How to play the Fed, practically no matter what

Good morning!

‍The markets are poised for a rebound ahead of the Fed which, not coincidentally is something I posited about on Twitter after yesterday’s close – along with two specific suggestions as to how to play the situation. (Read)

Both will be up in the early going if conditions hold.

Here’s my playbook.

Stop obsessing over the dang Fed!

Do yourself a favour, stop obsessing over the Fed. It doesn’t matter whether the next rate hike is 75 or 100 basis points, whether the Fed is right or not, or even if the Fed has no clue what it’s doing.

Focus on risks you can control. Play offense:

1. Buy a 3X inverse bearish fund if you think the markets will decline.
2. Buy a 3X leveraged bullish fund if you think the markets could rally.

Oh, and turn off the volume when Powell starts talking. He’ll be a great substitute for Animal Planet.

The rise of anti-ESG investors

There’s a growing faction of investors who have simply had it with ESG investing. According to Bloomberg, the number of anti-ESG activist investor proposals has more than doubled this year. (Read)

About time – ESG is robbing YOU blind.

Corporate issuers now spend more than $1.4 million a year on average according to Protoviti Consulting. Profits that would have otherwise been in YOUR pocket.

I smell a rat. BlackRock – yeah, that company - is now being investigated for driving a political agenda related to ESG. According to the WSJ, the company stands to make hundreds of millions in fees by steering investments away from those that could earn the biggest returns to those industries favoured by ESG activists and politicians. (Read)

Reminder: Always do what Wall Street does, not what it says.

New CA law says you can’t be fired for off the clock cannabis use

Hmmm.

Investing is often about unintended consequences and the opportunities they create. (Read)

I see three:

1) Will accelerate AI/robotics adoption

2) Companies may require periodic cognitive testing as a condition of employment

3) Insurance premium changes

Trade idea -> Buy all things robotic but especially robotic vision, AI processors, and data security. Many greats on sale right now. Testing and insurance players are trickier for now, though.

The Holy Grail of modern medicine

Antibiotic and microbial resistance is one of the most significant challenges we face today, even though most people don’t give it a second thought.

The situation is now so bad that bacteria are adapting and becoming antibiotic resistant, not humans. Even more problematic, these bacteria are now causing infections worldwide.

The CDC says that antibiotic resistance/infections will cause 50 million global deaths by 2050, up from the 1 million a year it causes now. That, in turn, has created higher medical costs, lengthier hospital stays and even higher death rates according to the WHO. (Read)

A possible breakthrough. The team at Peptilogics has created a new drug capable of fighting antibiotic-resistant infections without causing defenses to evolve. (Read)

Why this matters. Peptilogics is one of a new breed of pharma companies using data to develop new medicines, not traditional laboratories. This speeds up research and allows dramatically more effective treatment.

Customizable medicine is right around the corner which is why we’re already tracking 3 companies in One Bar Ahead, my paid research: one recently overhauled pharma and two cloud-related choices.

Upgrade to paid now

Peptilogics is private for now.

Forget the Fed, there could be a beer shortage

Okay, this is serious. Brewers across the US are reporting that they’re running short of carbon dioxide, a key ingredient in beer production caused by natural contamination at the Jackson Dome, an extinct Mississippi volcano. Others are paying 3-4X usual prices. (Read)

Why this matters: The supply chain isn’t just about groceries or medicine or fuel. Critical ingredients are running short in nearly every industry, including beer. I’ve heard reports that craft breweries are struggling to keep their doors open and this report would confirm that.

Time to stock up. Beer prices have risen less than other food items but that looks to be changing.

Bottom Line

Want to understand the markets?

Watch poker. Rookies play too many hands and bet too deep.

Pros fold as many times as needed until they get "that hand" then press the advantage.

Let’s MAKE it a strong day, as always!

Keith