By Clint Brewer, analyst, Market Minute Did Federal Reserve Chair Jerome Powell deliver an early Christmas gift for investors? In his recent speech, Powell commented that “it makes sense to moderate the pace of our rate increases… as soon as the December meeting.” After the Fed’s historic pace of interest rate hikes and the bear market it brought, anxious investors were happy to hear these words. That’s because it sets up a highly anticipated pivot toward easier monetary policy. Pivot chatter has picked up following signs that inflation is slowing its rapid ascent, which is a driving force behind the S&P 500’s 11.5% rally since mid-October. The market gained over 3% in just one day following Powell’s message. But investor optimism might be misplaced. So, before you celebrate, first consider what a pivot actually means for the economy and stocks… | Recommended Link | | How to make profits fast… EVEN in a BEAR MARKET! Have you heard of “The Money Multiplier”? No? That’s ok, it’s not your fault. In fact, most people haven’t heard of this strategy. And that’s intentional. Because the very people that use this strategy to make billions in the markets… It’s a strategy that gives you the chance to generate hundreds even thousands of dollars in a matter of weeks… sometimes even days. And the best part… It even works in the middle of this chaotic market. This year alone I’ve been able to show my readers gains like these: 89.19% in 12 days 156% in seven days 73% in just four days So what is this strategy that works no matter what’s going on in the markets? | | | -- | |
Pivots Have Been Bad for Stocks The term “pivot” describes the Fed’s transition to easier monetary policy. That’s marked by a slowing pace of rate hikes that gives way to outright cuts. And in a year when rate increases are bludgeoning stocks, you’d think a pivot seems like a welcome change. But pivots don’t always end well… It’s actually been quite the opposite when you look at the last two major bear markets with the 2000 “dot-com” bust and 2008/2009 financial crisis. The chart below shows the overnight federal funds rate (orange line) and the S&P 500 (blue line). The Fed pivot took place before stocks took their biggest plunge (grey dotted line). Take a look… 
(Click here to expand image) That’s because a pivot signals tough times ahead for the economy, and thus corporate profits. This may seem counterintuitive… But to understand the negative foreshadowing, let’s see what drives a pivot. Free Trading Resources Have you checked out Jeff's free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here to check it out. | Pivots Signal a Damaged Economy The Fed is tasked with two jobs: keep prices stable and people employed. Achieving both requires a balancing act with interest rates to keep the economy at the right speed. But unfortunately, the Fed tends to push rates too far in either direction. Those extreme moves create boom-and-bust cycles for the economy… Like slashing overnight rates to zero in the wake of the pandemic. Now we’ve seen four consecutive 0.75% hikes – a truly unprecedented rate. And pivoting is historically a bad signal because it follows the stark realization by Fed officials that they’ve pushed things too far and took the economy to the brink. But by then, it’s too late. Take another look at the federal funds rates in the chart below, this time with recessions shown in the grey shaded areas. Pivots happened before the last three recessions hit… 
(Click here to expand image) That means pivoting is a sign the Fed has gone too far in their battle against inflation – and is doing serious damage to the economy… By the time the Fed realizes it’s making a mistake, it’s already too late for the economy and corporate earnings. And that’s why you see further pressure on stock prices. Financial genius reveals unusual investment strategy that works in ANY market So don’t take a Fed pivot as an all-clear signal. Rather, it’s a sign this bear market has room to run. My colleague Jeff Clark has also shared his analysis on why he thinks this bear market isn’t over. But that hasn’t stopped him from taking advantage of the opportunities bear markets offer. Just last week, Jeff took advantage of the jump in gold and silver prices to close out five trades for gains as high as 167%… proving that even though the bear isn't going into hibernation anytime soon, there's still ways to play the market. If you'd like to receive his next trade alert, you can join his flagship trading advisory right here. Best regards, Clint Brewer
Analyst, Market Minute Reader Mailbag In today’s mailbag, a Jeff Clark Trader member shares his experience… I’ve made my money on GDX but got in late. I’ve made money on most of the rest too, so far. If I had more to invest, then I would have made a bundle. Excellent service! Thanks, Jeff. Keep the good trades coming. – Harry H. Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@jeffclarktrader.com. In Case You Missed It… Bear or bull market, this highly successful trader has shocking new forecast Nobody believed Larry Benedict’s prediction in February 2020. The DOW plunged 3.5%, and he told CNBC, “It seems like there’s much more to come.” Within a month, the market plummeted 34%. Then, nobody believed Larry at the start of this year, either. He predicted that “all the indexes will be negative for the year,” with the Nasdaq leading the way. Once again, he was spot-on. Anybody who followed his recommendations could be well in the black. Now, for the first time, Larry’s coming forward to share a brand-new forecast. Click here to watch his interview right now. 
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