📈IS THE FED PIVOT REAL?

Oct 06, 2022

It started early this week with talk of a Fed pivot. The talk turned into news articles released by 11:30 am. Then later in the day the Fed members press tour on all the major financial outlets dropping hints such as Fed member Barkin “ We need to watch what the dollar is doing to the global economy.” A Fed Pivot is when the Fed changes its position on rates. In this case the speculation is that the fed is getting a tremendous amount of heat from other countries. One of the departments in the U.N. penned a letter to the Fed expressing concern about its policies. They were worried about a global economic collapse. Earlier last week the U.K. had to step in and buy Gilts(10 treasury bonds) because pension funds were liquidating them to meet margin calls. As the Fed raises rates the dollar strengthens. A strong dollar weakens other nations buying power. This year the British pound is at a 40 year low, Japanese Yen 30 year low and Euro 20 year low. This is causing issues with Sovereigns nations raising debt and trading with the U.S. All of this will weaken the global economy. While we do not know if the Fed will pivot. It is a safe assumption that fixing a credit crunch much like the global financial crisis will be more of a priority than inflation. The chance of it is enough for Investors to close short positions and be concerned about starting new ones. Investment firms are underperforming so badly they need to put on long positions(buys) in case there is a pivot. Now there is predicted to be a rate cut by Nov 2023 and last week it was out till 2024. Slowing rate hikes will make the dollar lose value. The dollar dropping will cause bond buying which in turn spurs stock market rallies. For now we are seeing that action. The 10 year treasury dropped from 4% to under 3.6% briefly in less than a week. Equities continue to be bought for three days in row. Most dips we are seeing buyers. No one trusts the rally but that is how bottoms are formed. They are formed in distrust not in conviction. With the recent JOLT’s job opening number coming out 1 million jobs lighter it clearly shows the Fed’s action is having an effect. Friday we have the non farm payroll numbers, estimate 250,000, being released with the unemployment rate with an estimate of 3.7%. Both will be watched closely. Watch tonight’s video if you are struggling finding entries on new positions. I give three quick tips that can help. Also what stocks to watch tomorrow. Let’s get to it!

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