Published: 2022-03-18
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The S&P 500 has historically shown gains in the first 12 months following the start of interest rate increases.
"the s p 500 has historically gone up in the first 12 months of rate increases"
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Historically, in the first 12 months after interest rates begin to rise, the S&P 500 has seen an increase, occurring in the last eight such instances.
"when interest rates go up the stock market has typically gone up in the first 12 months the last eight times when rates started to go up the s p 500 was up higher than it was the year before"
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Technology stocks performed best, with a 20.6% gain, during periods of rising interest rates.
"stocks in the tech sector did by far and away the best at 20.6"
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Real estate stocks were the second best performing sector, with a 12% gain, during periods of rising interest rates.
"and number two was real estate at 12"
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Energy stocks were the third best performing sector, with an 11.9% gain, during periods of rising interest rates.
"number three was energy stocks at 11.9 percent"
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Healthcare stocks gained 9.7% during periods of rising interest rates.
"then healthcare 9.7"
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Utilities stocks gained 8.3% during periods of rising interest rates.
"then utilities 8.3"
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The Federal Reserve is projected to implement six more rate increases in upcoming meetings, with three expected this year and three to four next year.
"we're going to have six more federal fund rate increases throughout the next six fed meetings three of which should happen this year and another three maybe four next year"
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New federal student loan interest rates in July will be determined by the 10-year Treasury bond yield at that time.
"for new student loans that will change in july those loans are set by the government and what the government looks at is what's called the 10-year treasury bond yield so whatever that yield will be in july is what's going to be the interest rate for new student loans in july"
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Credit cards and car loans are expected to become at least 0.25% more expensive due to interest rate changes.
"when it comes to any kind of revolving credit things like car loans or credit cards that'll be more expensive by at least a quarter percent"
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Individuals carrying a credit card balance month-to-month should anticipate paying more within one to two statement cycles.
"if you're somebody who carries a balance month to month which you should never do you should always pay off your credit cards on time and in full then expect to pay more money within one to two statement cycles"
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New car loans are expected to cost slightly more than an additional quarter percent in interest.
"expect to pay probably a little bit more than a quarter percent"
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Interest rates on crypto deposits are unlikely to change significantly as they are not tied to traditional banking rates but rather to Bitcoin's price action.
"interest rates on deposits are not determined by the federal fund rate or the prime rate so they're probably not going to change much because bitcoin and crypto does not depend on the traditional banking system instead it's based on the price action of bitcoin"
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Crypto borrowing rates will increase when Bitcoin's price is rising and demand to borrow is high, and conversely, rates will fall when Bitcoin's price is stagnant or declining, making borrowing more attractive.
"if bitcoin's going up and everyone's excited they want to take more risk they'll want to borrow more bitcoin and that's when rates go up and the opposite is true if bitcoin's going sideways or going down that's when interest rates fall because nobody wants to borrow bitcoin so interest rates fall to make it more appealing to borrow more"
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Savings accounts may offer up to a theoretical 0.25% increase in yields, but this depends on the companies' decisions and can take weeks or months to materialize.
"savings accounts are yielding very little but they're about to yield a little bit more as much as theoretically a quarter percent more but it depends up to those companies if they want to increase it and sometimes it takes weeks if not months before we see those higher yields"
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An additional seven rate increases are anticipated, totaling between 1.75% and 2%.
"there's gonna be seven more rate increases again anywhere between one point seven five to two percent"
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Despite potential inflation erosion of purchasing power, the speaker advocates for remaining invested in the markets rather than withdrawing funds.
"i still believe that inflation could eat away at our purchasing power and our dollars which is why now more than ever i'm still staying invested in the markets i'm not pulling my money out and waiting on the sidelines"
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Homeowners are advised to consider refinancing before rates increase, and prospective buyers to consider purchasing soon before rates rise further.
"if you're a homeowner think about refinancing now before rates go up and if you're not think about buying soon before they go even higher"
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