The Giant Exxon Sign That Brings This Fair City Light …

Hey There Income Hunters,

 

I owe it to The Boss, Bruce Springsteen, at least in part, for my nice ride with Exxon.

 

Let me explain …

 

I’ve seen Bruce probably 25 times and I always look forward to hearing him perform “Jungleland” live …

 

I’ll never forget my first concert in 1976. My father’s friend gave us backstage passes at the Palladium, a small theater in Manhattan. I was 15 at that time and seeing Bruce up close was incredible … but what I remember most is “Jungleland” and Clarence Clemons playing the most beautiful saxophone solo you’ll ever hear.

 

Since then I’ve always been ready to sing that one line that sent chills down my spine, “They’ll meet ‘neath that giant Exxon sign/That brings this fair city light.”

 

Live, Bruce will always belt out those lyrics with his fists to the sky …

 

Now, regarding my trading, about three months ago I decided to hold a core long position in energy stocks into the summer. As I started going through the group and came to ExxonMobil (Ticker: XOM), I put the rest of the reports down and have stuck with the Tiger the whole way.

 

It got a bit frustrating watching oil rally relentlessly while the energy producers chopped around. But now it’s time for the producers to reap the rewards of their hard work.

 

ExxonMobil (Ticker: XOM) Reports Better-Than-Expected Q1 Earnings 

 

Exxon reported earnings on April 30 — and was a day I was looking forward to …

 

Exxon had been doing everything right during the slowdown. When the going got tough during CVID, Exxon got even tougher. How? The company …

 

      • Reduced costs
      • Paid down debt
      • Increased free cash flow to ensure coverage for dividends
      • Repurchased shares to return value to shareholders

 

These improvements led to a killer Q1:

 

  • Revenues were $59.15 billion versus a $56.4 billion estimate

  • Earnings per share were $.05 above estimates

  • Oil production was up 3%

 

It's off to the races in Q2!

 

Now on to what I believe is the next commodity to soar — silver — and the way for you to play it.

 

Kill It in Silver by Trading Around A Core Position

 

Right now is the time to get on the “Silver Bullet Express.”

 

In the chart below, we see silver trading above all three moving averages. (That’s the 14-day exponential MA and the 50- and 200- day simple MA.) When you have a setup like this, the risk/reward is heavily in our favor. 

 

 

When we have all three compressed together like this. we get a sharp move away from the area. So the conservative play is to get long right here with a stop below the 200-day MA at $25.50.

 

Alternatively, we can go with the 6-1 reward-to-risk 25/35 Jan-21, 2022 call spread. I think this is the trade to really get the bang for our buck.

 

 

Check Out the Stats on this Trade

 

We risk $170 to gain $1,000 if SLV closes above 35 by January 21, 2022. I believe SLV will easily be above $35 by then.

 

The vertical option strategy is the formula for success with commodities. Allow me to explain.

 

The call spread, which is a vertical option strategy, is a pair — long and short.

 

      • We are long the 25-strike call and short the 35-strike call …
      • Assuming we hold the trade through expiry, only three results can occur …
        • SLV can settle below 25, in which case we lose our initial debit amount ($170) …
        • SLV can expire in between the two strikes, in which case, our accounts would be credited with the difference of the final settlement price and the 25 strike. For instance a close at $27 means you are credited $200 …
        • The final settlement price is above $35, in which case, we would be credited the maximum payout of $1,000 so our profit would be $1,000-$170 = $830.
      • The other option is your ability to close the trade at any time prior to expiry, in which case, depending on the date, you would earn a portion of the amounts shown under the scenario of the hold through expiry. Here’s an example:

 

 

Check out silver’s moonshot out of a similar setup in 2009 …

 

 

Now take it a step further … 2022 is going to be another year of high inflation. So, put a second call spread leg on Jan 2023 to capture the more explosive move in the second year of the bull market in SLV. Look at these numbers:

 

 

Now you have a 14-1 reward-to-risk ratio on your side.

 

Not many people believe this type of move is in store for the market, but I fully believe it is.

 

I’m not being cocky, it's just that these markets will be driven by the global macro forces that I talk about in Power Income every day.

 

Bring It Home

 

The consensus narrative is driven by the Fed, the banks and the Wall Street government — who never reveal the true picture …

 

And they will continue to hide the fact that the Fed intends to keep printing money until their debt is reduced at citizens’ expense.

 

As #IncomeHunters, we need to rise above the fog of war and get out in front of the money flow. Once the institutions wake up to what’s really going on — and I think they are getting close — it will be hard to chase the markets higher.

