January 25, 2023

 

Tuesday morning
January 24, 2023

Hello everyone or Bonjour,

I’m practicing my French, so I can keep up with Alex.

But I don’t yet know what the French is for anti-inflation bet.

It seems that’s how investors are approaching the market this year. Will it pan out this way?

Yes, markets are moving up slowly as they look forward to the end of the Federal Reserve’s interest rate hikes. In other words, they are looking through near-term economic weakness and toward the next Fed cutting cycle – even though the current hiking cycle is not yet over. With an expected 0.25% - 0.50% move on Feb 1, investors have grown more comfortable with owning stocks. Fed fund futures are even anticipating some mild rate cuts by the end of 2023, according to CME Group data.

But is it an error of judgment to assume that the Fed will not show such a hawkish tone on Feb 1?

Is the market underestimating the Fed’s desire to avoid a 1970’s style inflation resurgence?

The 1970s saw the central bank raise rates to control inflation, only to cut them on signs of economic weakness. The consequence of this was more increases in the early 1980s that sent the economy into a double-dip recession.

According to Data Trek Research, history shows that the Fed most often cuts policy rates during recessions … so, is the U.S. in recession now?

Food for thought.

The latest Time Magazine cover says it all:

A Picture of Red Lips with a zip across them. It seems the world is full of people who want to hold the floor and spotlight with their wordy content, but apparently, it is the people who say less, who will receive more.

Maybe, we’re just sick of all the noise!

 

 

Artificial Intelligence is motoring along at breakneck speed. Now we have ChatGPT. Will it work alongside us or instead of us?

Figureheads in education are scratching their heads.

I can see handwritten essays in class as the future to challenge the AI revolution.

Not sure how education will challenge the chip in the arm or the head scenario.

But wouldn’t that make us boring and stifle creativity?

See Mohamed El-Erian’s post below.

 

 

John closed out the February 95/100 TSLA vertical bull call spread today at $4.80 or best. That was a good decision as TSLA reports tomorrow and earnings results are uncertain. Clients who did this trade took home approximately $1,250 or 11.62% in 5 trading days. The $101 bottom in TSLA shares is looking quite solid.

Yesterday, John sent out a trade alert to buy the QQQ February 2023 $305-315 in the money vertical BEAR PUT spread at $9.00 or best.

Expiration Date: February 17

Stand aside if you don’t do options.

John is 71 years young on 26 Jan (Australia Day). Drop him a line. He’d love to hear from you.

Happy mid-week. Have a terrific day.

Cheers,
Jacque

“In order to write about life, first you must live it” - Ernest Hemingway

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Many thanks to those who are subscribers.