F*CK your puts - JPow says it's time to load up on stocks

What could possibly go wrong>

It’s fair to say that was not the Jerome Powell I was expecting last night. Looking at the market, I guess I wasn’t alone.

Not only did the dot plot remain steadfast in projecting three rate cuts this year (2025 tightened somewhat), but Powell’s presser was something else.

After four consecutive inflation prints above expectations and stocks at an all-time high, yesterday was the perfect opportunity for the Fed Chair to channel his inner Paul Volcker and make it clear in no uncertain terms that he will beat the inflation genie firmly into submission. Instead, we got this this:

”We will get to 2% inflation over time.”

Over time…What does that even mean? Next year, the year after, or 10 years from now? What I suspect it means is that despite the Fed raising both inflation and growth expectations they will cut rates regardless, further enriching the 1%, and leaving us mere plebs to deal with the inevitable higher prices.

As one of my former colleagues so eloquently put it to me earlier:

”He’s just given the green light to go full risk on. Buy everything that’s not nailed down”

In theory, he has a point. Because when faced with lower rates and rising inflation, what other option is there but to buy things you believe will go up faster than your purchasing power goes down? This is exactly what we saw yesterday, with the S&P and gold making new all-time highs, Bitcoin adding 10%, and even Micron doing what it has failed to do for 24 years and finally clearing the June 2000 high (Micron is +15% overnight on strong earnings).

I’ll be the first to admit that I called this wrong. I was so wrong, that when I woke up this morning to check how my UVXY long was doing, I thought it had undergone a 5 for 1 stock split. Thankfully, the $20 loss won’t kill me. Anyway, by the time Powell is done, it will be cheaper to wipe out butts with $20s than with Kleenex.

But isn’t that as traders/investors, exactly what we should be doing? My job is to absorb new information, process it, and most importantly try to figure out how to make some money.

Taking into account the Fed’s stance, these are my thoughts:

1. The introduction of ‘over time’ suggests the Fed has abandoned the 2% inflation target. This should be bearish for the US Dollar and bullish for ‘risk assets’ including equities, commodities, and crypto.

2. Rather than looking for shorting opportunities, we should identify value in underperforming rate-sensitive assets for catch-up plays (provided for paid subs below)

3. The new regime should dampen volatility in indices and heighten volatility in commodities and crypto.
   

It goes without saying that if the landscape changes, I’ll change with it. But for the immediate future, it makes sense to go with the flow.

Here’s the first stock I am buying today…..It will shock you.