 

The chart below shows the true opportunity ahead of us: commodities are at the very beginning of a multi-year bull market.

 

Chart via SilverChartist.

 

It’s time to get set up for the ride of a lifetime. As always …

 

Live and Trade With Passion My Friends,

 

Griff

Introducing the Blockchain Network of the Wooorld

Hey There Income Hunters,

 

Let’s Get Ready to Rumble!

      1. First came the internet — the leap that allowed information to go from pen and paper to digital form with immediate delivery …
      2. Then came the growth of the web for e-commerce…
      3. Now, get ready for blockchain and its ability to deliver paper assets anywhere at any time …

Unfortunately, the U.S. is NOT driving this digital revolution.


As a matter of fact, President Biden never even mentioned it in his State of the Union speech. (We’re very woke, though!)

Still, the blockchain network will accelerate a globalization process that connects digital economies of the future.

Here’s the big question … What does the U.S. do when China increasingly assumes control? Will we rollover? Dig in?

Expect a clash of the titans, no doubt.

Our problem currently is we don’t have a viable team that can compete…

We are giving it a shot with the “Five Eyes” alliance (U.S., U.K., Canada, Australia and New Zealand).

However, New Zealand is already negotiating agreements with China. (And reaping HUGE trade rewards while neighbors Australia suffers.)

Blockchain, a genius interconnection of distributed ledger technologies, WILL change the world and allow for tremendous global growth …

Let’s dive into a few details…

Blockchain-based Service Network (BSN)

The architect of the BSN is Red Date Technology, which is not public yet. They have been working with China Mobile, China Union Pay and the State Information Center of China to create a plug-and-play for siloed blockchain networks to work in conjunction with each other

That’s a simplification, of course, but it is revolutionary progress in such a short time.

I’ll paraphrase how they describe it …

Outside developers can use a single private key to deploy and manage decentralized applications (dapps) on multiple frameworks and to realize interconnectivity and mutual communication between dapps. Within this process, each framework retains the unique feature of its own smart contract and consensus mechanism.

Supposedly it will be as easy as filling out a form online and users can select a smart contract from the BSN.

One US company involved is Nasdaq-listed Interlinks Electronics (Ticker: LINK).

Accelerating the Rollout

BSN will utilize a multi-cloud architecture utilizing services that include AWS, Microsoft Azure, Google Cloud, Baidu Cloud, China Unicom, China Telecom and China Mobile. The BSN launch will allow companies to access ultra-low cost blockchain cloud computing services.

Target pricing is less than $400 USD/year, which would allow small/medium enterprise and individual access to the critical tools to participate in the digital economy.

A Top-Down Approach

I understand Americans’ distrust and skepticism of anything in which China is involved …

However, this is the game changing initiative that will drive the new monetary system 

As #IncomeHunters we should put the why secondary to the where … 

Where is the money flowing?

We are at the beginning of a digital revolution — and if we “follow the money,” we will make easy money.

It’s early days, but ChainLink has the potential to be the next 100-bagger …

That is a positive for the likes of Baidu (Ticker: BIDU) and also JD.Com (Ticker: JD), a leader in the digital electronic payment race. Obviously, there’s a lot more work to be done — but I wanted to alert you ASAP.

China has made this a national priority. Beijing sees blockchain as critical to securing databases linked by 5G to scalable cloud and data management infrastructures that big data/AI analytics can efficiently run on top of …

And it’s not just a vision — it’s in motion.

Bring it Home

My question remains …

Will the U.S. play nice and accept a new role in a digital global economy?

Or will we go to war (metaphorically, at least) before we’re willing to hand over the reins of global supremacy?

Only time will tell. But we know one thing we know for sure … 

There will be a ton of money made along the way.

Stick with me and we’ll make it together.

Keep the comments and feedback coming and as always …

Live and Trade With Passion My Friends,


Griff


 

Silver & Gold Finally Join the Inflation Party…

Hey There Income Hunters,


The cool people always show up to the party late … 


And I guess since silver and gold have been around for thousands of years and they know what’s up.


Because after a fashionable delay, they’re now ready to get on down with inflation.


More on that inside today.


*****

The craziest thing happened yesterday … My brother called and said his son and his friends all got additional paycheck protection program (PPP) loans. The place doling them out was called Blue Acorn and it was all done online and approved in 15 minutes.


