The long-awaited Fed meeting has come and gone.
The Fed meeting, which happened on Thursday, came packed with new plans.
I’m sure today’s topic will come as no surprise – but we need to talk about the recent Fed meeting and what it means for you and your investments.
Just yesterday, the Federal Reserve announced a massive policy shift. This shift is willing to allow inflation to run wider than usual to bolster the labor market and the overall economy.
Chairman Jerome Powell explained that the shift was due to the need for “robust updating” of Fed policy. He further explained that the central bank formally agreed to a policy of “average inflation targeting.” And what this means is that it will allow inflation to run above the Fed’s 2% goal “for some time.”
Where’s the money?
Now, an important thing to take away from this decision is that the Fed will be less inclined to hike interest rates when the unemployment rates fall. Central banks traditionally have believed that low unemployment leads to dangerously high inflation levels, and typically, they make moves to avoid it. Powell explained that the Fed is hoping to shift away from the old thinking and create a plan that best suits what is happening now.
Powell was prepared for backlash – which came quickly – noting…
“Many find it counterintuitive that the Fed would want to push up inflation. However, inflation that is persistently too low can pose serious risks to the economy.”
And while many may be scratching their head at this progressive plan, I’m seeing a perfect opportunity aligning…
Where’s the money?
Truthfully, for me, Chairman Powell’s announcement was as expected, seeing that we’ve continuously seen investors chase technology and FAANG names – moving out of banks.
But after this news hit the airwaves, we saw a small pop in the banking sector as investors. And I believe that we could continue to see this kind of rotational shift in buying as the economy struggles to find solid ground.
And that’s why I’ve got my eyes on the banking sector. Using my proprietary trading system, I zoned in on a stock that is the perfect setup for this shift in investments…
Wells Fargo & Co (WFC) is a well-known name in this sector…
And when I saw this signal come up on S.C.A.N. – I knew it would be an excellent opportunity for my Profit Pregame readers.
I like the WFC October 16, 2020, $27.50 calls for a nice bullish play on the current momentum, especially if you can get them for less than $0.50. If you agree, all you have to do is tell your broker that you want to buy-to-open the WFC October 16, 2020 $27.50 calls for $0.50 or less, and just like that, you’ve got skin in the game.
It’s a mixed bag…
The increasing unemployment numbers combined with the optimism surrounding the banking sector’s anticipated response to the current inflation rates might leave individual investors unsure…
These are just two examples of conflicting signs of what to expect in the markets.
But there are plenty of reasons for optimism, and my S.C.A.N. trading algorithm has been finding them left and right…
In fact, on Wednesday, traders with access to S.C.A.N.’s recommendations could’ve turned the latest one into a quick 56% gain!
In today’s unpredictable market, you need all the guidance you can get…
Here’s your chance to join my Project 303 subscribers for the next play.
In the spotlight: A weekly job numbers overview
The number of Americans who filed for unemployment benefits for the first time came in above one million once again.
That makes the 22nd time in the last 23 weeks. U.S. jobless claims totaled just over 1 million for the week ending August 22. And this aligned with what many economists had predicted. This is down from last week’s number (which came in at 1.104 million). New Jersey and Florida saw the highest increases of initial claims – rising by more than 11,000 in both states. New York and Texas followed close behind reporting 9,000 new claims.
Outside of these numbers, economic data showed some positive growth. Durable goods orders rose 11.2% in July, and new homes’ sales were up 36% from last year. This is a small flicker of hope for the economy. But regardless, another week of a downturned job market isn’t something we wanted to see.
And that’s why we’ll continue to watch these weekly reports closely, in the hope of gradual improvement over the weeks to come.