Fed News Trade Alert: Best Rate Cut Stock to Buy

July 11, 2019
By Vlad Karpel

RoboStreet – July 11, 2019 

Stocks Rally Off Strong Tailwinds From Fed Narrative 

Fed Chairman Jerome Powell spent this week on Capitol Hill laying out his view of the economy, addressing concerns about slowing global growth, and signaling an interest rate cut at the end of the month when the Fed meets. To what extent the Fed is simply responding to market rates is always debatable, but historically speaking, the Fed never fights the bond market. 

With the yield curve currently inverted, the Fed is eager to steepen the curve at the earliest opportunity and the July 30-31 FOMC meeting could be the starting point. Mr. Powell stated a rate cut is intended to bolster the U.S. economy against the risks of slower global growth and trade-policy uncertainty. He noted that the economic outlook had not improved in recent weeks, but also had not materially deteriorated either. 


 “I’m investing my own money in each and every stock as my AI platform identifies.”

And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

Click Here – To See Where I Put My RoboInvestor Money


Second-quarter earnings season is about to get underway, which will offer the Fed and investors alike some good insight as to business conditions relative to the constant worries of the trade war with China. Given that roughly 70% of U.S. GDP is tied to the consumer, Mr. Powell’s assessment of the vibrant labor market and how that supports an ongoing economic expansion is fueling this week’s stock market gains. 

The S&P 500 is trading near a 3,000 level that has both the bulls and the bears on Wall Street somewhat perplexed in that earnings estimates are coming down as stock prices are moving higher. The expanded P/E ratios are rationalized by the expected decline in the cost of money as the Fed embarks on easy monetary policy, and this is quite possibly the most powerful market catalyst of all. 

The phrase “don’t fight the Fed” works when rates are moving in both directions. Investors should take a more cautious risk-off approach when the Fed is hiking rates and take a more risk-on approach when they are cutting. At some point, possibly if earnings truly disappoint, the market will correct, and we’ll find out very soon if that’s the case. 

However, the sharp drop in yield and the more cautious growth forecasts are bullish for defensive sectors that are consolidating at the expense of money chasing hot growth stocks this week. There is tremendous pressure on pensions and institutions to own dividend yield in safe-haven stocks since bond yields barely cover taxes and the adjustment for inflation. 

The most obvious place to seek Fed-friendly yield where a bond alternative exists is in the utility sector. In addition to the demand for power in a strong economy, coupled with extremely hot weather across the country, creates a natural tailwind for the electric power companies top and bottom-line growth. Income investors clamoring for yield where qualified dividends receive preferential tax treatment, the electric utilities make for a strong investment proposition as the Fed embarks on fiscal easing policy. 

Within our stock advisory RoboInvestor Portfolio, we established a position in Dominion Energy (D), a Mid-Atlantic electric utility powerhouse based in Richmond, Virginia. As one of the most well-positioned and well-managed utilities in the sector, Dominion Energy is a highly attractive stock when considering the current economic and market landscape. The stock pays a very juicy 4.70% dividend yield, making it a core holding for income and growth investors. 

Shares of Dominion Energy are trading at $78 and sit right on its 20-day moving average after building a six-month base. When so many good stocks look technically extended, Dominion becomes a premier fundamental and technical pick at this time. 

Speaking of good stocks trading up, the RoboInvestor Portfolio is long on some fantastic stocks hitting new all-time highs this week. Shares of Microsoft (MSFT), PayPal (PYPL) and Walmart (WMT) are all posting fresh highs and we’ll be ringing the register when my AI indicators signal when the time is right. 

Strong performance on a consistent basis is at the core of RoboInvestor and our track record proves it. Of the 74 trades we’ve closed out, 69 have generated profits averaging 4.95% per trade. We’re winning 94.52% of the time, an unheard-of streak that is in its fourteenth month. It’s a track record I’m ultra proud of and one I intend to keep adding to with the same frequency of winning going forward. 

As this rally gets longer, investors will want to have as many market-tested tools at their disposal to reduce unnecessary risk and add bullish probability to each and every trade. My “always thinking” AI platform brings enormous value in a market where leadership is getting thinner. Don’t keep the power of AI out of your portfolio when it can provide such an effective path to winning trades. Make RoboInvestor your best trade of the week and sign up today! 


 “I’m investing my own money in each and every stock as my AI platform identifies.”

And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

Click Here – To See Where I Put My RoboInvestor Money


*Please note: RoboStreet is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services.  If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.


Comments Off on