[Fighting the Fed] Is it Finally Time to Trade Against Them?

Also inside, beaten-down stocks ready for a reversal! Picks from the Editor SPONSORED (Newsletter Continues Below) Sponsored [A 100% Win Rate In 2022… Over The Past 6 Years...]( The next 10 minutes could change your life. We’ve recorded a special sit-down interview with a reclusive millionaire who details how he’s closed out winning trade after winning trade throughout the volatility of 2022. In fact, he hasn’t closed a single losing trade since 2016. Sounds impossible? It’s not - and he’ll prove it to you. [Click to see this exclusive sit-down interview.]( [Privacy Policy/Disclosures]( The Inflation Battlefront: The Fed's Standoff with the Markets  Hi Traders,  If you’ve been trading for a while, you probably heard about that age-old piece of advice that gets whispered in the ears of newbie investors: “Don’t fight the Fed.” Kinda sounds like something out of a movie, doesn’t it? It used to be the Wall Street version of “wash your hands before dinner.” But here’s the kicker: It seems like that wisdom has gone out the window like yesterday's bad sushi. Back in the day, when the Federal Reserve (Fed) gave us a wink and a nudge about loose monetary policy, we’d all nod and follow suit. Now? Not so much. The Fed is giving us the “I’m watching you” sign, signaling tight policy for the foreseeable future. And instead of falling in line, investors seem to be on a mission to prove they can take on the big guys. They’re betting against the Fed, expecting big interest rate cuts - more than one percentage point by next January. The plot thickens as US Treasuries rally, even with an inflation report showing stable numbers around 5% (give or take a 0.1%). I've got to hand it to the markets, they've got moxie. They’re not only forecasting a lower peak rate but also an earlier shift to loose policy, or deep rate cuts. But the question on everyone's lips is, are they betting on the right horse? Now, let me put on my future-teller hat. For a while now, we have been waving the red flag about high uncertainty, both in the macroeconomic environment and the policy response. Let's break it down and look at three key uncertainties that might determine if our brave investors are going to win this fight or if they've bitten off more than they can chew. First, let's talk growth outlook. If you're expecting the economy to crash and burn into a deep recession, betting on significant rate cuts makes sense. Personally? I'm not convinced. Sure, we've had some bumps in the road: higher interest rates, inflation hitting purchasing power, and a recent bout of banking-sector drama. But let's give credit where credit's due: the US economy is like the little engine that could. It keeps chugging along, showing impressive resilience.  Household consumption remains robust and the labor market is flexing its muscles. The unemployment rate in April was at 3.4%, a low we haven't seen since bell-bottoms were in fashion back in May 1969. And don't get me started on the employment rate for prime-age workers (25-54 years), almost hitting record highs. Secondly, let's not forget about inflation and the real interest rate. In an alternate universe where inflation declines faster than expected, a pivot might be justified. But in this universe, inflation would have to drop like a lead balloon for the Fed to feel comfy cozy about cutting rates by over one percentage point. Lastly, we need to talk about the Fed's stamina when it comes to fighting inflation. In the past, the Fed has shown a tendency to lean towards a dovish stance. But times are changing. The recent banking sector turmoil serves as a sobering reminder of the risks that can build up due to excessively loose monetary policy. To wrap this up, as some of the macro uncertainty clears up, I think we'll see that the economy is headed for a minor hiccup, not a full-blown recession. And if that's the case, plucky investors may find out the hard way that they should have heeded their own old wisdom: Never fight the Fed. Now, bear in mind, there's always a risk. Investing isn't a guaranteed win. Values can drop faster than a hot potato, and there's a chance you might not get your full investment back. It's like going on a roller coaster - the ride can go up, down, and all around. Bond prices and interest rates are like bickering siblings, always moving in the opposite direction. So, if interest rates rise, the value of bonds in your portfolio might take a hit, and that's as fun as a root canal. Changes in the credit rating of a bond, or even in the financial strength of the bond's issuer, insurer, or guarantor, could also affect the bond's value. In the end, whether you're a seasoned trader or a rookie investor, remember to take a moment and consider the risks. And while you're at it, perhaps we should revisit that old wisdom: "Never fight the Fed." It may not be as outdated as we think. Investing isn't a David vs. Goliath match where we root for the underdog. It's a strategic game of chess, and sometimes, it pays to follow the wisdom of those who've played the game before us.  Keep on keeping up!  John @ Traders on Trend  (In the next article: Looking for beaten down stocks that are ripe for a turnaround? Find out below! 