Stock Traders Position for July Rate Cut By the Fed

Stock Traders Position for July Rate Cut By the Fed

Fed chief faces tough task in congressional testimony: ‘Walking a tightrope over Niagara Falls’

When Federal Reserve Chairman Jerome Powell testifies before Congress on Wednesday and Thursday, he is expected to talk about slowing economic activity and increased risks, showing that the Fed is ready to cut interest rates as needed.

But Powell is also likely to keep the markets — and the White House — guessing about how soon and how deep the Fed intends to trim rates, when it meets at the end of July. The prevailing view, priced into the futures market, is for a 100% chance of a quarter point rate cut July 31.

cnbc.com/fed-chief-congressional-testimony

Traders Are Certain the Fed Will Cut in July, But Unsure What’s Next

Lurking beyond traders’ apparently unwavering confidence that the Federal Reserve will cut interest rates this month is a more nebulous outlook about what the central bank will do after that.

Traders are still pricing a full quarter-point reduction in July, yet they have slowly scaled back views on how much easing will take place for all of 2019 — lowering expectations to 64 basis points from around 80 basis points two weeks ago. At the same time, options traders are still adding to bets the Fed will embark on a series of cuts, rather than a one-and-done approach.

bloomberg.com/traders-certain-fed-will-cut-in-july

Weaponizing The Dollar Has Accelerated The Demise Of The US Empire

The signs are mounting steadily now. As the Trump administration weaponizes the dollar in defense of American hegemony, it is prompting many other nations to find alternatives to the U.S. currency as the default medium of exchange.

The long-term implications of this swiftly advancing trend, evident among allies as well as those Washington considers adversaries, cannot be overstated: At stake is the longevity of America’s global preeminence.

zerohedge.com/weaponizing-dollar-demise-us-empire

Building an Argument for Accepting Risk

Monday we discussed risk/reward, and the fact that it's useless without an edge. We should only accept risk if the profit potential justifies the risk.

So how exactly do you justify the risk?

You stack together reasons the trade makes sense. You build an argument for why you should put your money in harms way. The more reasons, the stronger you prove your claims, the more conviction you should trade with.

So what's a weak argument? That's easy, buying because of support. This reason is common, and a weak argument. It's actually the opposite of a good argument. Knowing your risk is not the same as a strong probability of continuation.  I call this trade expectation.

Trade expectation is knowing the odds of your profit target being reached versus your stop loss.

A strong argument is your stock is trading above key moving averages, shows higher highs and higher lows on the daily chart, is trading net positive and above yesterday's high. (for a long)

The primary reason you fear losing money is the poor quality of your arguments. You simply don't have a way of building a great trade. If you did, you would never be afraid to take risk. Each trade would simply be one more idea that allows the odds of winning to play out.

Pete

Pete Renzulli
 

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