Tag Archives: FOMC

Archive, Zoom Daily

Daily Meeting for Friday March 21

Posted on by Conor Browne

Prioritizing Precision Entries and Managing Sector Rotations

• Missed early opportunities in energy stocks, where the team hesitated despite confirmation of breakout setups.

• Refinements to the ‘big ass fly’ strategy, emphasizing tighter entry zones and faster profit-taking in high-volatility conditions.

• Increased focus on volume confirmation, requiring alignment with price action to validate trade entries more effectively.

• Discussion on dynamic stop-loss placement, adapting stops in real time based on volatility rather than fixed point systems.

• Shift in sector allocation, moving away from underperforming financials and targeting momentum plays in healthcare and tech.

• Commitment to avoiding overtrading, particularly during midday chop, reinforcing patience until clearer setups form.

Summary

the team analyzed missed opportunities in energy sector breakouts, emphasizing the need to act quickly when setups meet predefined criteria. Ernie stressed refining the ‘big ass fly’ strategy by focusing on tighter entry zones and speeding up profit-taking in high-volatility situations.

The session covered increasing the emphasis on volume confirmation, ensuring that price movement aligns with volume spikes before taking trades. Dynamic stop-loss placement was also discussed, with a shift away from static stops toward real-time adjustments based on current volatility.

Sector rotation analysis led to the decision to move capital away from underperforming financial stocks and focus more on healthcare and tech momentum plays. Ernie concluded by reinforcing discipline, encouraging the team to avoid overtrading during less active periods and only engage when setups offer clear potential.

0DTE Strategies, Advanced Concepts

Trump vs. Powell: The Hidden Battle Over Inflation and Interest Rates

Posted on by ernie
20
Mar

Trump vs. Powell: The Hidden Battle Over Inflation and Interest Rates

Introduction: The Economic Showdown in 2025

The ongoing battle between President Donald Trump and Federal Reserve Chairman Jerome Powell is more than just political theater—it’s a fundamental clash over inflation, interest rates, and economic policy. Powell and the Fed argue that inflation is driven by strong economic growth, while Trump believes that excessive government spending is the real cause. Their differences could shape everything from Federal Reserve policy to stock market volatility in 2025.

For traders and investors, the stakes are high. If Powell sticks to his cautious stance, we may see higher interest rates for longer, creating market uncertainty. If Trump gets his way and forces rate cuts, it could trigger a market rally, though inflation risks remain. Either way, volatility is here to stay, making this showdown critical for anyone watching the markets.

The Federal Reserve’s Blind Spot: Ignoring Government Spending

For years, the Federal Reserve (Fed) has framed inflation as a natural result of economic expansion. When consumer spending rises, businesses increase prices, and wages go up, inflation follows—or at least that’s the Fed’s traditional thinking. This perspective led to serious policy missteps during the post-pandemic recovery, when the Fed failed to anticipate the inflationary impact of massive government stimulus packages.

Between 2020 and 2021, the U.S. government injected over $5 trillion into the economy through stimulus checks, unemployment benefits, and business bailouts. This led to an explosion in consumer demand, with personal savings rates soaring to 33.8% in April 2020. As the economy reopened, businesses were overwhelmed by demand, but supply chains were still constrained. The result? Inflation surged to 9.1% by mid-2022, the highest in 40 years.

Despite these clear signals, the Fed largely downplayed the role of fiscal policy in driving inflation. Powell and his team focused on supply chain disruptions, labor market tightness, and strong consumer demand, rather than acknowledging that government spending had injected too much money into the system. Fast forward to 2025, and Powell is still repeating the same pattern. His March 19th comments on inflation focused on tariffs and a “solid” economy, while barely mentioning the impact of federal spending.

Trump’s Strategy: Cutting Government Spending to Curb Inflation

Trump’s economic strategy is radically different. His administration, backed by the Department of Government Efficiency (DOGE)—led by Elon Musk and Vivek Ramaswamy—is focused on reducing federal spending by $2 trillion annually. The goal is to curb inflation by cutting government expenditures, rather than relying on high interest rates to slow down demand.

