Yo, Pit Crazies,

Griff and I are going live at the close today for members of Power Income Trader and Capitol Gains to discuss what the Fed is doing and what troubles it’s causing. We’ll also share two exclusive trades. Call 1-888-872-3301 to get in now.

A big difference between the current worries about the economy and where the trouble lies is who is leveraged.

Right now, it is not the average person or business. Wall Street did not create myriad bets against an industry as they did in 2008.

Uncle Sam and the G7 own the debt. They created the leverage and the problem.  And right now we are living through how they extricated themselves from the massive spending over the last 5, 10, and 15 years.

But there is a silver lining.

The Interest Rate Mechanism Imposes Discipline

I’m a believer in the market mechanism and Milton Friedman. The only way to get the Fed to stop spending money is to make it more expensive.

Free money did nothing to help the democracies in the West. The good news is that we have a market mechanism and Jerome Powell is using it. Since no one running Congress or the White House is listening, he is speaking with the power at his disposal. 

Most of the G7 is falling in line.

As long as the market can impose discipline, there is a way out of this mess. Barclays iShares 20 year bond ETF (Ticker: TLT) has bottomed for now, even though rates are forecast to go higher in the future.

Now that Powell raised the bar, he can wait and see if he needs to raise it higher. The SPX is looking for a 160 point move by next week. I can see that happening.

And Bill Griffo is releasing two traders for Power Income Traders (and Capitol Gains members) post-Fed. Click here to join him in the program.

To Your Trading Success,

AG