They were all approved for between $5-10,000 and, get this, if they didn’t have the “required” paperwork, they could give Blue Acorn a rough idea of their gross and net income and there was a “special form” they would be approved on … 


The point is, with unprecedented money flow, it is SO easy today for anyone to get cash.


And, folks, this inflation party may last a while.


I’ll put it this way … if the Fed were a rock group, it would definitely be Bruce Springsteen and the E Street Band.


I mean, the Boss doesn’t leave the stadium until every single fan is satisfied … 


So someone get Fed chair Jerome “J-Pow” Powell a leather jacket — while we sweat it out on the streets of a runaway American Dream.


*****

  • Also today I have something I want to share that will reveal why the Fed’s “official” inflation numbers have been so far below inflation that consumers actually experience…

  • AND I have a couple of Silver miners trading in single digits that could be 5-baggers by the end of 2022!


CPI Held Down by Rental Income


First, let’s run through a few #facts:


  • Inflation expectations are at 10-year highs

  • Agricultural prices are at cycle highs

  • Lumber is insanely high

  • Same for rental car prices


Yet core consumer prices that make up the Consumer Price Index — the only index that matters for Fed policy — hasn’t done much.


How could that be?


Well, this isn’t the first time I’ve told you …


The Fed changes the rules to suit its own agenda.


This time they are using shelter — meaning owner-equivalent rent — to act as a discrete depressant on reported CPI growth.


You see, shelter CPI, which makes up 32% of the overall CPI basket, has been coming in at around 3.5% for many years — but in the last year it has dropped to about half its normal rate.


Check this out:



Look at the methodology described right on the Q&A section of the Bureau of Labor Statistics website…


Question: How does the CPI handle forgiveness, reduction, or nonpayment of rent in its shelter indexes?


Specifically, the respondent is asked:

How much rent (are you/is the tenant) paying for this (house/apartment) now?

Be sure to probe these situations to determine if any rent obligation will be forgiven.

  1. If the landlord expects payment in full, regardless of when, enter the full rent amount that is due.

  2. If some or all of the rent is being forgiven, enter the amount the landlord/manager has agreed to accept.

  3. If the rent is not paid or not expected to be paid AND the landlord/manager is unsure about the future, enter $0.00.

Can you believe that!?

Basically, a landlord’s expectation of rent collection directly impacts the calculation of reported rent/inflation … even though rent is directly impacted by pandemic related eviction/rent moratoria …

Now, this will reverse out at some point and have an immediate and meaningful impact on inflation — and an acceleration could create a serious shock to the headline numbers …

For instance, A recent New York Fed survey of consumer expectations 1-year out shows a 9% rise in rent prices.

This sort of thing can’t help but change investors’ opinions about inflation.

I’m convinced that if we get a 2.8% or 3% CPI number when it’s announced next week, commodities and the metals will go much higher still — which is good news for Income Hunters who are long gold and silver.

Digging These Miners

I have two silver miner stocks that I’m high on today. They are both royalty and streaming companies, which I think are the best structures in which to invest.

The benefits of a royalty structure include:

  • The ability to make a single upfront payment and gain access to the entire stream of the mine’s revenues.

  • A simple ownership agreement that is non-dilutive to the royalty company, whose royalties will always come off the top.

  • Owning the royalty is free of carry — you own the assets with no costs.

  • Royalty companies provide diversification across geographies and mines.

Streaming differs from the royalty structure because the streamer gains the right to buy into the mine at a discount to fair value.

First up …

Metalla Royalty and Streaming Ltd. (Ticker: MTA)

MTA is a Canadian royalty company. Canada is mine-friendly and also provides diversification away from U.S. dollars, which adds protection to the dollar devaluation. MTA has done 20 transactions, providing them with 68 precious metal assets…

Their most significant exposure is to silver. They have six mines currently in production

Founder Brett Heath has consistently proven himself to be the real deal. He’s been in the royalty business for more than a decade wields a deep understanding of the business.

The chart below illustrates an excellent entry point for buying a core position on MTA …

I’ve purchased a core position and will trade 30-50% of it because, as you can see, miners provide decent price volatility …

I like this setup due to MTA’s deep correction from $13.50 down to $8, plus there’s an upward sloping 200-day moving average and the 50-day MA is curling back up as well.  

I purchased a stake just below the downtrend line and will add on a breakout above. Either way, I will use a stop-loss below the 50-day MA and raise my stops as the market rallies.


Nova Royalty (Ticker: NOVRF)

The second company is Nova Royalty. What I love about them is they have built a portfolio of royalty projects exclusively in copper and nickel.


