[Altos Weekly Traders Edge] Unpriced Risks in the Market...Details Inside

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The historical options over the last 5 years have shown a remarkable 169.1% average return per trade of winners and losers over that same 28 day average hold time. The High-Stakes Game: Decoding the Fed's Strategy Weekly Market Overview Hi Traders, Recent economic indicators and market volatility have prompted a reassessment of the Federal Reserve's potential actions. While the market initially reacted strongly to hints of rate cuts, a degree of calm has returned. However, uncertainty remains high. The current market pricing suggests a dovish Fed, anticipating significant rate cuts to support the economy. Potential Fed Scenarios Various scenarios can be envisioned, each with distinct implications for interest rates and the US dollar. - Scenario 1: A Measured Approach In this scenario, the Fed adopts a cautious stance, balancing its dual mandate of price stability and maximum employment. While acknowledging that inflation remains above target, the Fed recognizes the risks of overtightening. A moderate easing cycle begins with a 50 basis point cut, followed by gradual reductions. The Fed funds rate settles at a neutral level, ensuring a soft landing for the economy. This scenario could have a mildly bearish impact on the dollar, particularly against the euro. However, substantial gains for the euro may be limited as Europe also navigates a complex policy landscape. - Scenario 2: Aggressive Easing Rising unemployment and concerns about job losses could prompt the Fed to adopt a more aggressive approach. To mitigate the threat of a downturn, the Fed cuts rates decisively, even venturing into mildly stimulative territory. As the economy stabilizes, a gradual normalization of policy begins. This scenario would likely lead to a deeper decline in the dollar, as the terminal rate falls well below current market expectations. - Scenario 3: The Stagflation Challenge Persistent inflation forces the Fed to maintain tighter policy for longer. With the job market weakening, stagflation fears emerge. A deepening recession helps to dampen price pressures, allowing the Fed to finally initiate rate cuts. The Fed must act decisively to support the economy and prevent inflation from significantly undershooting its target. Stagflation presents a complex challenge for markets. The US yield curve could re-invert, favoring the dollar against pro-cyclical and emerging market currencies. Commodity currencies could also suffer until the Fed signals that inflation is under control. Subsequently, the dollar could face a sharp decline as the Fed cuts rates aggressively. Political Considerations The upcoming US elections add another layer of complexity. Different policy agendas could significantly impact the economic outlook and the Fed's response. A potentially looser fiscal policy under a certain administration might keep inflation elevated, potentially limiting the Fed's ability to cut rates. Conversely, a tighter fiscal stance could provide more room for monetary easing. The political landscape will also influence the dollar's trajectory. A mix of loose fiscal and tighter monetary policies could strengthen the dollar. Alternatively, a less aggressive trade and foreign policy agenda coupled with tighter fiscal policy could lead to a weaker dollar. Conclusion The Federal Reserve faces a complex and uncertain environment. The path of interest rates will depend on evolving economic data and the Fed's assessment of risks. It is crucial to monitor these developments and consider various scenarios to anticipate potential market twists and turns. The interplay of economic and political factors will continue to shape the outlook for both interest rates and the US dollar. - The Team at Altos Trading In the next article: The escalating geopolitical landscape poses a formidable challenge to the current market optimism, demanding a reassessment of risk appetite and a focus on capital preservation. Sponsor This obscure formula holds the key to 64 wins in a row Over the past 5 years, Roger Scott has uncovered hundreds of winning opportunities. But his best-kept secret? A unique stock market pattern. Since 2020, this pattern has averaged an 85% return per year, winning over 72% of the time. Join Roger’s free class to learn [this powerful strategy.]( See how this pattern can guide your stock picks. [Follow this link and enter your email to sign up!]( The profits and performance shown are not typical, we make no future earnings claims, and you may lose money. From 2/25/20 through 7/15/24, the average win rate on published trade alerts is 72%. The average weighted rate of return on options trades was 7.82% over a 13 day average hold time. Escalating Geopolitical Tensions: Unpriced Risks in the Market The current geopolitical environment is fraught with escalating tensions, casting a shadow of uncertainty over the global economy and financial markets. The potential for a direct attack on Israel and the ongoing conflict in Ukraine have raised alarms, with the prospect of a wider regional war looming large. These developments highlight the interconnectedness of global conflicts and the potential for rapid escalation. From an investor's perspective, the immediate concern lies in the potential impact on crude oil prices. A sharp spike in oil prices could trigger stagflationary pressures, complicating the Federal Reserve's policy decisions and potentially leading to a deeper recession. The interplay between rising oil prices, inflation, and monetary policy poses a significant challenge for central banks and could fuel market volatility in the near term. Beyond the immediate economic consequences, the long-term implications of the current geopolitical landscape are far-reaching. A central question is whether US capitalism will continue to prevail as the dominant global system. The strength of US corporations and the stability of the geopolitical framework are crucial factors in determining the long-term rate of return on investments. The current situation draws parallels to the 1970s, a period marked by stagflation and market volatility. The outcome of the current geopolitical tensions and their impact on the global economic order will likely shape the trajectory of financial markets in the years to come. In light of these heightened risks, investors would be wise to exercise caution and reduce their exposure to equities. The S&P 500's current valuations appear to be discounting the potential impact of geopolitical escalation. In such a volatile environment, seeking refuge in safe-haven assets like Treasury bills may be a prudent strategy. Looking ahead, the path forward remains uncertain. The future of US domestic policies and their influence on the global geopolitical landscape will be pivotal. A decisive move away from the center, either to the right or the left, could further exacerbate existing tensions and have negative consequences for the stock market. While hoping for de-escalation, investors must be prepared for continued volatility and potential market corrections. Staying updated and adapting investment strategies will be crucial in safeguarding portfolios and achieving long-term financial goals. Sponsor [New Customers earn 5.25% APY* (variable)]( Store your money with Cash Reserve, a high-yield account built for peace of mind. New customers earn 5.25% variable APY*—that’s 13x higher than the national savings rate. ** Plus, your money’s FDIC-insured up to $2M†at our program banks and no limits on withdrawals and transfers. **The national average savings account interest rate is reported by the FDIC (as of 5/15/23) as the average annual percentage yield (APY) for savings accounts with deposits under $100,000. [Sign Up Now!]( Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA Disclaimer: The Altos Trading Alert Newsletter is published as an information service for subscribers, and it includes opinions as to buying, selling and holding various stocks and other securities. However, the publishers of the Altos Trading Alert Newsletter are not brokers or investment advisers, and do not provide investment advice or recommendations directed to any particular subscriber or in view of the particular circumstances of any particular person. Altos Trading, including its owner, does not participate in any trades issued through the alert services. Subscribers to Altos Trading or any other persons who buy, sell or hold securities should do so with caution and consult with a broker or investment adviser before doing so. Trading securities and options involves risk. Prior to buying or selling an option, an investor must receive a copy of Characteristics and Risks of Standardized Options. Investors need a broker to trade securities and options, and must meet suitability requirements. Past results are not necessarily indicative of future performance. Performance figures are based on actual recommendations. Due to the time critical nature of trading, brokerage fees, and the activity of other subscribers, there is no guarantee that subscribers will mirror the performance of the service. Performance numbers shown are based on trades subscribers could enter based on the trade alerts. Altos Trading, LLC assumes no responsibility for any losses incurred by any individual or entity as a result of trade alerts or strategies taught through courses or coaching services. 7154 W State Street Suite 169 Boise Idaho 83714 USA [Unsubscribe]( | [Change Subscriber Options](