Why FED may not decrease the rates as expected by the most analysts?

 17^th March 2023

Why FED may not decrease the rates as expected by the most analysts?

Dear Fellow Travelers,

Namaste! It is widely expected that looking at the banking sector issues because of the bond prices – FED may reduce the interest rates. I was personally also of the same opinion till today morning. But I gave a thought to the idea and my gut feelings says that the rates will not be decreased. Why? Let us understand step by step.

What is the real issue at this juncture?

SLB and other banks have seen withdrawal and they had to sell their bonds at losses to other big banks to generate the liquidity. In last week about USD 15 billion was deposited in Bank of America. This money is nothing but people took the money from one bank and deposited in some other bank.

Assume that you have a big deposits in some banks and you took out your money – will you keep in CASH at home? You will keep that money in the strong banks or directly invest in treasuries as Buffet is doing.

If you look at the banking system point of view – the CASH in the banks is the same – whether it remains with SLB or wither it remains with Bank of America.

This means FED has no actual problem of banks. It can provide the liquidity against the bonds to the affected banks. Technically, the people will have no major problem till there is alternative to park the cash in the banks is found out. As such USA is operating CASH LESS more than the CASH. Moreover, the highest denomination is USD 100. So if you want to carry USD 1 Cr – just think how much space you will need it? I am just talking about USD 1 Cr. What if somebody wants to take out USD 100 Crs?

What is the FED’s must solve problem?

Fed has the real problem of INFLATION. They have election in 2024. If the BIDEN or the democrats wants to come to the power – they will have to deal with the inflation first and foremost.

Inflation will affects all. Banking will not affect all as the money is moving from one bank to the other. But inflation is taking a big tall of the USA economy at this point of view.

What is the Middle way for FED?

FED will provide the liquidity to the affected banks and may ask the bigger banks like BANK OF AMERICA to support the smaller banks. It will keep the focus on inflation. So, FED will try to balance the both rather than focusing on the banks alone.

As per Bloomberg report today evening – the FED is trying to inject USD 2 trillion into the system. So, this proves our theory that FED will continue to increase the rates while managing the banking system.

What was our BOLD CALL on the USA in 2015?

On 23^rd august 2015, we had written our post – the USA is burning. In the same this was said – following categorical call.

PLUTO is known as YAM in Indian language.  The most powerful planet in USA chart is Pluto. Pluto is a planet of Regeneration/ Transformation and Rebirth. It’s energy is subtle. It is in the 8^th house in NATAL CHART and in cusp chart it goes into 9^th house along with Ketu – so all changes comes with PAIN and not smoothly. Pluto was in CAPRICORN when USA was born and now also PLUTO is in CAPRICORN!! Pluto ENTERED CAPRICORN on 27^th January 2008 and it will remain in Capricorn till January 2024!! Look at the EVENTS in USA post January 2008.                       

8^th house is a house of death / transformation and regeneration. It means the USA has to die somehow – economically looks more possible till 2024.

What will be the India’s position?

We have seen that MODI Ji is steering India out of the mess with the least of the negative effect. With the state election going on and parliament election around the corner in 2024 – he will be extra cautious and he will take all the efforts to take care of the Indian economy and Indian people. Wherever possible, India is trading in RUPEE and not in dollar. This is also saving grace.

The blessing in disguise is that the biggest USA companies are opening their factories in India. This means the USA companies will also do better going ahead and Indian will also move up in economic growth.

So, I maintain India and USA companies for long term investing point of view.

What NEXT?

When we predicted in 2012 that India will be super power in between 2014 to 2032 – readers were laughing at our vision. But we are being proven right.

The same way when we said in 2015 that the USA is going towards the DEATH by 2024, people were laughing.

Now, we are in 2023. See both the country in present times and see the ACCURACY of our SYSTEM.

Remember ACCURACY is our SPECIALTY.

If you want accurate guidance – be with us.

Wish you all the best.

Follow me on Twitter @hiteshmparikh /  WhatsApp - +91-9869425399.

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Hitesh Parikh.