Hey There Income Hunter,

 

Just think about what our policy leaders have done to the consumer. 

 

Twenty years of massive government spending and very low interest rates allowed Americans to live large and enjoy life to the fullest … 

 

Then, in one-year, the rug was pulled out from beneath them. 

 

Can you imagine the shock of:

 

• 19% credit card rates
• Nearly 7% mortgage rates
• Home affordability 3x worse than 2008 housing crisis
• Living expenses rising above income

 

Yet the Fed talking heads are still yammering about avoiding recession.

 

The Consumer Is Buried in Debt

The consumer has been forced to pay for essential needs by loading up on credit card debt. 

The Fed graph below shows the incredible rise in consumer debt added in the last couple of years (blue line) … Plus add having to pay the highest interest on the debt in 40 years (red diamonds). 

The Hard Truth 

The most frustrating part of having to listen to the Fed speakers over and over is how they all accentuate the fact that the jobs market is so strong.

 

It’s especially bad when they know better than anyone that employment is the last sector of the economy to fall after economic growth slows.

 

In fact, the unemployment rate is always still at its lowest levels as the economy heads into recession. 

 

This is just the beginning and, as you can see below, January reported the largest monthly bankruptcies to begin a year since 2010. 

 

 

Once bankruptcies and defaults filter through the economy, then layoffs build quickly.

 

We should reach this point later this year.

 

What’s the Trade?

Now, you cannot underestimate the lengths our policy leaders will go to in order to maintain power. 

 

So, yes, the US – and very likely the whole world – is in for a crash landing, but here is the thing:

 

The Banks will find a way to get THEIR money out of the system before the crash begins.

 

So, that tells you to expect a strong rally prior to the ultimate crash … and the timing for that would be somewhere between the March 22 and May 3 Fed meetings. 

 

The Fed has made changes to methodology and seasonal factors of key economic data to make the market believe it is making progress. 

 

Then when the time is right, it will announce a pause to rate hikes and the markets will soar. 

 

The most likely scenario is for SPX to break the 3900 level and make a quick move down to 3800 into the March 17 monthly option expiry. 

 

Then we could see a short squeeze out of OpEx, which builds into an extended rally into May …

 

You know what the trade is then, right? 

 

Sell in May and walk away … 

 

The question is how high can SPX go before the fall?

 

I think we could see a new all-time high.

 

 

Stay tuned for more details in the days and weeks ahead, and in the meantime … 

 

Live and Trade With Passion My Friend,

 

Griff