Hey There Income Hunters,

A wild finish to last week’s trading was fueled by rumors of an imminent Russian attack on Ukraine and an emergency Federal Reserve Board of Governors meeting today.

Both are important, however, the Fed meeting, held under “expedited procedures” will have a more immediate impact on the US markets.

It’s expected to go down today at 11:30 a.m. and will include, “Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks.”

No doubt it will be a Valentine’ Day to remember!

The timing of this meeting comes in immediate wake of the 7.5% headline CPI reported last Thursday.

Now the Fed could either …

• • • Raise its overnight Fed Funds rate .50% to expedite their rate hiking process.
    • Or announce its monetary normalization plan (rate hikes and QT) after the closed meeting today, then wait for the March 16 official FOMC meeting to give the details.

In either case, the Fed is revealing its urgency to slow the economy and keep pressure on stocks, which together could help it achieve the goal of reducing inflation.

Hopefully many of you participated in the Power Income Trader Live event on Thursday evening and jumped on the two trades Andrew Giovinazzi and I gave out because they took off on Friday.

It’s not too late to get on board.

Big moves are coming in the weeks ahead and these trades will maximize your returns.

Today, we’ll take a look at the key market moves from Friday and how the Fed’s decision may impact them – and you.

Let’s get this week started.

CFD contracts on Physical Gold (GOLD)

Gold broke out to the upside on Friday, but then fell back below resistance at the close.

 

If it can take out and close above the 1880 level this week then the inevitable moonshot I am looking for will have begun. 

On the other hand, if prices fail and signal a fake breakout then we could head back down towards support at 1780 – and I would set up a short term bear strategy. 

Crude Oil Futures (Ticker: CL)

 

I continue to be bullish on oil in the long-term, but I see resistance up against the upper channel of the rally since July 2021. 

 

There has also been a series of RSI/price divergence patterns, which historically can be a signal for an imminent trend reversal …

 

However the Russia/Ukraine geopolitical risk has kept a strong bid in oil and I am looking for an opportunity to establish a bearish strategy for a move back to $85. 

 

 

The Proshares Ultrashort US Oil ETF (Ticker: SCO) is an efficient ETF to play a short-term correction in oil. 

 

Growth Forecast for Q1 ‘22

 

The most important data point for Q1 is GDP. If growth does not pick up substantially this year as the reopening trade gathers steam, then the Fed will never be able to tighten enough to slow down inflation. 

 

The funny thing is that the Fed themselves are calling for much slower growth in Q1 ‘22 from Q4 ‘21. Notice the Atlanta Fed’s now cast for Q1 GDP is actually below 1. 

 

Atlanta Fed’s Q1 ‘22 GDP forecast versus Wall Street

 

If GDP falls below in Q1 while the Fed is raising rates then there is a good chance we see recession on Q2 ‘22.

 

So, no matter what the Fed does today, as long as it goes ahead with tightening in February or March we are headed for recession and much lower broad stock market prices. 

Bring It Home

 

We will see wild volatility in the months ahead as the Fed and US government attempt to move forward with rate hikes and QT.

 

It is inevitable that rate hikes will hit the economy hard and force the Fed into other policy changes, including reinstating QE to buy bonds and force yields lower.

 

Yield curve control allows the Fed to monetize debt, meaning the central bank buys as many outstanding bonds as necessary to hold rates at artificially low levels to eliminate the risk of high rates causing a debt crisis. 

 

Once the Fed announces YCC and is fully monetizing the debt, the government is then able to inject unlimited amounts of money directly into the economy. YCC removes the risk of a spike in interest rates that would normally occur due to a substantial rise in money supply.

 

You can see the potential for plenty of Fed action and endless opportunities for low risk/high reward trades.

 

Andrew and I will be giving Power Income Trader members plenty of trades to capitalize on the Fed moves every step of the way …

 

So, if you want to stack profits as the Fed attempts mission impossible then join Power Income Trader today.

 

Live and Trade With Passion My Friends,

 

Griff