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Could the Fed kill the rally?

Nov 01, 2021

Good morning!

Stocks are flat today ahead of the Fed which is as logical as it is frustrating.

Here’s my playbook.

1 – Rallies don’t die of old age, the Fed kills ‘em every time

Team Powell is not expected to raise rates from zero – which is stupefying all on its own – but merely to announce a taper this week. The key is how fast. Right now, the plan is to reduce Treasuries by $10 billion and mortgage bond purchases by $5 billion a month in a plan that starts this month and ends next June. If they lay out a plan that is faster, this is going to be a signal that rates go up, inflation is worse, and the Fed has lost the plot (again). It would also hammer your wallet.

Watch my take with Stuart Varney just ahead of today’s opening bell.

And, here’s a great primer (Read)

Make sure you own inverse funds ahead of time and have your trailing stops in place if it gets nasty! I’ll have the latest in today’s One Bar Ahead™ update! (Not a member? Get yours now)

2 - What else can I buy besides stocks?

Crypto prices have risen yet again after a healthy October rally. Ethereum is also on a tear and is now trading at $4,335. Hope you’ve got some and you’ve been following along. (Read)

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3 – Moderna shellacked

The US FDA is reportedly delaying their decision on Moderna’s adolescent vaccines over concerns related to the small risk of heart inflammation. It is an exceedingly rare side effect risk according to various medical sources but still … investors have hit the sell button. I think it’s overdone. (Read)

Selling puts to capitalize on chaos may be a great (and smart) move here.

4 – That’s What I Like

Coca-Cola just announced that they’ve bought full control of Bodyarmor, a sports drink maker, for a whopping $5.6 billion – Coke’s biggest brand acquisition ever.

The only problem I see?

There are no new drinkers left, and companies are just fighting over who drinks what. It’s a great move that builds upon the company’s initial acquisition buy-in in 2018 when it purchased a 15% stake, but still a sign of the times. Pepsi is still the leader in sports drinks with a 70% market share.

Coke’s playing catch up; I’d rather own Pepsi at this stage of the game. (Read)

5 - Mess with the bull, get the horns

The head of the UN’s World Food Programme, David Beasley, said that just 2% - roughly $6 billion) of Elon Musk’s wealth could solve world hunger. Musk called him out saying that he will sell Tesla stock right now and do it if a) WFP can explain exactly how $6 billion solves it and b) there’s open source accounting so the public can see precisely how the money is spent.

And in response … crickets (from Beasley) … (Read)