The Trading Week Ahead: Opportunity Abounds For Us My Lions! By Gregory Mannarino
This week we are going to hear from the Federal Reserve with regard to monetary policy, and the general consensus on Wall Street is that the Federal Reserve is going to raise the federal funds rate-whether or not they actually should.
The fact of the matter is actually very simple. The US economy is not nearly as strong as the mainstream financial experts want you to believe, (nor is the global economy for that matter), but this is the narrative which must be maintained to keep confidence in the system high.
Here in America we have both a labor force participation rate near historic lows, and money velocity near historic lows. Without these two parameters moving higher a booming economy will remain elusive.
What we do have are multiple bubbles and malinvestments which have created financial distortions across the spectrum of asset classes, a situation which has been created by the Federal Reserve artificially suppressing interest rates for the better part of a decade. Still, I believe that the Federal Reserve has no choice but to raise rates.
Frankly, I do not care what the Federal Reserve does, I just want us all to profit from it. (Roar!)
When the Federal Reserve makes their announcement on June 14th with regard to raising rates, I expect little to no effect in the immediate term with regard to the overall stock market because I believe a rate hike is already priced in. On the other hand, in the off chance that the Federal Reserve does not raise rates I believe this would be a negative for equities.
It is a no-brainer that financial stocks "should" benefit from higher interest-rate's however, the effect on the yield curve must also be considered. It is certainly no secret that the yield curve is flattening, and in order for banks to profit a flattening yield curve is not what you want to see.
When the Federal Reserve raises the Federal funds rate, it affects the short end of the curve more so than the long end, therefore flattening the yield curve even further which is a concern longer term.
Just this past Friday, yesterday, after the NASDAQ hit an all-time record high we experienced a hard rapid selloff across at the tech sector, it is very important for us all to keep an eye on this.
One of two things is likely to happen which will bring opportunity for us in the coming week.
Number one: We will continue to see pressure build on the tech sector which has the potential to bleed off to other market sectors (creating opportunities to go short the market) or.,
Number two: When The Federal Reserve announces a rate hike the tech sector will rebound because in the short run cash may actually leave the financial sector (as a rate hike is already priced in) and simply seek another place to go.
Happy Trading my Lions!
Gregory Mannarino
Greg, I dont belive they will raise the rate. At this point they and we have to start getting things back to fair market value. More us then the FED. I dont believe the FED could care less. It will be intresting on the 14th. Thanks for the info my friend.. stack it high while its low.
Your analysis is correct in as much as rates should not be raised in a failing economy. However, failure to raise rates after so much anticipation has dire consequences for the Fed and the dollar. If the Fed fails to raise rates then that is a huge loss of credibility and confidence. In short they would be admitting to all the lies about the economy. What would be the foreseeable consequences: loss of value in the dollar, loss of confidence in the banking system further withdraws, bitcoin and gold driven higher in a move to safety. It would be almost suicidal. Should be a fun week, remember "Jack be nimble Jack be quick" there is a burning candlestick.
"Profits Roar" Greg. Thanks again. I think that FANG flash crash was just that - a flash crash. There are, as you say Greg so many Distortions in this market because of the PPT that we will be seeing many more of these (Flash Crash) as we move forward. I think you are right the FED will raise rates - But has that caused rates to rise after they raised rates the last time? No. At least Not much and Not for long. Everything is "Rigged" people - Except Cryptos. Go long BTC and especially ETH.
You may be right, we shall see.
I'm not a shrink but know enough to say that schizophrenic behavior is virtually impossible to predict. I really think the FED policies are insane.
Agree, never predictable.
Screw the Fed!!! @marketreport
Follow Gregory for a safe path thru the storm...
I do with Success!
Agree, all you have to do is listen. He will send you on the right direction.
That's really all you have to do. It's to Simple... lol
Thanks for the info Greg.
I am no longer interested in what the FED does! All my money is in physical Gold, Silver & Crypo! Would love when you write more about this things and thank you for all the good long term advice!
Agree with you and in that order! 👍
Roar!
I am starting to see more articles and interest in mainstream news about cryptos. I wonder if a continued flattening or possible inversion of the yield curve will pour money into the crypto sector? Or am I really just hopeful?
Thanks Greg, i am in two minds about the fed raising or lowering . They probably shouldn't , but they seem hell bent on doing it . Not sure if it is because of political bias or wanting to instill false confidence . Either way Wall street will be way ahead of them .
Upvoted and resteemed Greg , thanks for your post.
The Russia allegations have failed and are now backfiring, uncovering a slew of nasty corruption schemes. It seems the powers that used to be in this country have run out of lies. Now is the time to burst the bubble(s) and cause mass chaos. They will put the blame upon the Trump administration and try to make a claim that the administration is unfit to run the country. I had a dream that this chaos would happen around a lot of infrastructure and Trump just announced a Trillion dollar infrastructure plan.
Was STEEMIT created by the FED? Interesting question and would like someone to answer?
Hi Greg, I've just posted an article that I think you might like. I'd be very happy to get you opinion on it when you have a chance to check it out. Thanks!