Powell Poured Gasoline on the Inflation Trade

Hey There Income Hunters,

 

I want to thank everyone who showed up for Inside Option Pit Insider even yesterday afternoon. 

 

Building on that momentum, I will be broadcasting live on Tuesday night at 8:00 p.m. to reveal — for the first time! Show the systematic method I’ve been using to stay ahead of the Fed and profit like crazy.

 

It’s no-cost to attend, you’ll get some exclusive trades and you’ll find out how I’m trading inflation for big profits.

 

Now, I wrote yesterday that Powell had a huge job ahead of him to convince the markets that the Fed was only moving forward on QE Taper and would not be raising rates any time soon.

 

Well, I give him an A+ for clearly getting that message across.

 

Now the equity market melt up can continue! 

 

Today I will give a great 1-week trade and share my thoughts on massive changes that are coming to the Fed.

 

Today’s Fed Meeting May Have Powell’s Last

 

And here’s why …

 

      • Powell is pro-banks and the administration wants to further regulate banks 
      • The Democrats want to place an ally at the Fed so they can print a lot more money to buy votes for a decent mid-term showing and reelection.
      • The government needs a Hail Mary in order to get real growth going. With a dove at the helm they could move fast on digital dollars and sending money direct to consumers

 

As I said, yesterday was game-changing in terms of the message sent. So what does this mean for the markets?

 

      • The biggest psychological shift will be in bonds, because the market was pricing in rate hikes in the short maturities, which brought in buyers in the long maturities. 

 

      • iShares 20+ Maturity Treasury Bond ETF (Ticker: TLT). Buy a 1-week 145/144 Nov12 put spread on TLT for .34 or just above. This is my highest conviction trade.
      • TLT will lose the bid that has been supporting it and could break below the 200 DMA next week.
      • Supply next week in bonds ($120 bn will also pressure TLT).

I think Powell did too good of a job avoiding any discussion on interest rates. The market may now look at this pivot as a policy mistake which would be very positive for commodities.

 

      • I think SLV is a great commodity to own as we edge closer to the infrastructure spending bill passage.
      • BTO $SLV Jan22 22/27 call spread for $.70
      • I really like that SLV closed back above the 50 DMA and now it could build momentum because the seasonality effects kick in to mid December plus passage of spending bills will give it a big boost. 

 

Bring It Home

Santa may bring everyone gifts this Christmas, after all. This has been a remarkable rally in stocks. 

 

No one really saw it coming –and that is exactly why we got it.

 

I was looking ahead at the growth potential from the reopening trade and passage of the spending bills …

 

Now everyone will be singing that song. 

 

I will stay with longs in energy, commodities and consumer discretionary for a few more weeks, but once the theme becomes general consensus I am on to the next trade.

 

I have an idea what that trade may be and I’ll let you know on Tuesday. Don’t forget Tuesday 8 p.m.!

 

Until then …

 

Live and Trade With passion My Friends,

 

Griff

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