Brett Heath from MTA is on the board of directors and CEO Alex Tsukernik has more than 15 years experience in metals and mining finance — together they form a strong leadership base.


Nova buys royalty from prospectors who discovered the mining deposits — and has the benefit of the entire stream of revenues for the life of the mine.


NOVRF doesn’t have any operating costs, capital expenditures or capital commitments. They are free to focus 100% on growth …


I also really like the access I get to nickel and copper. The supply/demand dynamics are so beneficial for these two metals and investors are able to get in at very good value right now.


Although they do not currently have options, NOVRF plans to list on a U.S. exchange in the future.


I’m purchasing a few hundred shares n and will put them away because I don’t currently have any exposure to copper or nickel.


I will purchase shares at the market and add once it clears the 200-day moving average. I will put a sell stop below $2.85 and then use a 10%, 12% and 15% trailing stops along the way.



Bring It Home


We are entering a 6-8 year bull market in commodities and metals and as the dollar gets weaker, we are better off measuring the value of assets against gold.


Right now, the Dow is 19 TIMES more expensive than gold historically. In 1980 they were both trading at $830 — a 1-to-1 ratio!


Chart courtesy of Silvermetalist.com 


I think we have a two-month window here before many more institutional investors realize they need to allocate more of their capital to precious metals.


I will continue to find more producers and royalty companies that have excellent management teams and diversification.


Getting on this trend and riding it to maturity can set you up with a great quality of life no matter what happens next.


Have a great day and as always …


Live and Trade With Passion My Friends,

Griff

J-Pow is the Fed-boy who cried wolf…

Hey There Income Hunters,


It’s awesome to turn the page on April showers and enter into the transitory period of May flowers.

However, before we get to the there, we have a bit of a storm to deal with next week as investors must absorb an all time record in the quarterly 3-year, 10-year and 30-year treasury bonds … 

And  in the middle of bidding for all that supply, the Bureau of Labor Statistics (BLS) will report what will likely be the highest Consumer Price Index (CPI) inflation number we have seen in years. (That will be announced on May 12.)…

But the inflation that’s coming will be anything but transitory.

And it’s not hallucinatory, exaggeratory or even inflammatory.

What it is … is here to stay.

On Friday, even the Fed’s manipulated inflation statistic — the personal consumption expenditure (PCE) was 2.3% — officially over the central bank’s inflation target of 2%.


The key now is the “10-year real rate or return,” meaning the 10-year rate minus the  inflation rate as measured by the consumer price inflation (CPI). Gold tracks the 10-year real rate very closely that is why it is such a powerful indicator…

As the real rate moves further into negative territory, silver and gold prices will rise — and last week the technicals in gold turned positive … 

Today I want to share two very important pieces of information that can help you in the days ahead:

  • My iShares 20 Plus Year Treasury Bond ETF (Ticker:TLT) short versus gold long is killing it and I plan on adding early this week …

  • There is also the top Gold miner stock reporting earnings this week … A major buy signal has also been confirmed with a doubling of the stock expected within a year while also collecting a 1.75% dividend …

There is also the top gold miner stock reporting earnings this week … A major buy signal has also been confirmed with a doubling of the stock expected within a year while also collecting a 1.75% dividend.


The 10-year Real Rate/Gold Relationship

 In two weeks, we could see the real rate go back below -1% …

That’s notable, because the last time it was there, gold was above 2,000 — and I think it will take out that high by the end of June.

The final big test for gold since it moves with Treasury Bond prices is getting through the next couple of weeks of record supply in Treasuries just as the CPI number is reported… 

You see, Gold and the 10-year real rate of return both track inflation… However in this cycle inflation is a much stronger driving force… I believe in the next 2-months Gold will lead the market higher as inflation is stronger the Fed anticipates…

That is why I am short iShares 20 Plus Year Treasury Bond ETF (Ticker: TLT) versus my silver, gold and gold miner positions right now… This trade perfectly fits my opinion that Gold will crush Bonds as inflation picks up…

 I own the TLT 139-137 put spread expiring May 14. So I’m looking for TLT to settle below 137 on that date. Here’s why:

 I am just as bearish on bonds as I am bullish on gold until the 10-year yield rises above 2%. 

That’s because this relationship is so critical as inflation rises. In the 1970s, the US had very little debt so when inflation rose and the Fed was able to raise rates over 6% in just a few years to fight inflation and bring real rates back to zero

And gold? 

