Is It Time to Short the Market?
Amanda Heckman|June 18, 2022
Do you hear that?
It’s the ghost of Paul Volcker, groaning at the Fed’s action this week.
After asserting mere weeks ago that “a 75-basis-point increase is not something that the committee is actively considering”…
Jay Powell quickly reversed course after May’s inflation numbers clocked in at a blistering 8.6%.
On Wednesday, the Fed raised interest rates by 75 basis points, the largest increase since 2004. Time to cue the applause?
But there are other reasons to have optimism in this market.
No Paul Volcker
Powell’s announcement was no “Saturday Night Special.” That announcement, from the late 1970s, was when Volcker famously abandoned incremental rate increases, instead focusing on drastically tightening the money supply to squash inflation… which in turn brought on a recession.
Powell and company are foolish enough to believe that despite flooding the markets with trillions in fake money… they can bring the economy in for a “soft landing” with a series of smaller hikes. Even President Biden chimed in on Thursday, telling the AP that a recession is “not inevitable.”
But the markets no longer believe them. While the major indexes ended Wednesday in the green, buoyed by a “bolder” Fed, the reversal was swift on Thursday.
More bad news about the economy sent stocks plummeting.
We learned that retail sales fell for the first time in five months in May. The Federal Reserve Bank of Atlanta cut its estimate for second quarter growth to 0%. And Guggenheim Chief Investment Officer Scott Minerd said the U.S. may already be in a recession, given the slowdown in consumer spending.
It’s clear that we’ve still got a long way to go before the Fed will be finished cleaning up the mess it made.
But while things are tough right now… there are two reasons investors should not panic.
The Future Is Digital
The Manward office was nodding along this week with a telling news piece from Bloomberg. As Andy told you on Tuesday, the news rag asked major business and market leaders where they see the markets in 30 years.
The consensus can be summed up in one word… one we’ve been excited about for years…
The folks interviewed were united in their belief that in 30 years, just about every asset under the sun will be digitized.
Our global financial markets will be transformed… and technology and the blockchain will play pivotal roles.
It’s why Andy stressed that “patient investors will make a killing in this market.”
Now’s the time to get in early on the technology that will make our economy fully digitized.
And better yet… with the market in a downturn, you can get in at a discount.
A Means to an End
The other piece of good news came out of the video call we held with our paid Alpha Money Flow and Venture Fortunes subscribers this week.
But he also showed one chart in particular that should allay concerns about this market.
Take a look at this…
This chart traces the long-term average of the S&P 500 over the actual price movements of the index.
As Andy said in the call, “Almost everything in physics and in nature reverts to the mean.”
And that’s exactly what’s happening now. We can see an end to the downturn in sight as the index falls back to its mean.
So get your “buy list” ready because this chart is a big reason why Andy is so bullish right now.
As Powell fumbles his way out of the inflation mess he created… and as Paul Volcker rolls over in his grave… smart investors should take the long view and see this market for what it is…
An incredible buying opportunity.
And we’ve got the perfect play to plunk some dollars into. It takes advantage of both today’s cheap prices and the future of our digital economy. At just $5, it’s Andy’s No. 1 play for this crazy market.
Amanda Heckman|Editorial Director
Amanda Heckman is the editorial director of Manward Press. With unrivaled meticulousness, she has spent the past dozen or so years – give or take a few sabbaticals – sharpening Andy’s already razorlike wit. A classically trained musician and a skilled writer in her own right, Amanda takes an artistic approach to the complex world of investing. Her skill has led her to work with numerous bestselling authors, award-winning financial gurus and – lucky for us – the fine folks at Manward Press.