QUESTION: Marty, Socrates has been right on target with the Fed and interest rates since it had a Directional Change in 2024. I am correct that the Directional Chabge next year implies higher rates thereafter?
Paul
ANSWER: Yes. This year should be a correction to a low. The resistance stands at 4.5%. As you can see from the cyclical-infused stochastic, this is NOT in crash mode. President Donald Trump says he wants more rate cuts to help buttress a wavering US economy.
The Federal Reserve cut rates by a quarter-point for a second month in a row amid pressure from within and from without. The problem is that both unemployment and inflation are rising, and our computer has forecast STAGFLATION through 2028. Interestingly, the spread between the 10-year and 2-year should narrow. This still indicates capital flight, mainly from Europe. As I have said before, the capital fled Europe for WWI, and since it was here, the Automobile boom into 1929 resulted in capital concentration in the US economy. That is why 1929 was the biggest rally, but call money rates only reached 20% – the lowest of all the major panics since 1882, all because of capital concentration. This is the phase we are entering, which accounts for the shift in the spread as well.