👇) [Your Chance to Get a Piece of the Crypto Pie]( [(Privacy Policy/Disclosures)]( Check the Free Presentation Today ☝ SPONSORED Recovery Plays: 2 Stocks Set for a Turnaround Everyone of us wants something that could make our wallet a bit heavier - buying shares in stocks that have taken a bit of a tumble, even though their financials look as solid as my grandmother's fruitcake recipe. Now, don't get me wrong, not every stock on a downward slope is a bargain, some are more like a lemon at a used car sale. We have recently decided to cash in on post-earnings weakness and buy more shares in a couple of stocks. Why? Well, despite the fact that the stock market has been playing hide and seek this earnings season (the S&P 500 is practically in the same spot as it was before the first-quarter results were announced), there have been some serious moves - think salsa dancing level - in individual stocks. So, let's chat about two stocks that may have gotten unfairly sent to the doghouse. First up, we've got the Oracle of Omaha, Warren Buffett, who recently told investors that there will always be golden opportunities because, well, people do silly things. He didn't spell out what these silly things are, but I'm willing to bet my favorite coffee mug he's alluding to investors who panic sell due to short-term hiccups instead of buying with an eye on long-term potentials. Now, I'm not saying we should judge those trigger-happy folks too harshly. We all know that the average investor's account spends more time in a slump than a victory lap. So, keeping losses in check is essential to ensure you're still in a position to profit later. You wouldn't want to buy a sinking ship like Polaroid or Sears and hold onto it until it completely capsizes, right? The real issue isn't selling shares in companies facing a rough road ahead; it's ditching companies that are doing well and are likely to keep doing so. In those cases, selling could mean a missed opportunity for sellers and a potential windfall for buyers. But hey, knowing which companies to bet on is easier said than done. Sadly, there's no magic formula to gain that level of knowledge and conviction. It's like trying to build an IKEA shelf without the manual - it requires work, lots of it. But trust me, it can pay off, even if only some of your picks end up winning. You won't hit the jackpot every time, but the odds will be in your favor. This brings us to the recent buys by analyst Chris Versace.  (article continues below) Sponsored [A 100% Win Rate In 2022… Over The Past 6 Years...]( The next 10 minutes could change your life. We’ve recorded a special sit-down interview with a reclusive millionaire who details how he’s closed out winning trade after winning trade throughout the volatility of 2022. In fact, he hasn’t closed a single losing trade since 2016. Sounds impossible? It’s not - and he’ll prove it to you. [Click to see this exclusive sit-down interview.]( [Privacy Policy/Disclosures]( SPONSORED  🔼 Pay attention, this is worth your time! ☝  (article continues)  He decided to up his stake in two stocks after they took a nosedive despite strong earnings reports. Let's dive into these stocks. First, we have Axon Enterprise, the folks behind the Tasers used by law enforcement. Despite reporting sales of $343 million in Q1, up 34% from a year ago, and a whopping 96% increase in earnings per share, its shares stumbled 15% after the report. A bit surprising, don't you think? Versace thinks so too. He's convinced that Axon's new products, despite impacting margins in the short-term, could be a boon in the long term. Also, with software and service solutions making up a larger portion of Axon's total revenue, the company's margins could be set for a boost.Versace also bought more shares of Clear Secure, a provider of travel security pre-screening. Despite a nice growth in revenue and EPS last quarter, shares dropped 8%. Versace seems to think that some investors may have been spooked by a slight dip in membership renewals or the fact that bookings remained flat quarter-over-quarter. However, Versace sees the bigger picture and believes that Clear Secure has a lot of runway left for new business opportunities. Let's look at the facts: Axon and Clear Secure both operate in the security sector, a field that's going to stay relevant for the foreseeable future. Law enforcement needs non-lethal alternatives, and the public demands greater accountability. This is where Axon steps in with its body cameras and software that allow law enforcement to store and share data. On the other hand, the need for airport security isn't going anywhere, and that's where Clear Secure shines with its time-saving pre-screening solutions. Let's not forget, Versace also mentioned Clear Secure's potential expansion into health verticals. Plus, the company has already started producing shareholder-friendly cash flow, allowing it to declare a special dividend and buy back 281,838 Class A shares. Talk about a win-win! So, here's the moral of the story, folks: When it comes to investing, don't be too hasty to sell off those stocks just because they're having a bit of a bad hair day. If their financials are solid and their long-term prospects look good, they could turn out to be the Cinderella story of your portfolio. And remember, the stock market isn't always a scary place. Sometimes, it's like a quirky flea market where you can find hidden gems among the clutter. So, don't be afraid to roll up your sleeves and dig in. After all, as Buffett said, there will always be good opportunities because people do silly things. And as investors, our job is to profit from those silly things. Oh, and one last thing, always make sure you do your homework before investing. It might not be as fun as binge-watching your favorite Netflix series, but trust me, it's worth it. Happy investing, folks!  Disclaimer:  The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein.  Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.  Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, be equal to any corresponding indicated historical performance levels or be suitable for your portfolio.  Any investment results set forth in this document are not net of expenses and execution costs, nor do they account for other relevant trading or investment fees. Please visit tradersontrend.com/terms for our full Terms and Conditions.   [UNSUBSCRIBEÂ]( TradersOnTrend.com  COE MEDIA.   1126 S Federal Hwy Unit #827   Fort Lauderdale, FL 33316Â