decade now. Like this Forbes article, which estimated an 80% chance of the S&P 500 being lower over the next 5 years in 2017. Safe to say that didn't happen. These days, most analysts all seem to

fall within the same camp: that we're probably going to see an annualized return of 0 to 7% over the next 10 years. And in the next year, JP Morgan, Goldman Sachs, and Morgan Stanley are calling for an S&P 500 at 6500. Barclays estimates

6600. Bank of America is coming up with an oddly specific 6666. Make of that what you will. And Wells Fargo thinks 7000 is possible. Although, whatever happens, don't expect a straight line upwards. In fact, throughout history, most returns simply come from a

few very, very good years that outweigh the very bad years. And 37% of the time, stocks see an annual return of more than 20%. This suggests that the title, "Average returns aren't normal; normal returns are extreme," is very true. And what we're

seeing right now isn't so much reckless, it's just par for the course, even if people are getting caught up these days again in meme coins. And that, of course, brings me to the second topic I want to talk about: Bitcoin. In a remarkable turn of events, my thumbnail

from January of 2021 finally came true when Bitcoin hit its infamous price of $100,000, which, by the way, I'm sorry to be the bearer of bad news here, but my mom recently asked me if I heard of Bitcoin and whether or not she should buy in.

That's probably a top signal. I hate to say that, but, uh, you know, it is what it is. Anyway, even though it's currently a bit down from its all-time high, everything is lining up for Bitcoin to be pretty well positioned politically in 2025. For instance, the Trump family is

openly pro-Bitcoin and could be open to a Bitcoin reserve in the next year or so. Gary Gensler is stepping down and being replaced by Bitcoin advocate Paul Atkins, and it appears as though quite a few companies are now beginning to raise money for the purposes of buying Bitcoin.

For example, Riot Platforms is considering a raise of $500 million to place in Bitcoin. Both Microsoft and Amazon are considering proposals as well that would allocate 5% of their reserves into the asset. And basketball player Scottie Pippen said that Satoshi Nakamoto

came to me in a dream last night and handed me Santa's list. I saw Bitcoin next to Gates and Bezos. History is being written now. Whether or not Scottie has supernatural future-telling dreams, or is just privy to inside information, is

yet to be seen. But no matter what you think, Bitcoin is certainly going to be a very hot topic for 2025, and I have a feeling that many more companies will soon begin to adopt it. Although, in terms of what's happening with the housing

market, it's a completely different story. Although, before we go into that, keep in mind that this is the last Federal Reserve meeting of the year. And as we wrap up 2024, it's important to use this time to take care of anything that you

might have been delaying up until now. For instance, just like the Federal Reserve is trying to protect our economy from inflation, it's equally as important that you protect yourself and your loved ones with life insurance for anything that might come your way. And thankfully, our sponsor, Policygenius, is there to

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started today. Thank you so much, and now let's get back to the video. All right, now before we go into Jerome Powell's latest comments and his outlook for 2025, there is one more item that we really need to talk about, and that would be

housing prices. That's right, despite mortgage rates staying at their highest level in more than 20 years, home prices have continued to grow, with the average home rising 5.9% since December of last year. Of course, in terms of growth towards the end of this year, a lot of

analysts were saying that homebuyers were waiting on the sidelines until after elections. Well, now that elections are over, it's said that we've started to see signs that homebuyer demand is coming back. That could lead to increased competition in coming months,

possibly pushing prices higher unless we see a major spike in the number of homes being listed. In terms of which housing markets are seeing the biggest increases, we've got to give it up to Detroit, Michigan, with more than a 15% gain year-over-year, followed by Chicago at 13.5%, New York at

11%, and Cleveland at 10%, with the hardest hit being Austin and San Antonio, Texas, having fallen 3% to 42% over the last 12 months. Although, in terms of the future outlook of housing prices, Zillow has made a few of their own predictions,

and surprisingly, they're all pretty reasonable. First, they think that the housing market's going to pick up, with prices rising another 2.6% within the next 12 months. This suggests that home prices may simply rise alongside inflation, which has been the trend for

over a hundred years. After all, if home prices rise by 5%, but inflation also rises by 5%, your equity is simply holding value. And I have a feeling this will continue to be the case. Second, expect mortgage rates to remain a bit volatile. Since home interest rates are

generally tied to the value of the 10-year treasury, there tends to be a lot more speculation here than, let's say, credit card interest rates. So, as a result, there could be a lot more fluctuation over the next year. Third, more of the United States will become a

buyer's market as inventory gets listed. In terms of where this is going to happen, Zillow thinks that the Southwest will become the hotspot for affordability and negotiations. Fourth, they've pointed out that smaller homes are now becoming more common. In this

case, builders are realizing that it's no longer profitable to maximize square footage when their buyers are just strapped for cash. So, as a result, they're building less, and they're passing some of the savings on to you. On top of that, more than a third of builders said that

they built smaller homes in 2023, and more than a quarter planned to construct even smaller this year. And finally, fifth, rent concessions will end. In their mind, an apartment construction boom meant that landlords were competing with one another to try to get tenants. But now

that almost all of those units are leased, competition is going to increase now that there's less to pick from. Now, honestly, from my perspective, just anecdotally, I am seeing a lot of sellers list their homes at exorbitant prices just to see what they could get. And on a

a lot of listings that I'm following. I am seeing consistent price reductions as they slowly come back down to reality. But everyone else is simply asking a very high price just for the sake of seeing what they could get, and this provides a unique opportunity for a