DOGE’s primary mission is to eliminate waste and redundant government programs while modernizing federal operations. Musk has proposed moving government services to cloud-based infrastructure, which he claims could save billions. The administration is also targeting Medicare, Medicaid, and defense spending, arguing that these areas have grown inefficient and bloated.

Trump believes that if government spending is significantly reduced, inflation will decline naturally, allowing the Federal Reserve to cut interest rates without fear of another inflation spike. However, Powell remains skeptical, and the Fed has yet to factor these spending reductions into its inflation forecasts.

Trump vs. Powell: The Battle Over Interest Rates

Trump’s frustration with Powell is intensifying because the Fed has refused to lower interest rates, even as the administration takes aggressive steps to rein in spending. Powell maintains that inflation—projected at 2.8% (Core PCE) for 2025—remains too high, particularly due to Trump’s tariffs on Canada and Mexico (25% starting April 2025).

Trump argues that the Fed’s inflation model is flawed. He believes that lower government spending should reduce inflationary pressures, allowing for interest rate cuts without triggering another surge in prices. Powell, on the other hand, sees tariffs as inflationary and fears that cutting rates too soon could lead to renewed price increases, particularly if Trump’s tax cuts stimulate consumer demand.

This disagreement is creating major uncertainty in financial markets. If Trump pressures Powell into cutting rates, stocks could rally, but if Powell holds firm, interest rates may stay elevated longer than expected. The result? Continued volatility in equities, bonds, and commodities.

Does Trump Have a Point on Interest Rate Cuts?

Trump’s case for rate cuts makes sense in a specific context. If DOGE succeeds in reducing $2 trillion in spending, inflationary pressures could ease, giving the Fed room to lower rates without fueling another price surge. However, there are risks.

If Trump’s tax cuts significantly boost consumer spending, the inflationary effects of reduced government spending could be offset. Similarly, if tariffs increase costs for businesses, those expenses may be passed on to consumers, leading to higher prices despite budget cuts. Powell’s hesitation, while frustrating to Trump, is rooted in these concerns.

What This Means for Traders and Investors

For 0DTE (zero days to expiration) traders, the Trump-Powell feud is a gift. Market volatility is increasing, creating profitable opportunities in options trading.

• If Powell resists Trump’s push for rate cuts, expect more market uncertainty and larger intraday swings, which benefits traders who thrive on volatility.

• If Trump successfully pressures Powell into lowering rates, markets could experience a strong upward move, creating opportunities for trend-following strategies.

• DOGE’s success—or failure—will be a key factor in inflation forecasts, meaning traders must stay informed about spending cuts and fiscal policy shifts.

Conclusion: Volatility Is Our Ally

The Trump-Powell standoff over inflation and interest rates is far from over. Trump’s push for spending cuts and Powell’s cautious approach to rate reductions will keep markets on edge, making volatility a defining feature of 2025.

For traders, this presents exciting opportunities to capitalize on market swings. Whether rates stay high or begin to drop, the key will be staying ahead of policy changes and reacting to shifts in economic sentiment.

As this economic showdown continues, traders who adapt to the uncertainty will thrive.

Coach Ernie out. 🚀

Archive, Zoom Daily

Daily Meeting for Thursday January 23

Posted on by Conor Browne

Enhancing Strategic Execution Amid Market Fluctuations

• Analysis of increased market fluctuations influenced by macroeconomic announcements.

• Refinements to the “big ass fly” strategy to leverage opportunities in volatile market conditions.

• Emphasis on improving timing precision through enhanced use of technical analysis tools.

• Review of trades that underperformed due to misaligned setups, with corrective strategies proposed.

• Introduction of an adaptive risk management framework tailored for rapid intraday shifts.

• Encouragement to remain focused on disciplined execution and prioritize high-quality trade setups.

