The markets were rallying yesterday and you may think: “See, you were wrong, we are good.” Well, most likely, we are not good. The markets rallied in anticipation of FED rate cuts. But cutting rates is not a good event. When the FED needs to cut rates, it means something is wrong with the economy. But at the time being, we get a crazy rally.

The question is, will the cut help saving the economy? Boost it? turn it around?

I think we have a structural problem now and the FED cut may boost the economy temporarily but will not stimulate it. Thanks to our Moron-in-chief who has no clue what he is doing we see labor market slowly eroding and when people lose jobs, they stop spending, and when people stop spending, the companies can bend over twice and no rate cuts help them to make money and report good earnings. This rally will fizzle as soon as the markets realize that the cut rates are just a chimera.

How to trade it?

Well, trade what is in front of you. Do not predict or anticipate the next move. Anything you think is happening today can change on a dime in the next hour or even a minute. If you think something is going up, then buy it and hold onto it. If it works, ride it, if it doesn’t get out.

The best approach I found in the past is using volatility as your guide. Is the market calm and complacent? Go bullish and ride it (until it peaks). Then get out and (or reverse to bearish, but not until you see it bearish not because you think it is bearish), and wait for the storm to pass. Then get back in. Easy said, difficult to do. But because it is difficult it doesn’t mean it is impossible. Trade small and be cautious.

Today the Bureau of Labor Statistics revised their job reports and you guessed it – down again. Who is Trump going to fire now? It is evident that Trump inherited good and booming economy  (as was reported many times, the economy that the entire world envied us) and ruined it. Of course, what would you expect from a conman, moron, and economic ignorant who bankrupted two casinos to do otherwise, right? I can’t believe that there is still almost 40% of Americans who still think Trump is their savior and good for the economy.

So let’s review the charts:

The chart above is from the BLS. See the drop in labor statistics? See how well it corresponds with Trump’s trade wars he started in April? Look at the S&P 500 chart and how well it corresponds with his stupid wars:

The market crashed exactly in anticipation of what is happening in the labor market today. So why the recovery and new ATH? It is my opinion that the market refused to accept the damage Trump has done to the country and to our economy. His tariffs on and off were seen as something that can mitigate the catastrophe so it rallied. But it is in a bubble territory and sooner or later the market will correct, unless the underlying data drastically improve which doesn’t seem to be happening.

The US economy is consumer driven. Spending is what fuels our growth. And spenders are going away. Why? High inflation, high prices, low job creation, unemployment rising. Wall Street bulls are still banking on earnings, but without spending, there will be no earnings. And disappointments are ahead of us. It is just a matter of time.

How to prepare for it?

Well, you have two options, ride through it (but be prepared to sit on losses for years if the decline will be like 1930 or similar recessions), or start trimming your positions and increase cash (for example parking your money into funds like ICSH or SGOV that provide fairly good protection against panic and pay dividends).

Stay safe and fuck Trump!