Powell Finally Opens His Eyes to Inflation… a Year Later

by | Oct 22, 2021 | Market Updates

I can’t think of a better way to wrap up the week.

Our Global Energy Crisis plays on the United States Natural Gas Fund (NYSEArca: UNG), CONSOL Energy Inc. (NYSE: CEIX) and Peabody Energy Corp. (NYSE: BTU) flashed us fantastic entry opportunities. Our play on the financial sector has worked out great and we took solid profits on our ETF longs.

BTU in particular is up 4.2% from Thursday’s lows, and if you were really opportunistic, as much as 8%.

And now that Federal Reserve Chair Jerome Powell has finally acknowledged what we’ve known for a year, there’s a way to trade inflationary pressures that are only rising.

Source: Bloomberg

I still think both of those stocks are buys on any weakness over the next month as weather moderates and pulls down fossil fuel prices in the process.

Remember, buy a little at a time — a tenth of a stake or less as you establish a core position.

Our new addition to capitalize on the likely increase in post-delta variant travel — Avis Budget Group Inc. (Nasdaq: CAR) — is up over 6% in the three days since we introduced it to the watchlist.

But I want to talk about two that have gone down in particular, because they’re the ones that should be at the top of your mind.

Watch These Trades for Inflationary Pressures

Both the ProShares UltraShort 20+ Year Treasury ETF (NYSEArca: TBT) and the ProShares UltraShort Gold ETF (NYSEArca: GLL) are down the past two days.

First off, although interest rates may have been down a little Friday, the trend is clearly oriented in the opposite direction.

Source: Bloomberg

That’s indicative of strong inflationary pressures, which Federal Reserve Chairman Jerome Powell FINALLY acknowledged in his remarks.

Just a polite reminder now that when inflation rises, so do interest rates… and that’s when both bond prices and gold fall.

Source: Bloomberg

So if gold and treasury prices are down on Monday, we’re going to take a hard look at both of these assets as a way to trade inflationary pressures.

Because this correlation has been set in stone for decades… It has truly stood the test of time.

And if there’s one thing that I like in volatile markets, it’s a strong price relationship.

Hope this week has been a good one for all of you though… I can’t wait to get back at it next week!

All the best,

Matt Warder

Fortune Research

WRITTEN BY<br>Matt Warder

WRITTEN BY
Matt Warder

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