WE’RE ON YOUTUBE NOW! See HERE & HERE (Yeah … I’m REALLY excited about this).

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Before you Trade Today: Know the Economic Calendar! Also See This Weeks Most Anticipated Earnings. NEVER BE SURPRISED BY EASILY ANTICIPATED MARKET BREAKING NEWS. That’s our goal here.

PAID SUBSCRIBERS: The last three short plays netted those who followed about 10-15%. I have added another short play as of yesterday, but neglected to mention it in the top half of this newsletter. You will find it right above yesterdays earnings results & insider trading activity.

KEEP AN EYE ON THE BANKING SECTOR!: Yesterday I wrote a rundown of what to expect this earnings season. But we should also keep our eyes on next earnings season. Bank of America $BAC reported an earnings miss yesterday, but rallied premarket on higher than expected revenue (has since come down … justifiably in my view). Nevertheless this was odd. We’ve seen many companies report record revenue lately (Speaking about companies other than banks as well). Despite record revenue, inflation has destroyed their earnings. In the case of Bank of America, I can only think of two reasons for the streets initial reaction. 1. Investors are looking for any sign that the rate hikes are benefiting banks. 2. There’s some awfully big firms sitting on cash looking for excuses to put it somewhere. Of course, it could have been your typical pre-market low volume short squeeze on the former reason. But much of this market is heading toward the latter category.

Whenever you see a bunch of large money managers show up on the financial news outlets talking to the market bottoming, talking to how the markets have priced in the current economy nicely, & talking to how bear markets usually rally for the second half of the year, you can bet your ass there’s an agenda behind it. They desperately want to talk up a bad situation, to construct a new normal, to get people satisfied with current valuations. They’re looking for anything to throw some money at … & right now the confidence just isn’t there. I began by writing “we should also keep an eye on next earnings season.” Well they will throw money at something but what? It will be those companies that are demonstrating favorable results under current market conditions. Banks are a natural choice. The higher the Fed raises interest rates, the more money banks typically make. And although they aren’t bringing in the bumper profit yet, even an indicator may be investment worthy. Institutions aren’t looking so much as to this quarter, but the quarters to come.

There’s nothing like a high interest rate for a bank, given a likely recession, when the Fed will eventually need to flip course & lower rates again. Borrowers will be stuck with high rates, & the rates at which banks borrow can be easily adjusted lower over time. They’re built for this kind of endeavor.

In an inflationary environment where people are quickly getting priced out of the market, where people are saving less & less, & spending more & more, this upcoming holiday season will be marked with debt. What seemed as an affordable lifestyle amid the pandemic, is no longer, & people WILL resort to debt. Banks love debt! We went from a time when commodities rallied from high demand & scarcity, the oil companies made a resounding post pandemic comeback, & now, the winds are blowing to the banks. And they pay dividends. Indeed if I told you to invest in Chevron in November of 2021 you would have called me crazy. Watch the banks! Of course, not all banks are created equal, but I will be keeping a very close eye on the banking sector this earnings season. Yes, they burned me in early 2022, but their day is coming.

UPCOMING ECONOMIC NEWS: I included the analyst expectations of this weeks most pivotal economic data on yesterdays newsletter.

WORLD MARKETS:

• Stock futures inch up after Dow reverses course to start a busy earnings week

• European stocks slip as relief rally falters; EDF up 15% on government takeover

• Asia-Pacific markets are mixed after a positive start to the week

• Treasury yields nudge higher, 2-year/10-year curve remains inverted

RECOMMENDED:

• China holdings of U.S. debt fall below $1 trillion for the first time since 2010

• Netflix investors brace for subscriber losses as company works on long-term fixes

• The food security crisis could kill more people than Covid has, says Senegal minister at G-20

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