Well, it collapsed after rising 800%. See it in the chart below …



Today, as inflation rises, the Fed will be forced to lower rates not raise them… this is because of the enormous debt… the Fed will have to deploy yield curve controls to hold rates down to ensure high real GDP (GDP + inflation) growth. 

Yield curve controls is simply the Fed using QE to buy bonds and keep their yields below a target they choose… Most likely that target will be 2% or 2.25%…

That is their solution for decreasing Federal debt …

The Fed can create 10% real GDP and that type of real growth over many years can get debt back to normal levels, meaning a move from 135% debt-to-GDP because at that level our enormous debt suffocates growth… The Fed goal is to get GDP as high as possible… Historically central banks try and grow their way out of debt…

A Gold Miner Ready to Break Out

The stock that Warren Buffet had a love/hate relationship with about a year ago, Barrick Gold (Ticker: GOLD), is hot again.

A few things to note:

– GOLD has very strong fundamentals and the technicals just turned positive as well.

      • – Barrick has a fairly new management team that has worked very hard to strengthen the company’s balance sheet.
      • – Leadership has worked to reduce long-term debt and increase cash and short-term investments.
      • – They are making a lot of money and report earnings pre-market this Wednesday.

What’s more, a key technical buy signal is also supporting the stock …

It’s called a moving average convergence divergence (MACD) and it’s a very useful momentum indicator that can help traders know when to buy or sell.

Here’s how it’s calculated:

      • – The MACD is calculated by subtracting a 26-period exponential moving average (EMA) from the 12-period EMA…
      • – That gives you the MACD line… Then a 9-day EMA of the MACD “signal line” is plotted on top of the MACD line…
      • – When the MACD crosses above the signal line it is a buy signal. Crossing below is a sell signal. 

In the chart below you can see the MACD crossover in the lower panel and the current prices rising above a rising 200-day MA which signals a continuation of the longer-term uptrend….


Bring It Home

Remember: positive fundamentals and technicals put the odds in our favor. As #IncomeHunters it’s what we seek — a favorable situation with powerful macro forces supporting us.

Have a great week and always…

 Live and Trade With Passion My Friends,

 Griff

Stimmy Checks on the Move

Hey There Income Hunters,

 

You know, there’s nothing quite like found money.

 

Government handouts. Bank errors in your favor. Trading errors that go your way.

 

No matter what form it comes in, it’s a good feeling.

 

What really counts, though, is what you do with it …

 

Once, in my 30s, I received a pension and profit sharing check I didn’t even know I was entitled to. 

 

So … I immediately booked a trip for my family and my sister’s brood for a week of skiing in Vail.

 

It was an awesome, lifelong memory. But money always burned a hole in my pocket … I guess you can say I wasn’t much of a saver.

 

It seems today’s generation is much savvier in terms of saving. (Though perhaps not as good on the slopes.) That may be due to the uncertainty we’re facing — a global pandemic has a way of refocusing priorities.

 

Regardless, with over $680 billion in government handouts over the past year-plus … so far the biggest beneficiary is savings.

 

Check out these numbers … 

 

 

I think it’s time to revisit what’s happening to spending activity (velocity) and its impact on inflation … 

 

I’ve also spotted a pretty strong S&P 500 signal that I confirmed with Queen of the Candlestick Licia Leslie.

 

What A Ride

 

Yes, Thursday was a wild day that left us with another S&P all-time high …

 

Except this new high was on …

 

        • A negative price/relative strength index (RSI) divergence. (You can learn how to get strong with RSI here.)
        • A reversal candlestick hanging man pattern.

The hanging man looks like this …


And it’s a bearish reversal candlestick pattern that occurs after a price advance. The body should be small (red box) and the lower shadow (line below the body) should be at least twice the size of the body, with little or no upper shadow … 

So we had two sell signals for the price of one. Take a look:

 

Another signal we have in our favor for a short S&P position right now is the Sell April, Buy May cycle that has delivered a drop of roughly 3-5% six years in a row. 

I purchased a SPY 418/413 put spread expiring May-21. I would love to hold it through expiry and capture the $5 strike differential, which would mean for every one contract I own I make $500.

However, if the drop occurs early I’ll close it out. I don’t expect much more than a 3-4% drop and would like to get long if that does occur.

