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Estimated read time: 2 minutes and 35 seconds
In this week’s newsletter:
Market recap
Top holdings: what I am buying & selling
Market Recap
YTD returns:
S&P 500: +7.73%
Nasdaq: +16.9%
Russell 2000: +0.0%
US Dollar ($UUP): -0.50%
Gold ($GLD): +10.51%
What a week of data…let’s dive in:
ISM manufacturing
Fed interest rate decision
Unemployment rate
ISM Manufacturing Index - economic indicator for the level of activity in the manufacturing sector in the United States
Would you look at that, ISM Manufacturing reading is still below the dreaded red contraction line.
This reading pairs nicely with our short call on Industrials ($XLI) in the bottom section. Industrials, or “cyclicals”, are subject to cycles (get it?) of demand. Pretty clear given the up/down nature of this reading.
When we have such a drastic drop off due to something like COVID, it sets up for a booming rate of change (RoC) measurement. Hence why 2021 went ballistic for most manufacturing companies.
But like all things like go up, eventually it must come down….hello manufacturing recession.
Fed Interest Rate Decision:
An interest rate hike of 25 bps was no surprise.
BUT, flashback to earlier this year. People were willing to bet their life that Powell paused, or even CUT (lol), interest rates as soon as their last April meeting.
Instead he hiked to levels we have not seen since 2008. Higher….for longer.
And for all of you historians out there, interest rate cuts don’t correlate to the economy all of a sudden going nuclear.
If history proves anything, the economy actually starts to deteriorate once the cuts happen…
That’s because the effects of interest rates are already engrained into balance sheets, income statements, you name it. There’s no turning back and reversing the pain that interest rate hikes, not to mention during a period of slowing demand, can have on a business.
What’s even more staggering is how much debt our country has taken on since the last time interest rates where this high - surely that won’t become a problem, right??
Unemployment Rate: 3.6% Actual, 3.6% Forecasted, 3.5% Prior
The US unemployment rate is the lowest level since 1969 - rejoice!
*realizes what this means for interest rate hikes
Why do you think Powell hiked interest rates, again, this week? Why didn’t he consider a pause? Why didn’t he cut?
Because this red hot unemployment rate is the one silver lining to this economy. It’s the one thing that hasn’t broke (yet).
That gives the Fed MORE reason to not consider cuts. And for the record, pausing hikes still means the interest rate will remain >5%! How many companies can withstand this high of an interest rate when their demand drops off a cliff?
It’s about to get really interesting….stay nimble.
In The Account | my top holdings
GOLD - $GLD
BONDS
$BNDD, $EDV, $TLT, $IIGD
UTILITIES, HEALTH CARE, LOW BETA
On The Radar | positions I want to build / sizing up
NONE
Off The Grid | removed positions / short selling opportunities
TECH - $XLK, $QQQ, $GOOGL, $TSLA, $NFLX
RETAIL - $XRT
HIGH BETA - $SPHB
CRYPTO - $BITO, $MSTR
HIGH YIELD - $HYG
ENERGY - $XOP
FINANCIALS - $XLF
INDUSTRIALS - $XLI
Until next week....
-BW
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
Estimated read time: 2 minutes and 35 seconds
In this week’s newsletter:
Market recap
Top holdings: what I am buying & selling
Market Recap
YTD returns:
S&P 500: -%
Nasdaq: -%
Russell 2000: -%
US Dollar ($UUP): +%
Gold ($GLD): +%
What a week of data…let’s dive in:
ISM manufacturing
Fed interest rate decision
Unemployment rate
ISM Manufacturing Index - economic indicator for the level of activity in the manufacturing sector in the United States
Would you look at that, ISM Manufacturing reading is still below the dreaded red contraction line.
This reading pairs nicely with our short call on Industrials ($XLI) in the bottom section. Industrials, or “cyclicals”, are subject to cycles (get it?) of demand. Pretty clear given the up/down nature of this reading.
When we have such a drastic drop off due to something like COVID, it sets up for a booming rate of change (RoC) measurement. Hence why 2021 went ballistic for most manufacturing companies.
But like all things like go up, eventually it must come down….hello manufacturing recession.
Fed Interest Rate Decision:
An interest rate hike of 25 bps was no surprise.
BUT, flashback to earlier this year. People were willing to bet their life that Powell paused, or even CUT (lol), interest rates as soon as their last April meeting.
Instead he hiked to levels we have not seen since 2008. Higher….for longer.
And for all of you historians out there, interest rate cuts don’t correlate to the economy all of a sudden going nuclear.
If history proves anything, the economy actually starts to deteriorate once the cuts happen…
That’s because the effects of interest rates are already engrained into balance sheets, income statements, you name it. There’s no turning back and reversing the pain that interest rate hikes, not to mention during a period of slowing demand, can have on a business.
What’s even more staggering is how much debt our country has taken on since the last time interest rates where this high - surely that won’t become a problem, right??
Unemployment Rate: 3.6% Actual, 3.6% Forecasted, 3.5% Prior
The US unemployment rate is the lowest level since 1969 - rejoice!
*realizes what this means for interest rate hikes
Why do you think Powell hiked interest rates, again, this week? Why didn’t he consider a pause? Why didn’t he cut?
Because this red hot unemployment rate is the one silver lining to this economy. It’s the one thing that hasn’t broke (yet).
That gives the Fed MORE reason to not consider cuts. And for the record, pausing hikes still means the interest rate will remain >5%! How many companies can withstand this high of an interest rate when their demand drops off a cliff?
It’s about to get really interesting….stay nimble.
In The Account | my top holdings
GOLD - $GLD
Despite a -1.5% performance on Friday, Gold continues to outpace the S&P 500 YTD
BONDS
Buy. The. Damn. Dips.
$BNDD, $EDV, $TLT, $IIGD
UTILITIES, HEALTH CARE, LOW BETA
All 3 of these sectors beat the S&P 500 this week. Get it? Got it.
On The Radar | positions I want to build / sizing up
NONE
Off The Grid | removed positions / short selling opportunities
TECH - $XLK, $QQQ, $GOOGL, $TSLA, $NFLX
RETAIL - $XRT
HIGH BETA - $SPHB
CRYPTO - $BITO, $MSTR
HIGH YIELD - $HYG
ENERGY - $XOP
FINANCIALS - $XLF
INDUSTRIALS - $XLI
Until next week....
-BW
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.