Today is one for the history books. The fed announcement is over and no matter what happens now we are going to be set up to win.
We have been slowing down the market and getting into trades that not only are profitable, but secure! Trades such as RDFN, DB, AG and so many more really fall into a category I call ‘Fed independent.’ We have been positioning ourselves for quite some time leading up to the announcement so we can sit back, relax and relish in our profits.
Lately, people have been buying their wants but we are starting to see that change quite a bit. Retail sales are down .3% which means a lot of analysts missed their mark by.5%. this is because for the last we months Cash in hand has been very easy to get because the feds have been just giving it away in the form of low interest rates.
Once the announcement drops this will likely change. People will stop buying for pleasure and being comfortable just paying for things later and start buying out of necessity.
There are 5 at risk retailers that I have on my radar moving forward and I can already feel that they are going to be taking quite the hit in the coming weeks
Please, im telling you to heed this warning, Jerome Powell’s job is to squash the housing market and when successful will really be digging into those shares of HD and LOW because buying homes will be much less cost efficient.
Along with that A company like Amazon is able to take the things you WANT and have them sitting on your porch in some cases the next day! Everybody loves a shiny new piece of machinery from best buy but do we really NEED a new computer? Does your Teen really NEED their 95th pair of $80 Jeans?
I love new things just as much as the next but things will be changing, and changing in a hurry, I can feel it in my bones.
Although today seems scary in a close up view when we zoom out we start to recognize that Jerome Powell is giving us the best thematic investing scheme we have seen since 2010..
The Economic train leading up to today has been slowing more and more and it’s seeming to start rolling back and really this summarizes J-Pows job. His job in a nutshell is to bring down a few sectors which I will get to soon and slow the markets to battle inflation which historically, whether intentional or not, drives us into a recession.
As promised there are really just three sectors we need to be watching:
The first is bonds. These are the smartest traders in the room and really have their fingers on the pulse of what is going on.
Secondly, Equity’s, they are going to start to drop because they see the bonds going down and there are cracks in the foundation of the rally.
The last to come down and confirm you are really in rough waters is the commodity’s market and we are already starting to see some of that right now. That what they are trying to do, SLOW IT DOWN. That’s the only tool we have to really combat inflation.
For example XLB, look what happened as soon as there was even rumors about a 75 basis point increase to rates. We are a HUGE drop and created a target rich environment for all of you joining me here today in what as of recently had been primarily sideways travel.
Days like today I may seem like a laid back person who can just look at the markets and find the right trade at the right time but in my eyes we are on a hunt and that means that we are always searching and when we see big moves like this I smell blood in the water now we have to be ready to strike no matter how the markets move.
It’s really the reason I’m happy that I have you all to bring along with me, it gives me the chance to shed some light on what is going on. Only two days left so make sure you join me for the rest of my free week starting at 9:30 where I get the chance to talk with you for a full 90 minutes.
Quantitative Specialist, Penny Hawk
June 15 2022