Bring It Home

I think this selloff is a short-term correction and expect a further “melt-up” rally into the summer … A melt up would mean a fast move higher driven solely by momentum as opposed to fundamentals…

As I’ve said before, spending activity is measured by money’s velocity — which is at all-time low. Velocity — how many times a dollar is spent — is a key signpost for high inflation. Even without higher velocity, we are seeing inflation rise in the everyday goods and services we purchase.

Next week, I will tell you how the Fed is hiding real inflation from the CPI number. The pressure continues to build in inflation and I’ll show you when it will spike much higher.

For now, as you can see in the chart below, money supply and velocity continue to further diverge. … Get ready for a powerful snapback as spending activity picks up around June or July.

I am short iShares 20 Plus Year Treasury Bond ETF (Ticker: TLT) and long energy and commodities just in case the spending activity picks up sooner. 

I will certainly keep you up to date in any changes.

Have a great weekend and as always …


Live and trade With Passion My Friends,



Griff

Treasury Repo Rates Go Negative — Now What?

Hey There Income Hunters,


I told you in March that Janet Yellen at the Treasury had $800 billion burning a hole in her pocket … 


So, she stopped issuing new bills and let the redemptions of maturing bills flow back to investors … 


We flagged how this would flood the banks with deposits and that bank rates could go negative.


Well, now they have.


Today you can pay someone to borrow your money. Is that something that would interest you?


I knew this would start in the Treasury repo market and we’ve had two closes in a row at negative rates … 


Chart courtesy of DTCC


DTCC is the parent of the National Securities Clearing Corp. (NSCC), which clears all stock transactions, and also for the Fixed Income Clearing Corp. (FICC), which clears all Treasury securities


DTCC publishes daily Treasury Repo Rates and you should always check them when volatility spikes and the market is trading nervous …


Because when there are real problems in the system it shows up in the repo market first.


Repo Crisis of 2019


The Fed never saw it coming — and it was under Jerome “J-Pow” Powell’s watch. After that I have never believed a word he’s said … because, as I’ll show, it was happening right in front of him and he did nothing.


The crisis could have easily been avoided.


Out of nowhere in September 2019, repo rates spiked from 2% to 15% causing a massive panic — and cash went from being plentiful to scarce.


That’s how fast market liquidity can disappear!

So, the market was looking for answers and then St. Louis Reserve Bank president, James Bullard came out with this statement:


Something is going on, and that’s causing I think a total rethink of central banking and all our cherished notions about what we think we’re doing. … We just have to stop thinking that next year things are going to be normal.”

WTF?Now you know why I go on rants about the Fed. Check out this chart of the Treasury repo market from September 2018 to September 2019 … 


Chart courtesy of Zero Hedge


Now, where was Powell when rates started to climb in April? Statements were being made like it’s no problem the Fed has it under control …


Then BAM … funding dries up, the market melts down and it’s a full blown crisis.


Allow me to set this up for you … 


The effective Fed funds rate is the rate the Fed’s primary dealer banks lend and borrow from each other overnight. That rate is published every morning based on a weighted average of lending and borrowing activity the previous night.


That is an exclusive bank-to-bank rate. Then you have the repo market which anyone that is a member of the FICC can participate in …


Treasury repo is the lifeblood of the FICC member’s business. They rely on getting their funding by going into the repo market to execute collateralized loans by offering their Treasury securities up for cash. 


Now, this market works very well until bank’s sense trouble brewing with loan defaults or customer insolvencies and then they pull their loans out of the repo market.


This leaves the smaller banks and brokers scrambling for funding … and it doesn’t take long before it expands into a crisis.


What Can the Fed Do Now that Rates Have Gone Negative?


The Fed has a reverse repo product that allows them to take the bonds they have on their balance sheet and execute collateralized loans as the borrower with authorised market participants who hold the excess cash that is pushing rates into negative territory … 


The Fed soaks up the excess cash in the system and allows lenders to bypass the repo market and earn a positive rate on their loan to the Fed.


You can see how much this product has been growing recently with all the cash that continues to be injected in the market …


Chart courtesy of DTCC


Bring It Home


The Fed is great at reacting to a problem and fixing it in the short-run. However, the fixes only work as long as they can keep asset prices rising…


So far, so good, and they can keep telling the world not to worry about inflation. But we Income Hunters will continue to look at the real data like the chart below.


Chart courtesy of Zero Hedge


Inflation is coming and eventually the Fed will have to raise rates — and we’ll continue to crush it in a down market, just as we are in the rally. 


