Mike on the Money: How the Fed's latest rate hike may affect your money.

MONEY. MIKE GIORDANO, FINANCIAL ADVISOR WITH WILLIAMS WEALTH MANAGEMENT, IS HERE TO TALK ABOUT INTEREST RATES. THERE’S BEEN A LOT OF DEBATE ABOUT WHETHER THE FED SHOULD HAVE DONE WHAT IT DID. WHAT’S THE STORY HERE? YEAH, SO I MEAN, THE FED, THEY GOT TWO DIFFERENT RISKS THAT THEY’RE REALLY TRYING TO WORK THROUGH. ONE WAS INFLATION COMING DOWN. AND, YOU KNOW, WE’VE HAD INFLATION EXTREMELY HIGH FOR THE LAST YEAR AND A HALF. IT’S COME DOWN A LITTLE BIT. BUT THE CORE METRICS OF INFLATION, THE REAL STICKY STUFF, IT HASN’T REALLY COME DOWN AS MUCH. THEY’VE HAD TO REALLY BATTLE THAT. NOW ALL OF A SUDDEN YOU HAVE A REAL RISK OF, GOSH, WE DON’T WANT TO LET GROWTH FALL OFF AND WE GO INTO A RECESSION. SO THEY’RE BALANCING THIS LIKE INFLATION COMING DOWN AND NOT TRYING TO THROW THE ECONOMY INTO RECESSION. AND IT’S A DIFFICULT BALANCE AND THEY’RE NOW IN THAT DIFFICULT SPOT. BUT THEY FELT LIKE, YOU KNOW, WE WE THINK NOW WE MAY HAVE REACHED A POINT WHERE WE WE’VE GOT ENOUGH. WELL, THAT’S THAT WAS MY NEXT QUESTION. DO YOU THINK THEY’VE GONE AS HIGH AS THEY WILL HAVE THEY INDICATED A PATH FORWARD? THEY BASICALLY SAID TODAY THAT THEY THINK THEY MAY HAVE GOTTEN RESTRICTIVE ENOUGH BASED ON TODAY’S DATA, BUT THEY DON’T KNOW. NONE OF US KNOWS WHAT THE FUTURE DATA IS GOING TO HOLD. AND SO IT’S HARD TO SEE IT’S HARD TO SAY WITH CONVICTION WHAT’S GOING TO HAPPEN. SO HERE’S WHAT EVERYONE’S WONDERING. ARE WE GOING TO GET A SOFT LANDING, A HARD LANDING, A SOFT LANDING IS BASICALLY YOU GET INFLATION BACK DOWN TO 2% WITHOUT REALLY CAUSING A LOT OF ECONOMIC PAIN. WELL, WE’RE NO LONGER AT 30,000FT. YOU KNOW, THE PILOTS COME ON THE ON THE INTERCOM AND HE SAYS, WE’VE MADE OUR INITIAL DESCENT INTO GSP, RIGHT? YEAH, WE’VE MADE THE INITIAL DESCENT. WE’RE NOT AT 30,000FT ANYMORE. MAYBE WE’RE AT 15 OR 20,000FT. WE HAVEN’T HAD A LOT OF TURBULENCE. WE HAVEN’T FALLEN INTO A RECESSION, BUT WE’RE STILL IN THE AIR. BUT WE’RE STILL IN THE AIR. EXACTLY. YOU HIT IT RIGHT ON THE HEAD. YOU SHOULD BE AN ECONOMIST. YEAH, WE’RE STILL IN THE AIR. AND SO YOU CAN’T SAY WITH CONVICTION ONE WAY OR THE OTHER THAT INFLATION WILL EASILY COME BACK DOWN TO 2% AND THAT WE WON’T GO INTO RECESSION. WE JUST DON’T KNOW YET. BOTTOM LINE, THOUGH, FOR AVERAGE FOLKS LIKE US, WHAT DOES THIS MEAN ABOUT BORROWING COSTS? WHAT ABOUT THE NEW HOME, THE NEW CAR? WHAT DO WE DO? SO THE MARKET’S BEEN EXPECTING INTEREST RATES TO GET TO THIS POINT ABOUT 5%. THE FED’S HIKED RATES ABOUT 5% OVER THE LAST YEAR. SO THE MARKET’S BEEN EXPECTING THIS. SO INTEREST RATES HAVE KIND OF FLOATED UP AND BEEN ABLE TO HOLD HERE. SO YOU’VE SEEN LIKE 30 YEAR MORTGAGE RATES. THEY GOT UP TO 7% EARLIER IN THE YEAR. THEY FALLEN BACK DOWN TO SIX AND A HALF AND KIND OF SETTLED OUT HERE IN THE 6.5% RANGE. YOU PROBABLY CONTINUE TO SEE THAT SO LONG AS THE DATA DOESN’T SAY INFLATION IS COMING BACK. IF INFLATION STARTS LOOKING LIKE IT’S COMING BACK, THEN THE MARKET’S GOING TO START PRICING IN. THE FED IS GOING TO HAVE TO DO MORE RATE HIKES AND THEN YOU’RE GOING TO START SEEING MORTGAGE RATES, CAR LOAN RATES, CREDIT CARD RATES GO BACK HIGHER. AND WHAT ABOUT INVESTMENTS? INVESTMENTS? THERE’S A LOT GOING ON RIGHT NOW IN THE MARKETS. I MEAN, WE HAVE ALL OF THESE FED RATE HIKES. WE’VE GOT TROUBLE WITH SOME OF THE REGIONAL BANKS. YOU KNOW, ANOTHER FAILURE THIS WEEK. AND THEN YOU’VE GOT THIS LOOMING DEBT CEILING. RIGHT. AND ALL OF THESE THESE CONCOCTIONS CAN CAUSE A LOT OF CONSTERNATION WITH INVESTORS. SO IT COULD BE A LITTLE BIT TURBULENT HERE OVER THE NEXT FEW WEEKS IF WE CAN GET THROUGH ALL OF THESE, IF WE CAN GET A RESOLUTION ON THE DEBT CEILING AND AND WE SEE INFLATION KEEP COMING DOWN, THEN INVESTMENTS SHOULD BE OKAY. BUT IF THERE’S ANY KIND OF TURBULENCE WITH LAWMAKERS AND THEY’RE GOOD AT DOING IT RIGHT, THEY’RE GOOD AT CREATING TURBULENCE, THEN WE COULD SEE INVESTMENTS SELL OFF AND WE’LL ALWAYS HAVE SOMETHING TO TALK ABOUT, WON’T WE? INTEREST RATES ARE ALWAYS INTERESTING. FINANCIAL ADVISOR MIKE GIORDANO