🗞 Re: Your Account May Be at Risk

WHILE YOU POUR THE JOE… ☕️

The market is now expecting a 25bps rate cut for the September Fed meeting.

Of course $SPY $QQQ are now riding on this assumption, which is not strange or negative at all. 📈 

But get this:

• Manufacturing & Services PMI price gauges are on the rise

And those typically lead the CPI + PCE measures later on, so I don’t know whether this view legs to it.. 👀 

If anything, we could be seeing a potential tail risk trade forming in the background, and that’s something I want you to consider for your trading account.

While I love that you’re here to get the information that few others are able to offer you,

My true goal is for you to build these skills for yourself so that you don’t need me anymore, so that we can end up working together on trade ideas and content opportunities.

For me, it’s all about community, building the world’s first remote hedge fund 💡 

Which is why I’ve built a free 5-day email experience for you to go over and discover:

• My mistakes along a 10-year journey

• What I used to fix them

• The strategies and methods that allowed me to live freely

See you there ✅ 

Speaking of your trading account, let’s get on with today’s email 📧…

DOWNSIDE PROTECTION
Let Them Eat Cake

Small-cap stocks are a growing cancer for your Twitter feed and the entire market.

Most of the negative EPS laggers in the US are found in the small-cap segment, and that trend is only going to accelerate with where the economy is at today:

• Tariffs are squeezing margins for domestic small businesses

• Inflation pressures don’t allow small companies to properly diversify

• High interest rates place a cap on the amount of spending small-caps can do

All told, this makes a perfect cocktail for you to buy some insurance for your other names. 🔎 

Which can be done through shorting the $IWM index.

Now for the long leg of this idea…

Spotting Alpha

Everyone knows the economic data is horrible right now (employment, inflation, spending).

But here’s what nobody is telling you:

• The Mag 7 are hiding all of this in a political hyperscale spending campaign

Let me explain ⬇️ 

Ever since 2024, the big companies in technology have been spending like crazy for a reason:

• They need to hide the fact that the economy is in the toilet

So as long as they keep doing this, billions of dollars are being booked as direct income into the economy, swaying the numbers in the wrong direction.

Which is why if you are invested in the $SPY $QQQ or any of the mag 7 names, you are following the wrong people on Twitter (also you should fire your financial advisor)

For you, I have a better idea ⬇️ 

As you can see, the correlation between Services PMI prices and the CPI changes is pretty high. 📈 

Which means the market could be up for a big surprise if it doesn’t get the expected rate cut from the Fed.

This is also affecting other areas of the market as well, as you can see, sales growth has been pretty steady, though net income hasn’t.

A classic margin squeeze. 📉 

That’s great news for us, because it means analysts and investors will likely be focused on the earnings and guidance from those hotter names, completely forgetting about the rest of the market.

So let me take you back to this newsletter post about the Mid-Cap opportunity 🗞️

Let’s get real for a second,

You can make roughly 20% returns in the next 6 months by closing down the $RSP to $SPY gap, which is directly tied to the idea we’ve covered today so far.

But, here’s a harsh truth:

• You have no idea how to replicate that success or how to avoid losses if you get it wrong.

And that is exactly where employing a long/short equity strategy comes into play.

It will allow you to make money whatever the Fed ends up doing, and no matter if the small-caps drag the rest of the market down with it as fundamentals become undeniably bearish. 🐻 

After 5 years trying to learn this strategy, and not finding anything that remotely explained it well…
I spent another 5 years working at investment banks to ACTUALLY learn this.

We’ve put it all together inside our flagship program The Sovereign Trader ✅ 

Become a better trader, and who knows, maybe you’ll end up selling your institutional quality ideas to a base of investors (like most of our alumni have done).

To your success,

G 🫰 

GO AND MAKE IT HAPPEN
Recap

The bulk of the smartest traders and analysts are surely on Twitter & LinkedIn.

Which is also where 90% of our followers come from, and why they enjoy these insights so much.

Staying true to my community focus, we’ve opened a free WhatsApp group for you to drop in and see what is happening live behind the scenes.

The best ideas and company picks end up getting a deep dive, where you can rest assured an entire team will be with you throughout a trade or investment

Join the Community ⬇️ 

To your success,

G. 🥃