Imagine for a moment how you’d trade, or make big buying and selling investment decisions, if you knew what the Fed’s FOMC rate moves were going to be before they actually announced them.
If you’d known in June of last year that the Fed was going to push rates 75 basis points higher rather than the 50 everyone was expecting, you might have made a killing playing the market to the downside. If you’d known in December of 2018 that the Fed was going to pivot on the proposed rate hikes that had stocks reeling, you could have ridden a skyrocketing market in 2019.
Here’s the thing: there is a way to know what the Fed’s going to do before they do it. That’s because they have an unofficial “town crier” that they’ve been using to disseminate forward guidance to the public for the past six years.
His name is Nick Timiraos, and he’s the Wall Street Journal‘s chief economics correspondent. Wall Street has a different name for him: the “Fed Whisperer,” because he’s predicted the Federal Reserve’s decisions with uncanny accuracy the entire time he’s had this job. Some suspect (as I do) that he has insider information on Fed policy moves.
Dealers like Goldman Sachs and Morgan Stanley follow this guy’s coverage to get ahead of what markets are going to do. And you can too.
Now’s a great time to get started. Mr. Timiraos has just released an article that tells us what to expect in February, and it’s our surest sign yet that things are about to turn bullish. You want to get in on this now, or else you risk missing what could be a very good sky-high run.
Here’s a review of what he said before the upcoming February 1, 2023 rate decision, why you should believe it’s definitely going to happen and, now that you know, how to position yourself to make money on it.
What the Most Recent Nick Timiraos Article Predicts for Februrary
Timiraos, responsible for covering the Federal Reserve and other major developments in U.S. economic policy for the Journal, in a January 22, 2023 article published at 7:30 am titled “Fed Sets Course for Milder Interest-Rate Rise in February,” began his coverage by saying, “Federal Reserve officials are preparing to slow interest-rate increases for the second straight meeting and debate how much higher to raise them after gaining more confidence inflation will ease further this year.”
Now, I don’t know about you, but the title of the article and his opening sentence doesn’t sound like conjecture coming from a reporter. It reads like he’s telling us the facts, ahead of time.
He goes on to say, “They could begin deliberating at the Jan. 31-Feb. 1 gathering how much more softening in labor demand, spending, and inflation they would need to see before pausing rate rises this spring.”
Thanks, Nick, for telling us the Fed will cut to a 25-basis point hike when they announce their policy rate decision on February 1. And thanks for the heads-up they want to see “softening in the labor market” and will pause sometime soon, maybe after another 25-basis point hike when they meet again on March 21-22, 2023.
Why would Nick put out the prospect of the Fed “pausing” rate hikes?
First of all, the Fed has been saying they would pause at some point to let the “lag,” the time it takes the economy to reflect the impact of rapidly rising interest rates, work itself through. And second, probably because the Fed wants Nick to soothe fears the Fed will raise too many more times and tank the economy.
But why should we believe him specifically, over other journalists? Well, frankly, because his track record here is flawless.
Here Are the Calls That Nick Timiraos Has Made in the Past
Let’s look at a recent one: he called the Fed’s first 75 basis point hike, its largest increase since 1994, in a report on June 13, 2022, when everyone else expected a 50-basis point hike.
And like magic, two days later the Fed announced a surprise 75-basis point hike.
Nick’s been making those kinds of calls for years.
I remember back in December 2018 when the Fed raised rates for the fourth time that year, which had the stock market reeling, and Chairman Powell said in his December 19, 2018 statement the economy was strong enough for two more hikes.
But Timiraos’ story on the Fed decision, updated at 7:16 pm that evening, was titled “Fed Raises Rates, but Signals Slightly Milder Path of Future Increases.” It turns out Nick was right, the future path would be a lot milder, because the Fed pivoted almost a week later.
Did Fed officials panic over the stock market crashing on the news of another hike and more to come, and tell Nick to calm the waters by signaling a milder path? Probably. The market skyrocketed from there.
Last thing on Nick Timiraos, for now, and it’s some inside baseball, or inside the Marriner S. Eccles Federal Reserve Board Building, I should say.
As reported in Intelligencer in October 2022, “The Fed regularly reshuffles its press-conference seating chart, but Timiraos is always placed front row and center, face-to-face with Powell.” And “The general air inside the press room is definitely that Nick is the big character in the press corps,” says another journalist who has covered the Fed. “It’s almost like he broke the seal.”
Bottom-line, the market’s already reacting positively to Nick’s prognostication, or future fact reporting, as the case may be. And so am I. And so should you.
The Best Way to Profit from This Market Foreknowledge
With the S&P 500 above resistance, above its 200-day moving average, above the down-trending channel marker that delineated the bear market, and the Fed cutting hikes to 25 basis points and eventually going to pause, you’d be remiss not to buy some good, cheap stocks, especially those that have already started trending higher, sooner rather than later.
I’m bullish, short-term, on account of what the Fed’s going to do at their next meeting, thanks to the heads-up from Nick. And I’ve been buying selectively.
We’re not out of the woods by a long shot, and the good news currently pushing up markets could always reverse. But as long as the path of least resistance now is higher, for however long, get into the market if you’re still sidelined by fear and use stops, trailing stops, to protect any gains you get on the way up.
There are two great ways to play a short-term bullish expression like this. The first is simple: buy an index ETF, like SPDR S&P 500 ETF Trust (SPY), Invesco QQQ Trust Series 1 (QQQ), or SPDR Dow Jones Industrial Average ETF Trust (DIA). I talked about these last week as our primary instruments to trade around support and resistance levels; now’s the time to put that into action.
If you like a lot more leverage and think we can go a lot higher on account of sidelined investors’ fear of missing out, then take it a step further and buy call options on these index ETFs or on the SPX itself.
And in the future, any time you see a byline from Nick Timiraos in the Wall Street Journal, pay close attention, because he’s telegraphing the Fed’s next move. Then come back here, and I’ll show you how to play it.
— Shah Gilani
Source: Total Wealth