Hey There Income Hunter,

The much stronger jobs report this month plus new remarks from the Fed and Treasury have set up a “Big Flip” narrative that suggests labor inflation is entrenched. 

This narrative has investors believing that sticky inflation will force the dollar and interest rates higher and the Fed will continue to raise rates for longer. 

I disagree with the consensus narrative.

That’s not surprising to #IncomeHunters because I never believe the messages that Jay Powell and Janet Yellen send to the markets.

That’s one reason why Option Pit is here – to cut through the noise for you. (Hat tip to my colleague, resident DC and Wall Street insider Frank Gregory for that one.)

With a monster week ahead of us you need to watch the key signposts for tradable ideas.

The Unemployment Rate and US Budget Deficit

When unemployment is at all-time lows and the Treasury is issuing more bonds to fill a widening  budget deficit, the dollar rises.

Watch out.

Just last week the dollar (DXY) rose 3%. 

Higher rates, higher deficits and higher inflation are a brutal combination for the global economy … 

You will not hear the truth from our policymakers but the have to make a critical choice to address this gap. 

The choice for policymakers is not between high inflation or low inflation.

It is one of …Higher Inflation or a Dysfunctioning Treasury Market (UST).

Three times in the past three years the UST market has stopped functioning properly … and each time the Fed and Treasury had to inject money into the markets and engineer a weaker dollar to address it.

The path ahead for markets is incredibly important to understand so you can stack  enormous profits

What’s Ahead
The narrative of growth picking up and the Fed raising rates for longer is nonsense. 

The Fed will now become a side-show with very little impact on the market for the time being.  

The US fiscal situation of higher debt issuance, lower tax receipts and a dollar debt ceiling crisis is now taking center stage.

Janet Yellen now becomes the most important policymaker in America … 

Yellen must engineer a lower dollar to keep foreign UST demand strong. 

Here Is Their Plan

Tweak the methodology for CPI so inflation appears to come in softer than expectations in the next few months. 

This will allow Powell to declare victory, helping Yellen engineer the lower US dollar needed to keep foreign UST demand high, which in turn drives higher US asset prices and – most importantly – higher tax receipts, which narrows the budget deficit. 

Now Plan the Trade

This will be bad for the USD and good for gold/silver and the miners, energy commodities, tech stocks and Bitcoin (for a while).

We must remain patient since the narrative can drive prices for a while longer. 

Email our team for my preferred pay in GOLD today – at no cost.

However, the only other choice for policymakers is an economic crisis more severe than 2008 – with a market reaction worse than 2022.

I am willing to bet our political leaders will opt for surrendering the dollar and living with higher inflation … 

I’m going live for members of my Power Income Trader at 10 a.m. tomorrow. Get in now to join us.

Live and Trade With Passion My Friend,

Griff