Have a great weekend everyone and as always …


Live and Trade With Passion,

Griff

J-Pow Drops the F-Bomb

Hey There Income Hunters,

Federal Reserve Chairman Jerome “J-Pow” Powell came out swinging yesterday with misdirection, avoidances — and one flat out lie we will address later on. 

However, during a Federal Open Market Committee (FOMC) press conference following the Fed’s monetary policy meeting he just could not hold back any longer …

And he said something truly shocking …

Yes, that’s right … 

He dropped an F-Bomb!

“I know many people just look at asset prices and they look at some of the things that are going on in the equity markets, which I think do reflect froth in the equity markets.

I mean, finally a bit of frothing reality!

The chart below certainly reveals froth. I am shocked we are that far above the dot.com bubble on the price-to-sales ratio …


He’s Lying, I’m Laughing

During the press conference, J-Pow was asked a question about the digital yuan and his answer was so far from the truth that it was laughable …

He went down the path of explaining how strong our position as global reserve currency is and that we don’t have to worry about any competition…

Now, this topic is exactly what I have been preaching lately … and what the Fed and the administration have been hiding from us for the past 40 years!

It will blow your mind!

We have been forcing the dollar on weaker nations for decades and this all is beginning to change…

As I have been saying, the world is in transition to a new global monetary system and the Fed and Treasury need to keep printing money — and a lot of it — to keep the house of cards from collapsing.

I honestly would be shocked if the J-Pow will ever taper or tighten during the rest of his term..

You talk about a bombshell … watch this BONUS video I put together on this very topic. (Plus, I include a couple of awesome companies for you to play from the long side.)

In this video I explain how it is the Petrodollar system that is soo little understood  and rightfully so since the corporate controlled media never mentions it… However, this system has been used to force the dollar on the world as a reserve currency… up to now that is… see video for more…

Check It Out Here: The Signpost for a Dollar Collapse and How to Profit from It

Bring it Home

All I can think of right now is that great Bob Dylan song … “The Times They Are A-Changin.”


On one hand, I’d say we are incredibly lucky to live through such dramatic change, with the ability to trade markets that are driven by such powerful flows …


However, the transition will not be easy and alot of people will get hurt along the way.


All we can do is be prepared and prepare others as well — which is something I try to do here in Power Income!


Here is an update on my portfolio… 


I have added international stocks, which will continue to grow as a % of the total portfolio… I have also been adding to my precious metals bucket as I expect a breakout and continuation of the longer-term trend this quarter…


Most of my deltas reflect vertical option spreads, which can shift to much higher delta’s depending on where the spot price settles at expiration of the option spread…


As always continue to leave your thoughts and comments below and …


Live and Trade With Passion My Friends,


Griff

Two Killer Trades I did today… Jump on them Now!!

 

Hey There Income Hunters,

 

A transition to a new monetary system is happening and there are great trades you can do right now to crush it every step of the way …

 

There is so much happening behind the scenes that our corporate-controlled media and corrupt leaders do not want us to know …

 

And the Biden administration is making it very easy for us to make money.

 

I just put on two trades today and are sending them to you at no cost!

 

They’re both Chinese companies that will soon be opened to the world stage and their stocks will soar … 

 

These two stocks I am sending today have gotten battered as the US continues to play hard ball with China … and all officials have accomplished is shaking the big boys out — so it’s the perfect time to get in.

 

Put the Top Down

 

Power Income’s Top Down Process puts you in the driver seat.

 

How’s that?

 

I make sure we have the macro forces behind us on trades before diving into the company fundamentals and the entry/exit technicals.

 

TRADE 1

First up … JD.com (Ticker: JD) 

 

        • JD is China’s largest retailer. They provide a mobile shopping market with a market share of 24% and net revenues that is 2x higher than their nearest competitor.
        • They just spun off a fintech business, JD Digits, that focuses on cloud services and AI — and still own a 42% 
        • JD is supporting development of the digital yuan and are already paying  employees in the digital currency … They will be a leader in electronic digital payments at the 2020 Winter Olympics…
        • Oh, and what’s this? The stock is currently trading at a 22% discount…

 

I put on a calendar spread today and am already in the money …

 

Earnings are coming out soon and this could be a moon shot…

 

 

 

TRADE 2

I also purchased a call spread in Alibaba (Ticker: BABA)

 

BABA stock trades at a 26% discount to fair value and is beyond the regulatory issues and ready to take off on earnings tomorrow …

 

 

I think JD and BABA are both great companies in the industry (e-commerce) that puts the wind at their backs… I will be searching for many others because I am super bullish long-term on China … 

 

Just think about where the US was in 1945 and their next 25 years of prosperity and growth… That is where China is headed …

 

BRING IT HOME

 

If you need more evidence check out the video below.The global playing field is evening out and money will flow away from the currencies that are doomed to decline and chase future growth …

 

How Digital Currencies make you REAL MONEY

 

Leave me comments and questions and as always,

 

Live and Trade With Passion My Friends,

Griff

Lyin’ Pols & Pullbacks

Hey There Shoppers,

 

The evidence is mounting …


I think the market will trade lower by Friday.


