The Other Side of Rising Interest Rates

Interest rates are on the move yet again... Almost everyone has talked about interest rates over and over in recent months (including us). And I bet you're starting to get tired of it. [Chaikin PowerFeed]( Editor's note: The markets and our Chaikin Analytics offices will be closed Monday, June 20, in observance of the Juneteenth holiday. Because of that, we won't publish the Chaikin PowerFeed e-letter. Look for your next issue on Tuesday, June 21. The Other Side of Rising Interest Rates By Karina Kovalcik, senior quantitative analyst, Chaikin Analytics Interest rates are on the move yet again... Almost everyone has talked about interest rates over and over in recent months ([including us](. And I bet you're starting to get tired of it. But the topic is unavoidable. After all, the Federal Reserve just announced another 75-basis-point hike to the benchmark rate yesterday. By this point, we all realize that rising rates are tough for stocks. And we've seen that rising rates are bad for bond prices as well. However, this story has another side... You see, rising rates don't just mean that bond prices are falling. They also mean that the payouts on bonds are rising. That's great news for risk-averse investors. It means they can get higher payouts on more conservative bond plays. Now, maybe your gut reaction is, "So what?" But this side of the story has worldwide effects. That's because it kicks off a global hunt for yield... Recommended Links: ["I warned the U.S. Pentagon — now, I'm warning you"]( The man who called the 2008 and 2020 crashes predicts a massive financial "heist" could sweep the U.S. He's already warned the U.S. Pentagon and the FBI. But few people are willing to admit this could actually happen on U.S. soil. Or how one move right now could make you massive profits as it unfolds. [Click here to learn more](. [‘Country Boy’ Makes Surprising $54 Million In Two Years]( Besides his wife, no one knows the true story of this quiet subscriber. Not even his kids. It's all thanks to ONE investing idea that doesn't involve stocks... options... bonds... or anything like that. And he's living stress-free even through this market crash. So what's this investment that made him a millionaire? [For the first time ever, we're sharing his story here](. Put simply, when interest rates rise, the demand for their higher payouts rises as well. And that change has the power to push money around on a worldwide scale... Imagine European bonds pay 1%. But now, similar bonds in the U.S. pay 2%. That's a 100% difference in return. And it's the kind of setup we're heading toward. It leads to a trickle-down effect... In our example, folks outside the U.S. would want to buy the American bond because of its higher yield. But they would need U.S. dollars to do that. Most individual investors don't think about changes in currency demand. But right now, more than any time in the past 40 years, it has big implications for folks like us... Economics 101 tells us that demand drives prices up. In a world of rapidly rising U.S. rates, that means demand for the dollar is soaring. And by extension, the dollar is getting "stronger" against other currencies. We can see this trend playing out in the rising exchange rates with foreign currencies. Over the past year alone, the U.S. dollar is up anywhere from 8% to 13%. (The exact number depends on the foreign currency.) That's good news for some folks. It's good for U.S. travelers on overseas vacations, for example. And more importantly, it's also good for anyone buying foreign goods... American businesses that buy foreign products will benefit from a stronger U.S. dollar. They'll be able to buy the same amount of goods at cheaper prices. And in time, that will cut down on the pain of inflation. In fact, this effect is so powerful that it will eventually lead to economic recovery as the cost of doing business falls. In turn, that will lead to lower rates. And before you know it, we'll find ourselves in the next economic boom. It doesn't feel like it now. But the bottom line is... Rising interest rates aren't horrible for everything. It's part of the cycle that will get us to a normalized, post pandemic world. Good investing, Karina Kovalcik Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 -2.35% 1 25 4 S&P 500 -3.26% 9 370 117 Nasdaq -4.04% 2 68 28 Small Caps -4.64% 125 1227 536 Bonds +0.79% — According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are strongly Bearish.. Major indexes are mixed. * * * * Top Movers Gainers [rating] NEM +3.24% [rating] CME +1.20% [rating] WMT +1.04% [rating] CHD +0.86% [rating] ABBV +0.77% Losers [rating] NCLH -11.51% [rating] RCL -11.41% [rating] CCL -11.08% [rating] PENN -11.04% [rating] ENPH -10.02% * * * * Earnings Report Reporting Today Rating Before Open After Close No earnings reporting today. Earnings Surprises [rating] KR The Kroger Co. Q1 $1.45 Beat by $0.17 [rating] ADBE Adobe Inc. Q2 $3.35 Beat by $0.04 [rating] CMC Commercial Metals Company Q3 $2.61 Beat by $0.76 * * * * Sector Tracker Sector movement over the last 5 days Staples -4.36% Health Care -5.94% Real Estate -7.87% Industrials -8.35% Financial -8.56% Utilities -8.92% Communication -9.02% Information Technology -9.42% Discretionary -10.53% Materials -10.92% Energy -13.74% * * * * Industry Focus Biotech Services 12 106 36 Over the past 6 months, the Biotech subsector (XBI) has underperformed the S&P 500 by -22.65%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #5 of 21 subsectors and has moved up 3 slots over the past week. Indicative Stocks [rating] INBX Inhibrx, Inc. [rating] HRTX Heron Therapeutics, [rating] NTLA Intellia Therapeutic * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2022 Chaikin Analytics, LLC. All rights reserved. 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