Has Uncle Jay Been Nice to You?
Hello traders,
I hope you are well and trading has been fun this week. Happy jobs day! The job numbers were above expectations but showed that the economy, wages, and overall hiring have slowed down dramatically. The data shows after a period of above-trend growth in both the economy and job market, we are now heading back to pre-pandemic levels.
The stocks gapped up on the job reports, but then gave it all back through the trading day.
I saw this interesting picture on my X of Vans, the shoe company advertising how they are beating inflation by bringing back the prices to pre-pandemic levels! I have been living in Canada for over 15 years now and I must admit, this is something I would have expected to see in Venezuela or any country dealing with hyper-inflation and not in North America! I guess the good news is that the inflation is finally coming down!
I have a friend who works for Google and really hates the Federal Reserve and Jay Powell. He thinks a decade of zero interest rate has pushed him out of the housing market in San Francisco, despite making in the mid-6 figures. He blames the Fed, and its bad rate policy for this.
On the other hand, another friend of mine loves Jay Powell. He bought his second place in 2021 at the LOWEST mortgage rate of around 2% and is now investing his ideal cash and home equity loan HELOC at short-term treasuries risk-free at 5.5%! He is eating 3.5% risk-free interest! The other day he told me how he is using this interest rate differential and basically living at his place RENT FREE. He told me “I love Jay Powell, Uncle Jay has been good to me!”
What do you think? Do you think Fed policy has helped everyday Americans or mostly hindered them? For now, money is flowing to the money market for the 6% risk-free rate!
I will be back in the office on Tuesday trading the market open! I am also heading to Toronto later next week with Ardi and Brian for a live seminar at the MoneyShow.
I will be presenting my journey on Everest, what I learned, and how it has impacted my trading. I will also share the result of my research paper on how ORB can beat long-term investing with proper leverage and risk management. If you are in the Toronto area, make sure to join us. It is a free event and you can sign up here.
To your success,
Andrew
