What a week!
It started with the optimism that maybe — just maybe! — inflation was moderating and that the Fed might have a little breathing room to back off of its aggressive rate hikes.
And indeed, the Fed raised by “only” 0.5% this past week, as opposed to the 0.75% that has been the norm for most of this year.
But as the week progressed, that glint of hope quickly faded…
The European Central Bank (ECB) dashed hopes on Thursday by also raising rates by 0.5% and adding that rates would have to still rise “significantly” to get inflation under control. The ECB is also planning to shrink its balance sheet by 15 billion euros per month starting in March, which should push up longer-term yields.
Both the Bank of England and the Swiss National Bank piled on, both raising their respective benchmark rates by 0.5%.
We’re looking at coordinated tightening by virtually all of the world’s central banks for months to come.
That’s not pleasant … and as I pointed out on Tuesday, it may all be for naught.
Central banks are good at fighting certain types of inflation … but mostly impotent in fighting other types of inflation. And the particular type of inflation we face today — cost-push inflation driven by deglobalization — isn’t the kind that responds to higher rates.
So, it’s likely the Fed and its peers will push us into recession … and still not kill inflation.
To make matters worse, poor retail sales and a lower than expected Purchasing Managers Index spooked investors who were already fearing a recession, sending the stock market sliding back toward its yearly lows.
But as you’ve come to know from reading The Banyan Edge, all this carnage creates MASSIVE opportunities.
And our team spent the week uncovering the biggest recession-proof ideas to keep your brokerage account intact — no matter how long this bear market lasts…
Last Week in The Banyan Edge
The Banyan Edge Podcast #1: The New Energy Super Bull
If you haven’t yet checked out the first episode of The Banyan Edge Podcast, you’re missing out big-time.
For this inaugural episode, I sat down with all of Banyan Hill’s top experts for an unfiltered discussion about our two biggest themes of the month: energy stocks and the Federal Reserve rate hikes.
You don’t want to go into 2023 without our experts at your side. Hear their big ideas right here.
Semiconductor Manufacturing Is Headed Back to Uncle Sam by Ian King.
Ian King thinks we’re witnessing the end of globalization … and American dependence on China.
As Ian showed on Tuesday, Uncle Sam is racing to “fire” China as the world’s manufacturing hub of critical components like semiconductors. As pandemic shutdowns and snarled supply chains have proven, depending on critical manufacturing in countries thousands of miles away is a risk that we simply can’t take.
This deglobalization is contributing to inflation today, but it’s also creating incredible opportunities in robotics, artificial intelligence, automation and virtually anything that promises to make American manufacturing competitive with China.
Carvana: The Worst Stock to Own in 2023 by Charles Mizrahi.
Charles Mizrahi is never one to pull his punches. He calls it like he sees it, and he calls Carvana — a company that “sells used cars out of a giant PEZ dispenser” — the single worst stock to own in 2023.
Charles is no Johnny-come-lately to this trade. While the shares were exploding higher in 2020 and 2021, Charles set a price target of zero even as the shares climbed to well over $300. Now at $5 per share, Charles’ price target is looking spot on. Click here to learn how he broke from the herd, and how you can do the same.
Biden’s Big Mistake = New Oil Bull Market by Michael Carr.
No smart buyer ever goes into a negotiation by telling the seller ahead of time that they absolutely have to have the item being sold. Yet that’s exactly what our government just did in the crude oil market.
After flooding the market with crude from the Strategic Petroleum Reserve in an attempt to keep gasoline prices down, the U.S. government is now obligated by law to buy 153 million barrels at a fixed price … in a market where supply is already tight.
This sets a floor under prices and will help push crude prices sharply higher over the next several years. See how Mike put the puzzle pieces together here.
This “Strong Bullish” U.S. Oil Stock Will Keep Crushing the Market by Adam O’Dell.
Adam shares his superhero “origin story” with us, explaining how the fates of two early colleagues shaped the kind of trader he would become.
He witnessed “Nate,” a neurotic New York currency trader who absorbed every bit of news he could find, trade based on news flow and instinct … and “Chad,” a relaxed systematic trader from Chicago, who traded based on defined rules and spend most of his day in a hammock.
Click here to learn how Adam followed Chad’s lead when he built his Stock Power Ratings system … and see which “Strong Bullish” energy stock it recommends today.
You’ll be hearing more from our team on the next episode of The Banyan Edge Podcast on Monday, so be sure to tune in. I’ll be asking Ian, Mike and Adam their take on the Federal Reserve’s latest moves and a lot more.
Are you enjoying The Banyan Edge? We’d love to get your take on our research, and we love answering questions. So, if you have any questions, insights, or just want to leave us a note, please send an email to: BanyanEdge@BanyanHill.com.
That’s it for this week! Thank you for reading and have a great weekend.
Chief Editor, The Banyan Edge