To The Moon

$iShares 20+ Year Treasury Bond ETF(TLT)$  

"Interest rates, set by central banks like the Federal Reserve, play a crucial role in shaping economic conditions. When the Fed cuts interest rates, it reduces the cost of borrowing, which has a broad impact on the stock market and the economy as a whole. This presentation explores the effects of falling interest rates on different asset classes, including stocks, bonds, and real estate, as well as their impact on consumer behavior and corporate borrowing. We will delve into key concepts such as the ‘wealth effect,’ discount rates, and how rate cuts influence market expectations. Through real-world examples like the performance of the iShares 20+ Year Treasury Bond ETF (TLT) during 2024, we’ll examine how investors react to rate changes. Additionally, we will look at historical case studies, including the 2008 Financial Crisis and the rate cuts of 2019, to better understand the immediate and long-term consequences of changes in monetary policy. By the end of this presentation, you’ll have a comprehensive understanding of the relationship between interest rates and the stock market, and the various factors that come into play when rates are adjusted."$iShares 20+ Year Treasury Bond ETF(TLT)$  

What are Interest Rates?

"Interest rates represent the cost of borrowing money and are a key tool in monetary policy used by central banks like the Federal Reserve. They influence everything from mortgages to corporate loans. For instance, a 5.33% interest rate means that borrowing $100 would result in an interest payment of $5.33. When interest rates rise, borrowing becomes more expensive, which typically slows economic growth as businesses cut back on investment and consumers reduce spending. Conversely, when rates are lowered, borrowing becomes cheaper, spurring economic activity. The Fed uses interest rate adjustments to maintain economic stability by managing inflation and employment levels. There are three main actions the Fed can take with interest rates: raise, decrease, or leave them unchanged. Raising rates helps cool an overheated economy, while lowering rates encourages borrowing and investment during slower economic periods. The Fed’s decisions on interest rates are closely monitored by investors, businesses, and consumers because they affect everything from stock prices to the broader economy. As we move through this presentation, we'll explore how these rate changes impact different sectors of the market and the broader economy."

tlt is one of the ETFs benefiting from the rise 

Slide 3: Recent Interest Rate Trends

"Interest rate trends are crucial in understanding market dynamics. Since the Fed's first interest rate cuts in July 2019, central banks globally have been adjusting rates in response to economic pressures such as inflation and global trade tensions. A significant increase in inflation prompts the Fed to raise rates, slowing down borrowing and, consequently, spending, to keep inflation in check. On the other hand, when economic growth stagnates, or a recession looms, the Fed cuts rates to make borrowing cheaper, encouraging businesses to invest and consumers to spend. From 2020 onward, the global economy has faced unprecedented challenges due to the COVID-19 pandemic, prompting central banks to keep rates at historic lows to support economic recovery. As of 2024, the Fed has been signaling a series of rate cuts to address slower inflation and weaker growth forecasts, leading to widespread speculation in the stock and bond markets. Market participants anticipate that lower rates will drive corporate earnings higher, particularly in capital-intensive industries such as technology and real estate. This trend has led to a positive market response, especially among growth stocks and long-term bonds, as lower borrowing costs translate into higher future profits."

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