buyer who's willing to negotiate. Although, in terms of what Jerome Powell just said as of a few hours ago, and the reaction of the market, here is what you came for. As of a few hours ago, the Federal Reserve has decided to cut interest rates another 25 basis points,

as expected. Except this time, we get the benefit of receiving a lot more information about their plan for the next year and what's called the Summary of Economic Projections. This estimates where they believe we'll see inflation, interest rates, unemployment, and GDP over the next few years. And in this case, bad

news: they're now expecting significantly fewer rate cuts in 2025 than they initially expected, as you can see here, which has caused the market to enter a bit of a freefall as investors price in higher rates for longer. For them, they explain that they want to take it

slow, make sure that inflation doesn't reaccelerate, and by holding firm, they're ensuring that prices don't meaningfully spike back up. On top of that, they believe that we'll be able to return the inflation rate back to their 2% target

and then hold steady and adjust in the future as needed. And overall, it appears as though their fight against inflation is working. All in all, none of this is too shocking. All of this was somewhat as expected, except with a few extra details sprinkled in. And if history shows us

anything, it's that the Federal Reserve does move a little bit more cautiously and slowly than people expect, but eventually they're probably going to get the job done. Now, I do have to mention that in the last meeting, he was asked if he would step down if Trump wanted him

to, and his response was, "No, because that's not permitted under law." "If he asked you to leave, would you go?" "No." "Uh, can you follow up on, is... do you think that legally, he... you're not required to leave?" "No." So, of course, leading up to today's meeting, Trump

preemptively made the comment that he would not try to remove Jerome Powell. So, hey, for the time being, it looks like we're getting more of the same. Now, as far as my own thoughts about everything discussed in terms of the stock market, even though it is expensive, relatively

speaking, based on history, at the end of the day, no one has any clue what's going to happen, and no one has any idea what the price is going to be a year from now. That's why I like to take the approach of: prepare for the worst, but hope, hope

for the best. Prepare for the worst; that one... this means I diversify my money throughout a variety of index funds. I do not buy individual stocks. I keep a little cash in the sidelines, just in case, and I keep buying in on a regular basis, regardless of the price, because

you know the saying: "The market could remain irrational longer than you could remain solvent." Look, I know I always give the same boring advice at the end of every single video, but the truth is, the boring strategy works. And I've been saying the same thing in 2017, '18, '19, all

the way through today. If you would have followed this over the last 8 years, you'd be up over 200% now. Sure, that's certainly not as much as Bitcoin's 9000% return in that time frame, but that's why

I believe a well-diversified portfolio is worth it. I like placing a small amount of Bitcoin in something like an ETF where, if it goes up, great, and if it doesn't, that would really suck, but it's not the end of the world. So, even though

yes, markets are high, I'm not deterred by the price, and I'm just buying in on a consistent basis no matter what. Like, I remember making similar videos addressing the market all-time high six years ago, and we'll continually hit new all-time highs as the market and economy

grows. Hopefully, I'm just a firm believer of taking a very slow and steady approach that's very consistent. And no matter what, hitting the like button and subscribing if you have not done that already. So, thank you guys so much for watching. It really means a lot. Happy New

Year, happy holidays, and until next time.

URGENT: Federal Reserve Cancels 2025 Rate Cuts, Markets Crashing FAST!

As a 30 year old real estate agent and investor who started working in real estate shortly after turning 18, with over $120,000,000 in residential real estate sales since 2008, I've created this channel to share my successes, failures, and experiences in the real estate industry and to support others who are thinking of getting into the business. Oh, and I'm also obsessed with cars. A lot. So expect to see some cars uploaded to my channel. A lot. And Subscribe. Because all the cool kids are doing it.  

Feel free to follow me on Snapchat / Instagram: GPStephan

Graham Stephan

The Federal Reserve cut interest rates, but experts warn of a potential market bubble similar to previous market peaks.

Despite record highs in stocks, housing, and Bitcoin, valuations resemble those seen before previous market crashes.

The video aims to analyze the current market situation, the Fed's actions, and their warning for 2025.

The impact of these events will affect various markets, including stocks, housing, and Bitcoin.

Inflation increased but is considered persistent rather than accelerating, with shelter costs contributing significantly.

Overall inflation rose by 2.7%, higher than the 2% target but an improvement from the previous year.

Increases were seen in food, motor vehicle insurance, and health insurance, while energy prices decreased.

Shelter costs accounted for over 40% of the total increase in November.

The stock market experienced significant growth, but experts warn against expecting similar returns in the future.

The S&P 500's performance this year is among the best in history.

Despite historically high returns following market peaks, some experts advise caution.

Warren Buffett's cautious approach and the Buffett Indicator suggest an overvalued market.

While the Buffett Indicator might be flawed, experts still warn about potential market corrections.

Bitcoin reached its predicted price of $100,000, and its future looks promising with political and corporate support.

The Trump family's pro-Bitcoin stance and regulatory changes favor Bitcoin's future.

Several companies are considering allocating funds to Bitcoin, indicating growing adoption.

Despite high mortgage rates, housing prices continue to rise, with varying growth across different markets.

Post-election homebuyer demand is increasing, potentially driving prices higher.

Detroit, Chicago, and New York experienced significant price gains, while Austin and San Antonio saw declines.

Zillow predicts a 2.6% rise in housing prices in the next 12 months, aligning with inflation.

The Federal Reserve cut interest rates, but their projections suggest fewer cuts in 2025 than initially anticipated.

The Summary of Economic Projections reveals expectations for inflation, interest rates, unemployment, and GDP.

The Fed aims to control inflation and return it to the 2% target.

The Fed's cautious approach is consistent with their historical behavior.