Which Way Wednesday – Fed Edition


S&P 500 Chart DailyThe next meeting is May 3rd.  

After that June 14th and July 26th and then no more meetings until Sept 20th.  At the last meeting (Feb 1st), Powell sent the market into a 45-day dive by saying the Fed was going to make sure Inflation was well and truly dead and it was expected rates would keep going up at all 3 of the remaining meetings before the summer break.  

Since then, the Consumer Price Index (CPI), rose 0.4% in February – which was was down from 0.5% in Jan but still much higher than 0.2% and 0.1% in Nov and Dec.  Overall CPI is up 6.0% over the last 12 months, with 0.9% in the last two months – does that seem to be slowing?  The index for all items less food and energy increased 0.5% in February (SA); up 5.5% over the year.   

CPI March 22 2023

This is NOT under control but, unfortunately, all this inflation-fighting has caused the banking sector to collapse and the Government has had to jump in with a $2Tn bailout, which will ultimately cause more inflation.  So it would be ludicrous for Powell to announce, 6 weeks after saying they are going to be tough on inflation, that the Fed will stop tightening – it will make the Fed seem crazy and out of control which, sadly, they are.  

Inflation is like the monster under the bed: It’s scary, it keeps you up at night, and no one really knows how to get rid of it…  The Fed has been trying to slay this monster with a combination of interest rate hikes, bond buying, and jawboning, but so far, it hasn’t worked at all.  With the economy already on shaky ground, it’s hard to see how the Fed can keep playing this game of chicken with inflation.

As investors, we’re left to wonder: is the Fed’s current approach to inflation really the best course of action? Or are they simply grasping at straws, hoping that something, anything, will work? And even if the Fed manages to get inflation under control, what will be the cost to the rest of the economy?  

We sent out a Top Trade Alert from our Live Member Chat Room (join us here) for one bank that we think is going to be a winner and then we added two more financials and two more short put trade ideas for our Long-Term Portfolio – as we’ve learned not to look $2Tn bailouts in the mouth – even when the Government refused to acknowledge it’s a bailout.  

That’s a joke from 2008 but the joke is still on us in 2023, isn’t it?  Still, as noted by former Senator, Al Franken, yesterday on the Daily Show – none of it really matters as we’re all DOOMED anyway.  


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Good morning, everyone. Here is the link to today’s webinar.


going to go bigger on the SPWR spread and take it up from 10/20/20 to 20/40/40 puts and calls. Unless somebody thinks this is bad timing for some reason.

Sell 10 BX 2025 $65 puts for $12 ($12,000)

Did you mean $75 or are you waiting on $12 ?

Good Morning.

The positioning in tech seems extreme, betting on no rate hike?

There seems to be movement out of banking —- and some of this is moving to larger tech with clean balance sheets – AAPL, AVGO, AMZN google METS…. some of these are hitting overpriced areas..

LOL, “seems’. Yes, WSJ says AAPL and MSFT are highest percentage market ever

i keep trying to short NVDA and it keeps not working.  😂 

actually, i am not currently short NVDA, but I am short the SMH as of yesterday.

Banks were benefitting, theoretically, from the rate spread. Cheap deposits, lend it out at increasingly higher rates. Profitability for banks was rising (of course, now we know HTM losses were lurking in the balance sheets) with higher rates, the same high rates slaughtering long duration assets in tech. But now we have falling rates and money flows back out ot banks (which are suffering a double whammy of decreasing spreads and balance sheet liquidity problems) and back into long duration tech, especially tech with quality balance sheets.
Some people think investors are willing to pay nosebleed prices for AAPL, MSFT, and GOOGL because the theory is an investor pays a high price but is more likely not to lose money in the very long run because these companies control their own balance sheets and grow profits enought to counteract the crazy price we pay for them (or did pay for them in 2021).
Incoming recession = quality balance sheet buys i guess

somebody also very recently had a chart up on twitter that shows Quality crushing Low Quality balance sheet stocks for the last several weeks. didn’t have to be quality tech, just quality balance sheet any sector.

I must have missed this earlier, but which LLM is Warren? I bought into GPT-4 and have been experimenting with it as well. Its research data is still stopped in 2021.

That’s kind of spooky, a real personality emerging.

Phil – the puts pricing is this from today? some. of these are way off… MU for instance never traded above 7.25??? others are also way off

ISRG – I just looked at the Da Vinci system (so far had just seen pictures) – it really is something…

It’s really incredible. I toured a student doctor training facility at UT Southwestern where they have 2 Da Vinci machines to practice on. They let me play on one for a while

Want to hear something sad? I was in Korea for a diplomatic thing in 2009, in the course of which I took a look at a number of medical centers around Seoul – every one of them had a Da Vinci. Word is those are outdated now; they’re moving on.

I am not a medical professional – the newer machines – how are they better?

I am assuming the gains in STP would cover the cost in the nasty market that caused all of those to be assigned? About $1.5M

Last edited 2 months ago by tangledweb

i must be a glutton for punishment. does anybody beside Phil have a buy price on /NG futures? did anybody buy any when it hit 2.12?

phil, what price would be so cheap you just back up the truck? is that 1.85? 1.45? i am trying to be ready. nat gas trades like a roller coaster; i want to be ready when it roller coasters down to such a price.

Gunder, you’re not listening. He said “reasons other than some random number”.

no, you are not listening. He said he would be interested if it drops below the previous low of 2.11. Furthermore, I did not ask for a random number. I asked for the ‘back up the truck’ price based on all the fundamentals, eg. weather patterns, gas in storage, marginal cost, relative value to oil or european nat gas, open/close of freeport, interest rates, the dollar, Putin’s maneouvers, etc.
i think Phil probably has an idea of bargain basement price below which nat gas is unlikely to go, and, even more importantly, is unlikely to stay. also, the ‘random number’ as you call it, that i suggested previously, 2.11, it hit 24hours later and bounced.
i do not understand your aversion to discussing nat gas prices below $2. there is a price there somewhere where its guaranteed money. or would you not like to buy a house for $200,000 made out of $400,000 of lumber.

I backed it up at 2.20 and gonna ride the storm out

wow, thanks for the reply. i haven’t backed up the truck yet; i am still trying to figure out at what price I would consider it a sort of fundamental and trading certainty, or near certainty. i think i am mostly waiting for one good, horrific spike downward below 2, if that comes. best of luck.

my 2 cents

Last edited 2 months ago by ce


Phil has done some fun/useful stuff with AI but I have been trying to keep some of this wizbang tech in perspective so I asked my BotBud a couple of questions:

Do you have access to 2022 and 2023 data

No, we do not currently have access to 2022 or 2023 data. This data is not yet available, as it has not yet occurred.

Does Google search have access to 2022 and 2023 data?

No, Google does not have access to 2022 or 2023 data. This data is not yet available, as it has not yet occurred.

“not yet occurred”- I guess it was insulted 🙂

Jeromes message to the markets, kick rocks.

When asked if additional policy firming means no more rate hikes in the sentence “The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”, Powell’s response was “you should focus on the ‘some’ and the ‘may’ of that sentence”.

The mind games…

Phil / Hedging

SQQQ seem to be rallying. Regional KRE are not rallying. You have sold whole bunch of puts.

Would you want to change anything in SQQQ or KRE or FAZ?


a mass exodus has begun….