Is the Bond market predicting a slowdown?

Hey There income Hunters,

 

It’s only Tuesday but it feels like a lot has happened.

      • Another strong PPI number with most likely a higher CPI tomorrow
      • Another resignation from the Fed board so Biden now has 4 seats to fill
      • Another day of  Vol up/SPX and now a down day

On top of that the bond market continues to trade like we are headed for a slowdown.

Real Interest Rates that are turning more and more negative as inflation numbers continue rising.

I have been talking about Bond volatility vs Stock volatility a lot and now we are seeing a reaction from the stock side…

 

The rest of this week is key for stock. I hope you guys put on the SQQQ trade I shared yesterday. It saved me today.

 

I also want to thank everyone for attending the Power Income Trader event yesterday. We are heading to some wild trading into next year and I know I can help you expand and become a complete trader that can make money in all market environments. Let’s Go get on board!

 

Today, I’ll review the trade giveaway from the Power Income Trade event ..

 

Energy Transfer (Ticker:ET)

 

Energy Transfer owns a large network of Oil, Liquid Natural Gas and Natural Gas Infrastructure assets…

 

Their 3rd quarter results were good and guidance was as expected.

 

The company continues to focus on cutting its debt and reduced it by $6 billion this year alone.

 

Here is the key mention on the earnings call… In 2022 ET will look to buy back shares as well focus on greater distribution…

 

And with the stock trading at a 50% discount to fair value I think it is a buy here.

 

Technical setup

I see this as an optimal low risk/high reward play. The aggressive selling over the past few days appears to be a capitulation of selling. It bounced off the 200 DMA, which makes this a great setup for a short-term, quick strike trade. 

Risk Profile and Trade

 

This is simple low risk/high reward play with fundamental and technical pulses behind it. 

 

Notice the small upfront cost for a possible 288% return and you have until December 23. 

 

 

Bring It Home

 

It was a disappointing day because the infrastructure spending bill is now priced in and we may not here any good news from the government side until after the new year. 

 

The bond market may be sending slow growth signals but it may also simply be the dynamics of the debt ceiling and lack of new supply in the long-end of the curve.

 

The next couple of days are key to see if the bid comes back and if not we may see some follow through heading in to the start of the Fed taper.  

 

Have a great day and as always,

 

Live and Trade With Passion My Friends,

Griff

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