This Is When the Fed Will Pivot

Use this chart to plot the Fed’s next move. [Jeff Clark's Market Minute]( This Is When the Fed Will Pivot By Clint Brewer, analyst, Market Minute Ever since the S&P 500 reached its 200-day moving average (MA) one month ago, it’s been a rough stretch for investors. Recently, things haven’t gotten any better. Let’s start with the latest Consumer Price Index (CPI) report… Last week, the CPI revealed that core inflation increased by more than expected in August. Since the core index strips out food and energy prices – which are subject to short-term whipsaws – it’s a sign that inflationary pressures are becoming more entrenched. But economists and investors were hoping for the exact opposite… Recommended Link [Make MORE During Crashes (Trading Millionaire Reveals His #1 Retirement Stock)]( [image]( After going viral with over 1.4 million views… One of America’s top millionaire traders says: “QUIT Panicking! 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It also means that rising interest rates – the main catalyst behind this bear market in stocks – aren’t going away any time soon. Higher rates drag on stocks in two ways: - It makes the return on fixed income investments (like bonds) more attractive, thereby drawing funds away from equities. - Rising interest rates put the brakes on economic activity, which slows corporate earnings (like FedEx’s profit warning last week). That’s why the stock market shed over 4% the day of the inflation report, as investors screamed in horror. Yet, Federal Reserve Chairman Jerome Powell will keep ignoring the stock market’s cry for mercy over rate hikes. Here’s why… 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. The Fed Will Break Something There’s a critical link between interest rates and the broader economy you don’t hear discussed very often – financial conditions. Think of financial conditions as the availability of cheap and plentiful credit, or lack thereof. When conditions are “loose,” it means funds are plentiful and cheap. That’s high octane fuel for stimulating the economy. But when conditions get “tight,” it can extinguish demand for goods quickly. For example, the housing market has quickly gone from red hot to struggling as more expensive interest rates squash demand. Single-family housing starts have plunged by 23% since the start of the year. Officials at the Fed are well aware of this link between financial conditions and economic activity. In fact, Fed Chair Powell stated that the central bank would consider moving more aggressively to tighten financial conditions and tame inflation. Now here’s the thing investors don’t want to hear… Despite multiple rounds of aggressive rate hikes, financial conditions are still looser than average! You can see that in the chart below, which is a measure of financial conditions from the Fed’s very own Chicago district… [(Click here to expand image)]( This is their own in-house indicator, with the solid black line representing the long-term average. Anything under that line indicates that conditions are looser than average, and tighter when above. If you’re looking for a Fed pivot, don’t hold your breath until conditions have tightened much further. Or until something breaks in the capital markets because of it. [The One Ticker Retirement Plan: Over the Shoulder Demo Now Available]( As a trader, that means you shouldn’t lose sight of the big picture backdrop – we’re stuck in a bear market until there are signs that the Fed will relent on interest rate hikes. So, staying tactical and adaptive in your approach is paramount to navigating this stock market. Best regards, Clint Brewer Analyst, Market Minute Reader Mailbag Under what conditions do you think the Fed will reduce the interest rate hikes? Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com. In Case You Missed It… [Bezos & Musk investing billions to transform America]( This is troubling. Have you heard of COP26? Almost nobody has. Amid the distractions caused by lingering health issues, conflicts overseas, shortages, and inflation… Treasury Secretary Janet Yellen recently took the stage at COP26 in Glasgow, Scotland to address some of the world’s most powerful people. From the stage, Yellen called for world leaders to commit to a $150 trillion ‘global transition’ of our economy. Since then, Bank of America has signed the accord, along with 131 countries, 234 cities, and 695 of the world’s biggest companies. Jeff Bezos and Elon Musk have invested in this ‘transformation’ as well. What is it that Yellen, Biden, Trudeau, Bezos and Musk are pushing for? And what does it mean for your money? Investigative journalist and renowned economist, Nomi Prins has followed the money… And what she’s found is startling. [Go here to see how this ‘transformation’ will play out – and what it means for your money.]( [image]( Get Instant Access Click to read these free reports and automatically sign up for daily research. [The 101 Guide to Pre-IPO Investing]( [The Ultimate Guide to Taking Back Your Privacy]( [An Insider’s Guide to Making a Fortune from Small Tech Stocks]( [Jeff Clark's Market Minute]( Jeff Clark Trader 55 NE 5th Avenue, Delray Beach, FL 33483 [www.jeffclarktrader.com]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. 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