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The Fed is STILL wrong – and here’s what to do about it

Sep 19, 2022

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Friday’s selling means retest of June lows

Buckle up, the markets could test June lows. The markets failed to hold 3,900 last Friday – a key level I shared with you right here over a month ago as being the last line of defense. That means 3,600 or so is the next stopping point, probably by mid-fall.

I made my case this morning ahead of the opening bell with the fabulous Stuart Varney on Fox Business (Watch)

Trade Idea: Buy inverse funds but also puts and specialized spreads like the one I’ll be sharing later this morning with the One Bar Ahead™ Family. Upgrade Now

At least 75bp but 100 may be in the cards

Recession is now a near certainty even though some continue to believe in soft landing fairy dust. Would somebody please tell the President that self-congratulatory headlines, aviators and a tanking market are not cause to celebrate.

I believe the Fed may be foolish enough to bump rates 100 basis points, not just the 75 “everybody” knows is coming.

The markets support that. Futures suggest an 18% (and rising) possibility of a 100-pointer as I type, up markedly from the 75bp everybody else thinks is in the cards.

Trade Idea: Long rates, long volatility, short bonds.

Time to pick the winners: digital currency

The US said it was time to explore a “central bank digital currency” last March.

Too little too late. According to the Atlantic Council nonpartisan think tank, 105 countries representing more than 95% of global gross domestic product already are exploring or have created a central bank digital currency. (Read)

My favorite banking stock is likely heavily involved in the research and creation of the digital dollar. It’s in the premium One Bar Ahead™ model portfolio, which you can find in each weekly update or monthly journal.

Shares are trading at a significant discount if I’m right, BTW.

World’s hottest housing markets heading for a reset

Brace yourself if you purchased a home within the past 12 months. The world’s hottest housing markets are heading for a major reset as rates rise. (Read)

Now’s the time to seriously rethink housing stocks if you have ‘em – and I sure hope you don’t given how much we’ve talked about this and for how long now.

Short/avoid airlines; here’s why

Inflation continues to rage and many companies are rethinking their travel plans. The new mandate isn’t business class on long-haul hops but rather “go coach or don’t go at all.” (Read)

I expect that to put a serious dent in airline stocks for the simple reason that airlines make bank on business class travelers (and cargo).

Trade Idea: Sell your airline stocks and buy Amazon if you’re into cargo. FedEx isn’t going to cut it. Better yet, take that money and use it to get “short” the indices for reasons I just mentioned above. I’ll have details later today in the One Bar Ahead™ weekly update.