No, all is NOT lost

Good morning!

‍The markets are tumbling in pre-market action as I write and experts are worried that the Fed is “overdoing” it?!?!?

Where do they find these people?

The Fed always overdoes it.

People thought I was joking at the beginning of the year when I said two things:

1. rallies don’t die of old age, the Fed kills ‘em; and,
2. the Fed has already caused the next three crises.

Let’s talk about what that means for your money and what we can do about it.

Here’s my playbook.

Tape this chart to your forehead if you must

Nerves are frayed and fear is creeping in around the edges.

Take a deep breath.

We’ve been here before; people are just caught up in the moment. In fact, there are two direct parallels: 1949 and 1979.

Companies that are on the margin will fail, including some big household names. PTON, FDX, META and more we’ve talked about frequently come to mind.

Rock solid “must-haves” on the other hand will survive and prosper over time as hard as that is to imagine.

I’ll have a deeper discussion in today’s Premium One Bar Ahead™ update and Ask Me Anything’s. Upgrade to Paid Now

How low could markets go?

Zero. I don’t mean to make light of the situation, but the markets will go as low as they must until the sellers exhaust themselves.

Technically speaking, I’ve told you 3600 because that’s what my calculations suggested a while ago. Goldman Sachs, incidentally, just cut its year-end target to – ta da – 3600 while also saying that the prospect of a hard landing is growing by the minute.

If that gets taken out, the next major level is 3450, or roughly October 2020.

I will have two new trade ideas to capitalize on the chaos in Trade with Keith later this morning. Become a member now

Beat this into your skull if you must: What’s happening now has nothing to do with the underlying economics of our world and everything to do with how much leverage is in the system.

COST

The company beat revenue AND profit estimates. Yet, shares are down 3% in pre-market trading.

You know what to do.

This is not a company that’s failing. Fiscal Q4 revenue rose 15% to $72.10B versus analyst estimates of $72.04B. Comparable sales jumped 13.7% while e-commerce tacked on 7.1%.

Putin: Excuse me while I whip this out

Of all the things roiling headlines, this is THE most serious.

I’m not trying to ruin your day, but I have to think about this kind of stuff – the nature of what I do for a living dictates that.

Putin is a caged animal who, by all reports, may also be fighting serious illness, dementia and more. His inner circle continues to die of mysterious means even as his citizens revolt.

The financial markets will go into meltdown if he whips out a nuke, even tactically. Buying a few SPX, QQQ puts is the move here because, frankly, there is not a whole helluva lot you can do otherwise.

The downdraft will be the worst in financial market history because of all the computerization and leverage.

However, it will also be the buying opportunity of the century when the algos kick in, assuming we’re not a smoldering pile of ash.

Meanwhile, I suggest you print your most recent financial statements because nukes release something called an EMP which will wipe out electronic records if they are not protected properly.

Let’s hope that cooler minds prevail.

Pichai says cool it on holiday parties

Normal people are struggling to make ends meet. One data point I saw recently suggests that 75% of Americans are altering financial plans, delaying retirement, and having trouble putting essentials on the table.

Yet, apparently Google employees are heated because CEO Sundar Pichai told ‘em to dial back expectations for holiday parties during what is being described as a “heated” all hands meeting this week. (Read)

Sigh.

Bottom Line

Anybody who claims to be a long-term investor but who is not bullish on big tech, in particular, at these levels is either lying to themselves or delusional.

Let’s finish the week STRONG!

You got this and I am with you every step of the way.

Keith