Summary

the team analyzed market fluctuations driven by recent macroeconomic announcements, focusing on adjustments to strategies for improved adaptability. Ernie emphasized refinements to the “big ass fly” strategy to optimize performance under volatile conditions.

The importance of timing precision was highlighted, with discussions on utilizing advanced technical analysis tools to enhance trade accuracy. Trades that underperformed due to misaligned setups were reviewed, and corrective strategies were proposed to address these issues.

A new adaptive risk management framework was introduced, designed to accommodate rapid intraday market shifts effectively. Ernie concluded the meeting by encouraging the team to maintain disciplined execution, focusing on high-quality trade setups to navigate the current market environment successfully.

Archive, Zoom Daily

Daily Meeting for Thursday December 5

Posted on by Conor Browne

Adapting Strategies to Active Markets and Managing Emerging Risks

• Discussion on aligning strategies with increased market activity and post-holiday trading momentum.

• Refinement of the “big ass fly” strategy to capture opportunities in heightened volatility conditions.

• Emphasis on enhanced risk management practices, including adjusted stop-loss settings and dynamic position sizing.

• Review of technical indicators to improve timing for trade entries and exits amid active market movements.

• Exploration of sector trends influenced by recent economic events and their implications for strategy adjustments.

• Encouragement to remain focused on quality setups and avoid impulsive trading during this active market period.

Summary

the team focused on refining strategies to adapt to increased market activity and evolving trading conditions. Ernie led a discussion on updating the “big ass fly” strategy to better capture opportunities in heightened volatility, emphasizing the importance of flexibility.

Enhanced risk management practices were highlighted, including the use of adjusted stop-loss settings and dynamic position sizing to mitigate emerging risks. The team reviewed technical indicators that can assist in optimizing timing for trade entries and exits during active market periods.

Sector-specific trends influenced by recent economic events were analyzed to guide strategy adjustments. Ernie concluded by encouraging the team to prioritize quality trade setups, maintaining discipline and avoiding impulsive trading decisions in this active market environment.

Archive, Zoom Daily

Daily Meeting for Monday November 18

Posted on by Conor Browne

Refining Execution and Risk Control in Prolonged Market Stability

• Focus on refining trade execution to suit the continued low-volatility environment.

• Discussion on adapting the “big ass fly” strategy for improved performance in stagnant market conditions.

• Emphasis on maintaining disciplined trade selection, prioritizing high-probability setups.

• Review of technical indicators to enhance precision in entry and exit points.

• Analysis of external economic events with potential to disrupt market stability and create volatility.

• Reminder to adhere to conservative risk management practices, safeguarding capital.

Summary

the team addressed the challenges of trading in a prolonged low-volatility market. Ernie led a discussion on refining the “big ass fly” strategy to ensure it remains effective in these conditions, focusing on performance optimization.

The meeting emphasized disciplined trade selection, encouraging the team to prioritize high-probability setups and avoid unnecessary trades. Technical indicators were reviewed to assist in enhancing precision for trade entries and exits.

The team analyzed external economic events that might disrupt current market stability, preparing for potential increases in volatility. Ernie concluded the session by reinforcing the importance of adhering to conservative risk management practices, ensuring capital is safeguarded during this stable trading period.

Archive, Zoom Daily

Daily Meeting for Friday September 27

Posted on by Conor Browne

Fine-Tuning Trading Strategies Amidst Evolving Market Trends

• Analysis of the week’s market movements and their implications for trading strategy adjustments.

• Emphasis on the importance of refining stop-loss techniques, particularly in light of sudden market reversals.

• Review of the “big ass fly” strategy’s performance during the week, with suggestions for modification in different market conditions.

• Discussion on risk management practices, especially when volatility decreases after periods of market instability.

• Insights on the impact of recent economic reports and geopolitical factors on market trends.

• Encouragement to maintain flexibility and adapt strategies in real-time while adhering to core risk management principles.

