The next Federal Open Market Committee (FOMC) meeting is in 19 days, 4 hours, 59 minutes and 14 seconds as I type.
Traders give Team Yellen a 98.5% probability that the Federal Reserve is going to raise rates in November and an 86.7% probability that they’ll raise rates in December.
Are you and your money ready?
There are huge profits at stake and now’s a perfect time to “trade the Fed” using a play that’s worked 100% of the time ahead of interest rates since 1990.
It all comes down to financials, and specifically, buying banks.
According to Kensho, a 3.5-year-old start-up that uses artificial intelligence to parse big data related to real-world events, buying financials two months before a rate hike has generated an average return of 10.74% every single time since 1990.
Granted, there have been only four December rate hikes over that time frame so you need to take their research with a grain of salt. But, don’t let that stop you when it comes to pursuing profits.
My research shows that year-end rate hikes are typically part of a much broader financial set up that includes everything from window dressing to performance-enhancing trades that portfolio managers use to position hundreds of millions (or even billions) of dollars for the following calendar year.
Key moves include shedding losers, deferring income, harvesting winners, and more – all of which should sound familiar considering we’ve talked about doing the same things in years past.
This time around, though, there’s a little more incentive.
You see, raising rates towards the end of this year is really a vote of confidence in upcoming economic conditions rather than just a rate hike like most investors think.
That’s what makes today’s trade so attractive, and potentially very profitable.
Remember, we’re talking about an opportunity that’s worked 100% of the time, according to Kensho’s research. The probability of success drops to only 62% for rate hikes at other times of the year, in case you’re wondering.
