The Perfect Trade To Profit From The Consumer Spending Boom
Since the end of World War II, inflation has been relatively constrained. There have been just a few times when the year-over-year change of the consumer price index topped 5%.
You can see this illustrated in the chart below.
Source: Federal Reserve
In the late 1940s, inflation roared after the government lifted price controls that had been imposed during World War II. In the 1950s, inflation rose as the government increased spending to fight the Korean War. The Vietnam War explains the rise in inflation in the 1960s.
In the 1970s, wars indirectly drove inflation. In the early 1970s, oil prices jumped after OPEC imposed an embargo on countries that had supported Israel in the Yom Kippur War. Late in the decade, the revolution in Iran lowered that country’s oil production and prices rose again.
The inflationary spike in the early 1990s was again due to oil and war, this time the first Gulf War that ended quickly.
The next time inflation spiked was in 2008. This time there wasn’t a war. China’s economic growth increased demand for raw materials, especially oil, and the spike in oil drove inflation higher.
What We Can Learn From This
Over the past 70 years, history shows inflation has generally been explained by an event. This time is different. There is no easy answer on what’s causing inflation.
Oil is back to its pre-pandemic highs. But that wasn’t an exceptionally high price level.
It’s possible the Federal Reserve is behind the spike in inflation. The next chart shows that money supply has increased sharply.
Source: Federal Reserve
This could be difficult to reverse but the Fed is no doubt working on a plan.
For now, it’s likely that much of that money will be spent on goods and services or invested in stocks, real estate, or cryptocurrencies. That gives us an opportunity to profit…
How I’m Trading This
As the money is spent, companies like Discover Financial Services (NYSE: DFS) should benefit.
Discover is a digital banking and payment services company. The company issues the Discover card, and offers private student loans, personal loans, home loans, checking and savings accounts, and certificates of deposit through its banking business. These are businesses that profit from consumer spending.
Discover charges merchants for processing payments, and its payments networks have been growing rapidly.
These small charges, on billions of dollars in transactions, should allow the company to steadily grow its earnings.
You see, most investors would simply buy a stock like DFS and hold it for the long run. There’s nothing wrong with that, but with my “Fast Money Crossover” technique, we can generate immediate income from DFS.
In the chart below, you can see that DFS is on an Income Trader Volatility (ITV) “buy” signal. This is the award-winning indicator I developed to identify trades over at my premium service, Income Trader.
The chart also shows that the price of the stock has been moving sideways for months. This sideways price action could be setting the stage for a rally in the stock.
We’ll be in the trade for 45 days or less, and expect to earn about 3% on our trade (or 25% annualized). Best of all, we get paid immediately. Contrast this with traditional buy-and-hold, where investors would have to wait an entire year to collect a yield of less than 2%. But as long as DFS doesn’t fall below a certain threshold, we can repeat another trade like this again if we want…
As I’ve said before, trading strategies like this allow us to remain flexible with our trading capital. We can earn quick income payouts, and quickly move on to the next trade. And while most regular investors may not be familiar with this strategy, the good news is anyone can do it…
This strategy has delivered a 90.2% win-rate for my readers year after year, allowing them to generate thousands in extra income each month…
In just three easy steps, they’re able to get a simple “P.I.N.” code that unlocks access on-demand cash payouts every Wednesday, like clockwork. You could be making $748 (or more) instantly from these trades in just a few minutes.
Want your chance to get in on the action before the next trade goes live? Go here now.