Hey, Ross here:
The Fed’s preferred inflation data just came out this morning.
And that leads us to the question:
Will the Fed’s predicted rate hike crush the stock market?
Let’s take a look.
Chart of the Day
Right now, traders are pricing in a 34.2% chance of a rate hike at the next Fed meeting in July.
If that doesn’t happen in July, traders expect a 66.7% chance of that happening at the next one in September.
If it still doesn’t happen in September, traders are pricing in a 75.6% chance of it happening in October.
By the final meeting in December, it’s an 84% chance…
Meaning there’s an 84% chance of at least one rate hike this year.
Based on what I’m seeing in the inflation data right now, this isn’t surprising.
But here’s what most people will find surprising…
The effect of rate hikes on stock prices.
It is almost an accepted “truth” that rate hikes always mean weaker stock prices.
But let’s look at what the data actually says.
As you can see, the data of how stocks do after rate hikes is much more mixed than what you would expect.
In fact, the (slight) majority case is for stocks to be higher six months and one year after rate hikes.
So I wouldn’t necessarily be too bearish on the Fed rate hikes later this year.
But the real lesson from today’s newsletter has nothing to do with rate hikes.
I elaborate below.
Insight of the Day
Many so-called market “truths” are just perception – not reality.
There are a lot of “truths” about the market being spread around out there.
On the surface, some of these “truths” can seem intuitive – and even obvious.
But probe deeper…
And you’ll find that reality is quite different – and even the opposite.
Why does this matter?
Because in the gap between perception and reality – you find opportunity.
And tomorrow, I’ll share more about how to follow the best traders in the world at exploiting these perception-reality gaps.
In the meantime…
I just released a brand new YouTube video on the $3 stock powering every quantum computer out there.
Customer Story of the Day
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Clear, simple and the most effective method I’ve come across. I’ve invested in training with other “gurus” who although they were good, they left out the most important part. … HOW TO FIND STOCKS.
Ross and his crew have completely hit it out of the park. With his method of entering and exiting my account is up 13% in a month.
I have multiple stocks currently at 50% gains after only a few weeks. The cost to join his memberships will be made back in less than a month. ….. unlike others out there”
Ross Givens
Editor, Stock Surge Daily
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