Here are several charts pointing to that move.


I am seeing a doji at the top of an uptrend in S&P 500 (Ticker: SPX) …

 

 

There is also a doji at the top of the uptrend in the E-Mini S&P 500 Futures (Ticker: ES) …

 

 

And finally in the SPDR S&P 500 ETF (Ticker: SPY) …

 

 

I think this will be a quick move lower — so I’m looking at a SPY put spread in the Apr30 cycle, expiring Friday.


I like buying the Apr30 417.50/412.5 put spread paying $1.30.

 

 

I will buy this spread on a lower opening this morning. I will take my loss if the spread trades down to .90 cents.


I will begin to take profits at $2 and above.

 

Trade Review


During our mentoring day on Thursday, I recommended two trade ideas and have recently sent out two trade ideas:

 

        • Xpeng (Ticker: XPEV): May21 32.50/40 call spread paying $2. It is down a tad but I am keeping it.
        • Oracle (Ticker: ORCL): Buying the May21 75 puts paying $1.20. These have traded up to $2 and closed yesterday at $1.40. I am still in.
        • Peloton (Ticker: PTON): I paid $2 for the Apr30 102/108 call spread. This spread has traded up to $2.66 and closed at $1.80 yesterday. The chart is still intact; I am still in the spread.
        • PepsiCo (Ticker: PEP): May21 145/140 put spread for $1.30 was a trade I recommended, but PEP moved lower too quickly and I would have had to pay up to $1.60+ for the spread which closed over $2.10 yesterday.

Keep your eyes on these politicians, every time they open their mouths they are lying.


Thanks for Reading … See You Next Tuesday!

 

Licia Leslie

Playmate (Trade) of the Year

When I was driving back from Naples last weekend I listened to Matthew McConaughey’s book “Greenlights.”


Matt tells the complete story himself — as only he can. He acts out everyone’s part in different accents and it is hilarious.


It’s more than just alright, alright, alright — and I highly recommend it in audio …


Anyway, green lights are exactly what I see for Playboy (Ticker: PLBY). This week it traded above $55 before closing yesterday at $52.13 …


Check out the ride so far …



Now the trade I’m in is interesting and it capitalizes on a steep vol skew that really juices the returns …


I utilized the diagonal option strategy to create a synthetic covered call… You see, selling covered calls allows you to earn power income as you hold a quality stock in exchange for being obligated to sell it at a price you consider to be over valued…


This will cap your upside, but will generate high income in the meantime… You can replicate the covered call by owning a long-term call while selling short-term calls, which is accomplished through the diagonal option strategy… 


I purchased PLBY 40 strike long call position out to Dec 2022 and then sold the 55 strike call expiring May 21, 2021 …


Here are the prices where I initially executed the trade …



The kicker for the trade is the volatility skew. I am able to sell the short call at a 50% higher vol than what I am long.


See the skew graph below …


My long 40 strike call to next December is highlighted at the bottom and my short 55 strike call to May 21 is highlighted at the top…



Here is where the trade is right now with the vols circled in the red … 

If I were to take the trade off today I would be up about 29%. However, if the short call expires worthless I make 69%.


Why? Because the higher volatility on the short strikes allows me to capture so much more income on the trade … 


If I can repeat this for five months I would own the Dec-2022 call for free …


The 30-day implied vol illustrated by the red line at the bottom of the graph is hanging tough, but I would expect it to come off as PLBY goes into consolidation around this $50 – $55 range … 


Bring It Home


PLBY has so much potential.


They now have a forward-looking merchandising strategy, plus their partnership with Nifty Gateway to capitalize on their 70-year art legacy is a massive wildcard in the NFT space that could take their revenues to a whole other level.


Institutional money flow has added real juice and it is shaping up to be an 8-bagger, 10-bagger — or more.


Do you own PLBY? As Matthew McConaughey once said, it’d be a whole lot cooler if you did.


Live and Trade With Passion My Friends,


Griff