In the following video, I’m breaking down the supply chain woes that continue to accelerate across this economy.
At some point, the stocks won’t be able to climb anymore and investors are going to take a lot of profits off the table.
Then, there are the oil markets – and I’m breaking those worries down.
Watch the video if you’re serious about making money next week.
The Inflation Trade Heats Up
In March 2021, Federal Reserve Chair Jerome Powell said that the United States didn’t need to worry about inflation. Notice the date at the top.
Six months later, the tune is different. This headline is from Marketwatch this morning…
Inflation isn’t slowing down.
So what do we do now that the Fed has admitted what we already knew?
There are three primary ways to trade inflation.
First is naturally the energy space.
Oil producing companies with strong balance sheets and low levels of debt that own lots of crude. They’ll see a big push in their share price thanks to rising crude.
Second, banks.
The Fed is expected to tackle tapering its balance sheet as soon as next month.
I’ve talked about the community banking space over the last few months. You can buy banks that are trading under a price-to-tangible book (P/TBV) of 1.
Then, you just wait.
Finally, you can combine basic materials producers (palladium, platinum, and silver) with emerging markets. I’m warming up to the metals producers that have cheap buyout metrics and low PE ratios.
That seems like the next move for institutional capital looking for a way to manage their cash in the months ahead.
Positions in Play
We’re still holding onto ICICI Bank (NASDAQ:IBN) and Skechers (NASDAQ:SKX). I offered my insights in the video, and I’m expecting these stocks to keep moving higher in the weeks ahead thanks to strong institutional inflows.
Recently, we’ve added Brink’s Company (NYSE:BCO) as a play. The stock is off again today, and we’re looking for a positive reversal. Ahead of the holiday season, we’re facing a lot of Americans sitting on a lot of cash.
Of course, we’re eyeing BCO stock and expecting a strong forecast when the company reports earnings next week. I’ll be back with more insight into that trade as we progress.
Finally, we had some swings with American Axle (NASDAQ:AXL).
If you haven’t sold your November 19, 2021 $9.00 call in American Axle (AXL) (AXL211119C00009000) do so at the best price possible.
Currently, the bid-ask spread is between $1.45 and $1.60.
A trade at the $1.50 range would generate about a 50% return. We’ll take action today.
We’re still holding the stock, and will exit on Monday if it trails lower.
Have a good weekend,
Garrett Baldwin