Surprising Job Opening Numbers!
Ardi here, writing on behalf of Andrew. As you all know, Andrew is pursuing his dream of climbing Mount Everest. I spoke with him yesterday and he is now in great spirits and ready to conquer his goal! Here is a picture of Andrew from earlier in the week, on his first attempt to climb Mera Peak.
A lot has been happening in the market and if you are a trader who does not pay attention to economic news, I must tell you that we are in an environment where you need to be paying much more attention. This morning, just as an example, Thor knew that the job opening numbers were coming out. Accordingly, right after the news broke, he took a short on SPY and was able to get a massive 5-point move. Make sure to watch his recap here.
The market appears to be pricing in one more rate hike and then a pause. More and more regional banks are finding themselves in trouble and KRE (the ETF that tracks the regional banks) is getting closer to its COVID lows!
Higher rates often lead to tighter financial conditions, which in return will limit loan generation and the creation of new money in the economy. The charts below do a really good job of showing this phenomenon. US financial conditions are now sitting at a Z-score of 3, which means 3 standard deviations higher than the average.
At the same time, when US financial conditions tighten, it often leads into subpar economic growth (better known as a recession!), as shown in the chart below.
So, regardless of what the Fed does, the appetite for taking risk in the economy has cooled down significantly and a slowdown should be a base case for most economists out there.
Are you experiencing these tighter financial conditions in your day-to-day life? Has it been harder for you to raise money or get a car loan or a loan from the bank? I would love to hear back from you all in the community. Simply reply to this email here.
Today, in our webinar room, Mike is presenting his TradeBook: Failed Breakout! This is an important webinar for countertrend traders and I encourage everyone to join us.
Mike, our Chief Learning Officer at Peak Capital Trading, has developed an extensive curriculum for our upcoming bootcamp in order to help traders define their edge and become consistent. We have been able to increase our limit this time around and now have 3 open spots left for the bootcamp. If you would like to work with Mike, John, Peter, and many of our other experienced consistent traders, make sure to sign up before these spots are gone.
Thank you all. I hope you enjoyed this newsletter.
To your success,
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