Summary

The team reflected on the week’s trading activities, discussing how recent market trends necessitate fine-tuning of strategies. Ernie provided a detailed analysis of how market movements influenced trade outcomes, especially with sudden reversals, prompting the group to review and adjust their stop-loss techniques.

The performance of the “big ass fly” strategy was evaluated, with Ernie offering modifications to suit different market environments, emphasizing adaptability. The discussion moved to risk management, focusing on adjusting exposure in response to decreasing volatility following a period of market instability.

External factors, including economic reports and geopolitical events, were also analyzed for their ongoing effects on market behavior. The meeting concluded with a reminder to stay flexible and adapt strategies as needed, while continuing to adhere to solid risk management practices.

Archive, Zoom Daily

Daily Meeting for Wednesday September 18

Posted on by Conor Browne

Navigating Fed Day Strategies and Maximizing Volatility

• Discussion on the significance of Fed Day and its impact on market volatility, particularly the anticipation of the FOMC’s rate cut decision.

• Explanation of the role of the Federal Reserve’s balance sheet in influencing the economy, with a focus on its symbolic versus actual power in monetary policy.

• Detailed exploration of trading strategies tailored for high volatility environments, such as the “big ass fly” and how implied volatility affects profit potential.

• Analysis of how to time trades effectively on Fed Day, including the advantages of making trades before and after key announcements.

• Emphasis on the importance of understanding market structure, implied volatility, and time decay to optimize trading outcomes.

• Practical advice on balancing risk and reward, with considerations for using tools like straddles, strangles, and Batman strategies during high-impact trading days.

Summary

the focus was on the unique trading opportunities presented by Fed Day, where the FOMC’s decision on interest rates creates significant market anticipation and volatility. Ernie explained the limited but symbolic power of the Federal Reserve in controlling the economy through interest rate adjustments, highlighting the greater impact of its balance sheet on the economy.

The session emphasized the importance of understanding how implied volatility, particularly on days like Fed Day, can influence trading strategies. Ernie discussed the “big ass fly” strategy and how its risk and reward profile changes in high versus low volatility environments. He stressed the value of placing trades before and after the Fed’s announcement to capitalize on volatility crush and market movements.

Participants were guided on the critical role of market structure, time decay, and volatility in trading, with Ernie offering insights into how to manage risk and optimize returns. The meeting also covered practical tips for using advanced strategies like straddles, strangles, and Batman setups to navigate the volatile conditions of Fed Day effectively.

Archive, Retrospective

Sunday Retrospective for August 25

Posted on by Conor Browne

Navigating Economic Uncertainty and Strategic Risk Management

• Economic Data Impact on Market Sentiment: Discussed the unusual market behavior in response to recent economic data, particularly focusing on the unexpected changes in employment reports and their implications.

• Fed’s Potential Rate Cut: Analyzed the Federal Reserve’s possible rate cut, speculating on a 50 basis point reduction and its potential effects on market volatility.

• Volume Profile and Structural Analysis: Highlighted the importance of using volume profile to identify structural market levels, which are critical for strategic trade entries.

• Risk Management in Uncertain Times: Emphasized the necessity of maintaining disciplined risk management strategies, especially when market conditions are driven by unexpected economic news.

• Psychological Resilience in Trading: Stressed the importance of mental toughness and maintaining a clear trading plan amid market fluctuations and conflicting economic signals.

• Continuous Adaptation and Learning: Encouraged participants to continuously adapt their strategies in response to evolving market conditions and to stay informed about global economic trends.

Summary

Ernie and the participants discussed the unusual market behavior in response to recent economic data, particularly the unexpected revisions in employment reports. The conversation focused on the implications of these revisions and how they contradict the previously optimistic narrative provided by the Federal Reserve.

Ernie speculated on the possibility of the Fed implementing a 50 basis point rate cut and the potential short-term market rally followed by a more significant downturn. He emphasized the importance of using volume profile to identify key structural levels in the market, which are crucial for making strategic trade entries, especially in times of economic uncertainty.

