Why I am still in Cash
I am a great believer in the health of the economy. The earnings releases and other data points just reinforce how strong things are.
However, I am focused on the next Fed meeting August 8th.
1. Fed does nothing
2. Fed raises rates and says "we're done"
3. Fed raises rates and maintains options to do it again
It's all about the sacrifice ratio - how much economic growth the Fed will sacrifice to keep inflation down. Because we do have inflation well above their targets.
I have sat out the last 2 weeks (which have been very positive ones in the market). I have basically been willing to sit out a few points of gain rather than lose more if rates are hiked. Because I think that we are in either option 2 or 3, and the odds are that the market won't like either one.
If I'm wrong, then we'll get back in.
Meanwhile, the riskier model - Turbo - has several positions.
However, I am focused on the next Fed meeting August 8th.
1. Fed does nothing
2. Fed raises rates and says "we're done"
3. Fed raises rates and maintains options to do it again
It's all about the sacrifice ratio - how much economic growth the Fed will sacrifice to keep inflation down. Because we do have inflation well above their targets.
I have sat out the last 2 weeks (which have been very positive ones in the market). I have basically been willing to sit out a few points of gain rather than lose more if rates are hiked. Because I think that we are in either option 2 or 3, and the odds are that the market won't like either one.
If I'm wrong, then we'll get back in.
Meanwhile, the riskier model - Turbo - has several positions.
posted by Andrew at
8:14 AM
3 Comments:
Another possibility is Fed doesnt increase rate this time, but retains the option of hiking it up in fall?
I am interested in strategy post Aug. 8 (as soon as the Fed announces its move or no move). What are the best candidates to go long / short in each of the moves?
It doesn't matter even if FED pause as the economy is cooling off based on friday's trades..Better to invest in emerging markets again.
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