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Keep it on the fairway

Feb 11, 2022

Good morning!

I’ve said repeatedly that the Fed had better get a grip on things or the market would take matters into its own hands. They didn’t and now it is.

Here’s my playbook.

1 – The Fed has already caused the next 3 crises

There’s lots of discussion at the moment that the Fed may make a “policy mistake” that roils markets. Excuse me for being blunt, but they already did. (Read)

The Fed-funds futures now point to an 87% chance that Team Powell will raise rates from near zero where they are now to 1.75% by year-end according to CME data. Again and … ahem … the 10 year is now holding above 2% as I type.

I continue to believe the first hike will be at least 50bp or 0.50% in plain English. Perhaps more.

You’re running out of time if you don’t have hedges in place.

I’ve suggested several over the past few months to the One Bar Ahead™ Family including two super-simple, yet blisteringly effective choices. Along with a few VIX related options for good measure.

Russia nor China aren’t exactly playing nice right now either and it’s not a stretch to imagine either piling on at the moment.

2 – Keep it on the fairway

My friend the fabulous Mark Tepper, CEO of Strategic Wealth Partners, put it succinctly the other day when it comes to navigating current market conditions, “keep it on the fairway.”

I agree and very strongly at that.

Now is not the time to take huge risks that could see your money end up in the bunker or worse, totally out of bounds!

Be ultra-selective.
Have trailing stops in place and don’t look back if they’re hit.
Own low-beta stocks, preferably those with high dividends because history shows they’ll fall less, stabilize faster, and recover more quickly.
Make sure you know what to buy when companies you may have missed last time are put on sale.

If you’ve got this covered, awesome! If not, I’m here. (Learn More)

3 – Somebody’s getting fired

Shares of Affirm, a popular buy now pay later stock, dropped 21% after somebody apparently tweeted the company’s Q2 results ahead of schedule. Don’t know that it matters much at this point … the markets didn’t like what they saw. Shares are off another 10.4% in pre-market action. (Read)

Undoubtedly many will bet on a quick rebound but I won’t touch that bet under the circumstances even if there is one. The game’s changed.

4 – Zuck – Why didn’t I think of that??!!

Twitter missed analyst expectations, but shares fell only 2% during trading in contrast to other companies that have stubbed their toes this earnings season … cough, cough … like Affirm. Newly seated CEO Parag Agrawal announced a $4 billion buyback that the Twitterotti liked. (Read)

Might be good for a quick trade but tread lightly, it’s got to be counter-trend to broader markets if you pull the trigger.

5 – It’s the future, or so they say

Samsung held what I think may be the first launch event in the metaverse. The event took place in Decentraland, a cryptocurrency-focused virtual world and was intended to launch the newest Galaxy.

One problem … virtual people couldn’t get into the virtual building called 837X that the company designed to replicate its flagship NYC experience center.

CNBC reports that “users were getting their avatars to jump on other people’s heads as they clambered to the front of the queue” and that didn’t help. (Read)

I can hardly wait – sigh.