During the press conference, Powell reiterated several times that the July meeting is “live”, meaning that they could raise rates at that meeting, and the risks to inflation is tilted to the upside. Equally important, Powell said that there were no plans to adjust the RRP rate in response to the Treasury’s expected $1 trillion issuance (see How the Treasury refresh may not be catastrophic), which is a sign that the Fed may not be able to act in a timely manner should Treasury issuance drain liquidity from the banking system and threaten the price of risk assets.
An extended advance
My inner trader is maintaining his short position in the S&P 500. I received some inquiries from readers about how I set my stop loss positions and I want to address that question. I disclose the entry and exit points of my trading to disclose possible conflict. Between those entry and exit signals can be gradients of positions. I could either add or subtract from my short (in this case) in accordance with my risk and profit assessments. I don’t disclose those changes because they depend on my personal risk profile. My return expectations are not the same as yours. My pain threshold are not the same as yours. My tax situation is definitely the same as yours. That’s why the disclosure of those adjustments are entirely inappropriate. Any reader who decides to act on my entry and exit disclosures should set their own risk parameters and set their own stop loss levels. I can’t do that for you. If I did, I would be offering a fund that sets out risk levels.
That’s a long-winded way of reiterating the importance of reading and understanding the disclaimers about my trading positions.
I would like to add a note about the disclosure of my trading account after discussions with some readers. I disclose the direction of my trading exposure to indicate any potential conflicts. I use leveraged ETFs because the account is a tax-deferred account that does not allow margin trading and my degree of exposure is a relatively small percentage of the account. It emphatically does not represent an endorsement that you should follow my use of these products to trade their own account. Leverage ETFs have a known decay problem that don’t make the suitable for anything other than short-term trading. You have to determine and be responsible for your own risk tolerance and pain thresholds. Your own mileage will and should vary.
Disclosure: Long SPXU