Fast Money Blog- 10/7/22
Here’s what is going on in the stock market this week: Turns out we are in a strong economy.
On Friday, October 7th the U.S. Labor Department released its September Jobs Report. Despite a slight slowdown in hiring, the U.S. economy still added 263,000 jobs in September and the unemployment rate fell to 3.5%. Because economists were hoping to see unemployment hold at 3.7% it is anticipated that the Federal Reserve will keep raising interest rates to lower inflation. Wall Street does not like this outcome which is why the market was down at Friday’s close.
So here’s this weeks Wealthy Investor Econ 101 lesson:
Historically stocks do well when the U.S. economy is thriving. Over the past 10 years our economy has thrived when unemployment, interest rates and inflation are low. Even though our economy is exceptionally strong, we are being challenged in this market by a Federal Reserve who wants see much lower inflation and slower growth rates.
I expect the tug of war between stocks and the U.S Fed to continue for the next 8 weeks or so. As a result, you’ll want to continue to trade stocks that pay healthy dividends as they tend to maintain their price and stability. Your best trades now will be a combination of 30 and 60 day out-of-the-money covered calls. This will require patience, creativity and savvy on your part.
Remember your job is to keep consistently bringing in covered call income in all of your trading accounts.