Risk management was a central theme, with Ernie stressing the importance of maintaining disciplined strategies despite the unpredictable market conditions. He advised traders to be psychologically resilient and to adhere to their trading plans, even when faced with conflicting economic signals.

The session concluded with a reminder for traders to continuously adapt their strategies and stay informed about global economic trends, ensuring they are prepared for the potential volatility ahead. The meeting reinforced the value of strategic planning, disciplined risk management, and ongoing education in navigating the complexities of the market.

Archive, Zoom Daily

Daily Meeting for Wednesday June 12

Posted on by Conor Browne

Strategizing Amidst Market Uncertainties: Navigating Through Fed Announcements and Global Economic Shifts

• Anticipation of Fed’s Interest Rate Decision: Discussion centered around the expected Federal Reserve announcement on interest rates, with speculations on market reactions.

• Economic Indicators and Market Reaction: Analysis of CPI numbers and their impact on market optimism regarding potential interest rate cuts.

• Global Economic Policies and Effects: Insight into global monetary policies, including the impact of the U.S. dollar’s role in international markets and the expiration of the petrodollar agreement.

• Political and Economic Strategies: Debate on possible political maneuvers in economic strategies, including austerity measures and changes in tax policies.

• Market Volatility and Trading Strategies: Consideration of the current market volatility and its implications for trading strategies, especially in options trading.

• Technical Analysis and Trading Adjustments: Detailed discussion on adjusting trading strategies based on market conditions observed through technical analysis tools and volatility measures.

Summary

In the June 12th daily meeting, the primary focus was on the upcoming Federal Reserve announcement concerning interest rates, which significantly influences market sentiments. Participants discussed the implications of recent CPI numbers and the broader impact of global economic policies, including the significant shift away from the U.S. dollar as the primary currency for oil transactions. This shift could potentially alter the global demand for the dollar. The discussion also touched upon potential political and economic strategies that could address current economic challenges, although skepticism about their implementation was evident. Additionally, the meeting covered specific trading strategies and adjustments in response to observed market volatility, with detailed analysis using technical tools to gauge and respond to market movements effectively. Overall, the session was rich with strategic insights aimed at navigating through current market uncertainties.

Archive, Zoom Daily

Daily Meeting for Wednesday June 5

Posted on by Conor Browne

• Market Observations: Ernie discusses current economic indicators showing a weakening job market and unexpected services PMI increase, influencing the stock market’s rise despite negative forecasts.

• Impact of Interest Rates: Discussion on Wall Street’s expectations for the Federal Reserve to lower interest rates, potentially impacting market movements and investor strategies.

• Trading Strategies Amid Stagflation: Insights into trading and investment strategies during a period of rising prices and stagnant economic growth, focusing on risk management and leveraging short-term trades to capitalize on market volatility.

• Investment and Speculation Balance: Ernie advises on balancing speculative activities with stable investments to manage risks better and maintain healthy financial status during economic uncertainties.

• Long-term Financial Planning: Discussion on the importance of conservative investing during high inflation periods, reducing speculative investments, and focusing on assets that preserve capital.

• Educational Component on Financial Resilience: Ernie emphasizes learning to manage investments wisely, avoiding large losses, and understanding market dynamics to build long-term wealth effectively.

Summary

During the daily meeting on June 5th, Ernie led a comprehensive discussion on the current economic landscape, characterized by weakening job metrics and anomalous market behaviors like the rise in stock prices amidst negative economic reports. He shared insights on potential Federal Reserve interest rate cuts and their expected effects on the markets. The conversation also covered strategic financial planning amidst stagflation, emphasizing the importance of balancing high-risk speculative trades with stable investments to safeguard and grow capital during economic downturns. Ernie stressed the necessity for prudent investment to manage risks and ensure long-term financial health, advocating for a conservative approach during uncertain economic times. Additionally, there was a focus on educating attendees on financial resilience strategies, underscoring the value of preparedness in navigating market volatility.