Since the beginning of the year, I’ve warned you to buckle up for a rollercoaster ride in the markets... I’ve told you that record-high inflation… interest rate hikes… and geopolitical uncertainty would lead to a “cyclical” bear market. And that’s come to pass. We’ve seen the broad market drop 24% and the crypto market drop 72% at its trough.
If you’re unfamiliar with market cycles, there are two types: Secular and cyclical.
Secular markets are long-term “one-way” directional moves that generally last between 12 and 20 years. Within these secular markets, we also have shorter “cyclical” markets. They can last from three to 18 months. Right now, I believe we’re in a cyclical (short-term) bear market… within an overall larger secular (long-term) bull market. It’s why I told you to prepare for pain this year... But for the first time this year, I feel cautiously optimistic in the short term.
The chart below shows the Bloomberg Commodity Index. It measures 23 commodities broken into six groups: Energy, grains, industrial metals, precious metals, livestock, and “softs” (things like sugar, coffee, and cotton).
As you can see, after surging higher since 2020, it’s down 14% from its recent peak…
Indeed, commodity prices across the board are down, too.
For instance, lumber, copper, and gas prices are down 58%, 33%, and 11% from their annual highs. This suggests to me that inflationary pressures are easing. In other words, we may have hit peak inflation in June. I know that may seem insane when prices at the pump and grocery store still put a crimp in your pockets. But the CPI is a “lagging” indicator. It shows what prices were the previous month, not what they will be in the next month. Now, I’m not saying the inflation rate will return to normal of about 2% per year. As I’ve written recently, we’re in a New Reality of Money. In this new reality, inflation will continue to erode the value of the U.S. dollar for years to come.
For now, it looks like inflation may have peaked in June – at least in the short term.
That’s good news for the markets.
All Eyes on the Fed
If commodities are slumping, I expect the Federal Reserve to move from a “hawkish” stance on inflation to a “neutral” stance. A “hawkish” stance means the Fed will likely raise rates to slow down an overheated economy. A “dovish” stance means the Fed will lower rates to prime a sluggish economy. A “neutral” stance means the Fed will take no action. And for the markets, “neutral” means accommodative. On July 6, the Fed signaled it plans to raise interest rates another 75 basis points. That hike is already baked into the market. The next Fed meeting after that is in September. If inflation continues to ease, then I believe the Fed will either shift to a neutral stance or just hike 25–50 basis points. I think anything at 50 basis points or lower will be greeted with extreme optimism by the market. I’m not saying the Fed will cut rates. I am saying it’ll likely be done with all its rate hikes before the year ends. And that will spark a massive rally. The first sector to rally will be blue-chip dividend stocks. When people realize rates are done going up… there will be a mad dash for blue-chip dividend yield. Many of which are trading with dividends over 4% right now. The Fed’s shift to a neutral stance will also cause bond yields to decline... so the yields on blue-chip dividend stocks (which rise over time) will look mighty juicy.
Be Prepared, But Be Cautious
To take advantage of this potential move, I’m deploying my capital to blue-chip dividend stocks in thirds:
I’m allocating the first third of my capital right now before the Fed’s next meeting on July 26.
The second third if the Fed announces its July rate hike will be lower than the widely expected hike of 75 basis points. (I think that is a low-probability event.) If the Fed sticks to 75 basis points at the July meeting, then I’d deploy the second third if the Fed raises 50 basis points or less at its next meeting in September.
I’ll allocate the final third if the Fed says it’s done raising rates. If it explicitly says it’s done raising, I think we’ll see the market explode higher.
So why am I deploying my capital in thirds?
If the Fed doesn’t move to a neutral stance… I want to keep most of my capital parked on the sidelines until we get more visibility on rates.
The Fed has a history of overdoing things. It either eases rates too much, or it tightens rates too much. If it decides to play “hero” and try to shock the market with back-to-back 75-basis point raises – or even a 100-basis point hike – I want to have plenty of dry powder available to put to work at lower prices. Remember last year when inflation was running out of control? Everyone could see it. Yet, the Fed dismissed rising inflation as “transitory.” It was off by a country mile and got behind the eight ball. It had to institute the biggest rate hike we’ve seen in 28 years to catch up. And we’re all feeling those effects now. That’s why I’m being cautious with my capital. Now, I understand everyone doesn’t follow the markets as closely as I do. So you may be unable to deploy your capital in thirds based on the Fed’s policies. That’s why I want to share another strategy I’m using to generate decades’ worth of gains from blue-chips stocks during this market downturn. It all has to do with a rare phenomenon I call an “Anomaly Window.” And it has enormous implications for investors.
My Anomaly Window Playbook
During Anomaly Windows, boring blue-chip stocks can see decades of gains in just a few weeks.
And the Fed’s recent actions are creating the biggest Anomaly Window I’ve seen since 1994.
It’s one of the few opportunities to make asymmetric gains from conservative companies... And right now, we’re nearing one of the largest Anomaly Windows I’ve seen in 28 years.
My team has made a fortune for our readers by taking advantage of Anomaly Window events.
In 2019, my team struck on two smaller Anomaly Windows: Brexit and the gold merger mania. That allowed us to earn a 380% return in four months. That’s nearly 17 years’ worth of average annual S&P 500 gains.
In 2020, the Anomaly Window created by the 2020 U.S. presidential election gave us the chance to earn a 184% return in three months from a trade on Target. That’s 11 years’ worth of average annual S&P 500 gains.
In 2021, we took advantage of an Anomaly Window created by the government’s COVID-19 response. That trade on CVS returned 422% in 34 days. That’s 40 years’ worth of average annual S&P 500 gains... in one month.
That’s the power of using the right playbook to invest during Anomaly Windows. You could potentially recapture 20 years of S&P 500 returns in as little as three months.
Right now, I’m using this strategy with my own money to generate annualized returns of as much as 60%.
And I want to share it with you…
That’s why I'm explaining my Anomaly Window strategy...
Wall Street has used these Anomalies to make billions at your expense… and how you can use them to capture decades of market returns in three months or less. I’m using to take advantage of the next Anomaly Window... absolutely free... with no strings attached.
If you don’t have the right playbook to take advantage of this Anomaly Window... you’re either going to cower in fear... or you’ll wait until it’s too late and buy at the top.
Using my Anomaly Window playbook can put you in a position to take maximum advantage of the next window... in a way you won’t hear anywhere else... controlling the level of risk in a way you’ve never seen before... and using a strategy that’s been right for my subscribers 97% of the time.