Here’s Why I Think NOW Is The Time To Stay Long

Despite the media blitz surrounding the Trump-Putin summit in Helsinki recently, there weren’t any large news catalysts to speak of.


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Trump did publicly criticize the Federal Reserve’s current interest rate trajectory on CNBC. The president said he wasn’t “thrilled” by the Fed’s rate increases, but that he was “letting them do what they feel is best.” Trump then ramped up the criticism via Twitter, charging that tighter monetary policy was punishing the United States by contributing to a stronger dollar.

#-ad_banner-#While I believe this is mostly Trump being Trump, he could use the media to put more pressure on Fed Chair Jerome Powell, which theoretically could influence his hawkishness and subsequent votes…

Some analysts really believe that damage was done. Greg Valliere, the chief global strategist at Horizon Investments, said Trump is likely to ratchet up criticism as the Fed continues to raise rates.

If the Fed does follow through on its plan to deliver two more increases this year and another two to three in 2019, Powell will likely face criticism not just from Trump but from Democrats such as Sens. Elizabeth Warren and Bernie Sanders, who may argue that aggressive tightening isn’t necessary.

As a result, Powell said he “may feel compelled to show that he isn’t swayed by political pressure and is vigilant against inflation.”

The Fed has dispensed two interest rate increases so far this year, bringing the fed funds rate to a range of 1.75% to 2% (still low by historical standards). The Fed has signaled it is on track to deliver two more rate increases this year.

As I write this, Fed fund futures traders predict a 61.7% chance policy makers will raise rates at least twice more this year, up from 58.7% a day earlier and 56.6% a week ago, according to the CME FedWatch tool.

Frankly, I’d like to see a slowing of rate hikes.

The dollar did respond to Trump’s actions, moving sharply lower… and that might not be the end. And all this could benefit the markets.

Earnings are also starting to look better than expected.

With results already in from many S&P 500 members, it seems the Q2 earnings season is on track to be as good as what we saw in Q1.

Don’t forget that Q1 earnings growth had reached the highest level in more than seven years, with many seeing that pace of growth representing a peak.

The blended Q2 earnings growth (blending the reported with the unreported) currently stands at +21%, which is below the preceding quarter’s +24.6% level — but still better than what most were expecting.

Given the momentum we have seen from the S&P 500 members that have reported already, both in terms of growth and positive surprises, we could see Q2 earnings growth gaining on Q1’s level as the remainder of this earnings season unfolds.

All this means is that it might be a good idea to stay net long!

All of this to say that the action I’m seeing bodes well for bulls, but I wouldn’t get too comfortable as Trump’s quasi-trade war continues.

China is threatening to volley a new round of tariffs back at the United States. Tariff negotiations are likely to continue to weigh on market prosperity until remedied.

As stated before, my belief is that there needs to be some rebalancing of trade tariffs, but that too much of this silly and dangerous game/negotiation tactic will have an effect on economic output. I just hope that Trump is smart enough to realize the ramifications of both actual and perceived trade sanctions. (If you’d like to hear me talk more about this at length, check out my recent appearance with Neil Cavuto on Fox Business.)

Frankly, I was hoping that all these threats would get the participants to the negotiating table sooner… But my Profit Amplifier subscribers and I aren’t letting that get in the way of making timely trades, using the power of my proven trading strategy to turn small price moves into mega-gains.

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