Is Fed Watching a Load of Horsepucky?

"Expectations shmexpectations." You are receiving this email because you signed up to receive emails from True Market Insiders, rebranding to Sector Edge. [Unsubscribe here]( Keep the emails you value from falling into your spam folder. [Whitelist True Market Insiders](. Forgot your login information? Click [here](. [Image] Weekly Market Update Today is March 10, 2023 Hello again and Happy Friday! It’s called a “self-fulfilling prophecy.” And I’m sure you’ve heard of it or seen it in action. If people believe something should happen, or is about to happen… They’re likely to act in a way that makes it happen. Take World War One. Bill Spencer Editor-In-Chief True Market Insiders France, Russia, Germany etc. all believed they were about to be attacked by one country or by an alliance of countries. In fear, each nation set into motion their plans for defense. As one nation did so, it confirmed in the minds of the others that the first nation was, in fact, about to attack. The other nations set their “defense” plans into action. The actions of the other nations proved to the first that it was justified in having prepared for war. This logic of mutual fear in the face of out of control war preparations led to disaster. Even though everyone was “right” for thinking war inevitable! We see this self-fulfilling, self-reinforcing behavior all the time in the economy and in the stock market. Nowhere is the dynamic clearer than with so-called “inflation expectations.” If people think prices are going to rise, they’ll rush to spend their money before it loses value. (Inflation isn’t really a case of “things cost more” but a case of “money is worth less.”) That spending frenzy constitutes “demand.” That extra demand in the face of existing supply drives prices higher. People see prices rising and think “I knew it! I’d best spend my cash now before it’s worth less later.” Rinse and repeat… The key word here is “expectations.” And not just expectations around inflation. The financial news is chock-a-block with chatter about how Fed Chairman Powell’s testimony before Congress “caused” this week’s swift descent in stock prices. That prices descended swiftly isn’t up for debate. What’s less clear is how much Powell’s words had to do with it. The current “thinking” seems to be that Powell spoke hawkishly, signaling that interest rates will be (all together now) “higher for longer.” Higher rates are bearish for stocks, therefore… Sell! Hence the decline. One problem I have with that interpretation is this. The Nasdaq 100 (NDX), like its better-known cousin the Nasdaq Composite, is filled with tech companies. Conventional wisdom says these firms are more than normally sensitive to interest rates. For that reason, investors expect NDX to fall when rates rise, or, what amounts to the same thing (see Prophecy, Self-fulfilling, above) when investors expect rates to rise.   Below is a sponsored ad from our friends at Trend Trader Daily. Please note the results are from some of their best performing. Some opinions may differ from what you read in True Market Insiders. To opt out from receiving special offers [click here](. - Chris Rowe, Founder I call it “Holo-Core technology,” and it may look whacky… But it has the potential to sell 2.5 billion units, making it the [best-selling product in history](. Why such a high-flying forecast?  Because the (pictured) device could [replace every smartphone on Earth](. And now investors have a shot to earn oversized profits. [Click here before April 26 »](   But here’s how NDX has performed over the past month versus the Dow Jones and the S&P. The Nasdaq 100 is spanking the other indices, relatively speaking. Which, when it comes to investing, is the only way to speak. So how much do expectations that interest rates will rise really matter here? It’s hard to say. And even if it were easy to say, there’s no upside to saying it. If I slip on the ice and dislocate my coccyx, I don’t want the ER doctor asking, “Yes, Bill, but why did you slip? Until I know that I’m afraid I can’t ease your pain.” So where does that leave us as investors? In the same place we’ve always been. And in the same place we’ll always be, if we’re smart. We’ll pay less attention to “why” things are happening and more to “what” is happening. That means looking at which sectors are outperforming right now, high rates or low. Inflation or not. When we’re bullish that means focusing on sectors that are outperforming the market and the other sectors. When we’re bearish that means focusing on sectors that are underperforming. Dive into True Market Insider every Monday - Thursday, and enjoy having Chris, Tobin, Costas and me show you which sectors those happen to be. And how you should play them. Thank you as always for stopping by. Have a great weekend, Bill Spencer Editor-in-Chief, True Market Insiders ******************************************************* Yes, expectations or not, this market can in fact drive you a little crazy! Which is why this is no time to be flying blind… … or playing by a “conventional wisdom” playbook. I mention that because Chris Rowe is now granting a limited number of readers access to his flagship Sector Prophets [sector research and relative strength platform](. New users of the platform will AUTOMATIC enrollment into Chris’ twice-weekly LIVE mentoring sessions. And to make it as easy as possible for you to access the platform, we’re lowering your entry fee by an ADDITIONAL 40%. 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