The liquidity from quantitative easing (QE) operations and the injection of funds after COVID-19 have led to a continuous rise in markets over the past 15 years, resulting in high valuations.
We are facing three problems today:
The Federal Reserve (the “Fed”) has delayed raising and cutting interest rates, leading us to expect a 0.5% cut in September.
The geopolitical situation, both regionally and globally, is not promising, which may lead investors to avoid taking risks.
There is a slowdown in the US economy, which will accelerate the pace of interest rate cuts.
At The Family Office, we do not believe the economy will decline sharply. However, there might be a soft landing for a longer than usual period given the current geopolitical situations.
We have long recommended that investors balance their investment portfolios and maintain 25% liquidity. They should be prepared for unfavorable conditions like the one we are currently experiencing. We advise investors to avoid borrowing and wait until the end of this challenging period to see how quickly the Fed will cut interest rates.
Watch the full interview above.