Trading in Spite of a Fed Nothingburger
Who doesn’t love a good Fed announcement?
Aside from the stock market, that is.
And cryptocurrencies.
Both blue chips and Bitcoin took a dive Wednesday in response to Jay Powell’s nothingburger of a statement on lowering interest rates.
“We believe that our policy rate is likely at its peak for this tightening cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said. “But the economy has surprised forecasters in many ways since the pandemic and ongoing progress toward our 2% inflation objective is not assured.”
Translation: Rates may come down at some point. Probably. Potentially.
This morning’s strong jobs report should only muddle things further.
[Screenshot: Jobs Report Headline]
The results of Wednesday’s Fed meeting certainly weren’t unexpected. At least not if you ask Shah. As he explained in our weekly Alpha Money Flow video call, the Fed’s right-down-the-middle approach is appropriate given how much is still up in the air right now.
But apparently the bond market didn’t see it that way. In the wake of Powell’s comments, bonds rallied… with the 10-year yield hitting nearly 4%.
“I’m not sure where that rally came from other than the expectation that bond traders and investors think the Fed’s got it wrong,” said Shah.
Get his full thoughts on the Fed announcement here.
Of course, a turbulent week in the markets is no excuse for not doing what we do best. We closed several positions for gains, including two from Alpesh’s GVI Investor.
On Monday, Alpesh hit his price target on our F5 (FFIV) May $180 calls. We locked in a 78% return.
And later that same day, we hit the price target on our General Dynamics (GD) May $270 calls. This time, our gain totaled 144%.
I said it just last week, but it bears repeating… Alpesh is ON FIRE right now. If you got in on these or any of our other big GVI Wins recently, we want to hear about it. Shoot us a note here.
Moving over to Breakout Fortunes…
Robert has recommended two new plays on the recent resurgence in crypto activity.
That’s right. Don’t let this week’s Fed action fool you. Over the past year, the size of the overall cryptocurrency market has grown by more than 50%.
[CHART: Crypto total market cap - one year performance]
Robert is bullish on crypto miners and exchanges as simple ways to play the action… and that’s why he’s recommending Bitfarms (BITF).
“Bitfarms is a heavyweight in the Bitcoin mining industry,” says Robert.
He continues…
Bitcoin miners use powerful computers to solve complex math problems that validate transactions on the Bitcoin network. In return for this service, they earn Bitcoin.
It’s like digital gold mining… and Bitfarms is one of the pros.
To get Robert’s full rundown on the stock – plus his second recommendation – read the full alert here.
And, as always, you can keep scrolling for links to everything else we published this week, including a fresh pick from Shah in Alpha Money Flow, a portfolio update from Alpesh and more.