The July 8 tariff deadline approaches… will we get extensions?… the Fed’s rate of interest bind… profiling Luke Lango’s buying and selling system… two uncommon earth shares to your radar
July 8…
Ring any bells?
We’re lower than two weeks away from the official expiration date of President Trump’s 90‑day pause on broad “reciprocal” tariffs.
In the meantime, just one commerce deal has been finalized with the U.Okay. And albeit, it’s much less of a “deal” and extra of a broad “framework.” Roughly 17 different offers stay in negotiation.
Not extending the tariff pause would imply President Trump’s sweeping “Liberation Day” tariffs snap again into impact at elevated ranges – usually a ten% baseline plus additional reciprocal tariffs on nations that fail to achieve a deal.
For instance, for the European Union, its 10% tariff may bounce to 50% as quickly as July 9…two weeks from as we speak.
The excellent news is that Treasury Secretary Scott Bessent not too long ago stood earlier than Congress and informed lawmakers:
It’s extremely doubtless that these nations … who’re negotiating in good religion, we are going to roll the date ahead to proceed good‑religion negotiations.
If somebody shouldn’t be negotiating, then we is not going to.
The markets have priced in a boatload of extensions. So, if negotiations fail, nicely, look out.
Now, we consider the extensions will come. However we have now the posh of not needing to know specifics or timing. Wall Road wins if the can is kicked down the highway.
However the Federal Reserve doesn’t have such a luxurious…and that complicates its coverage going ahead.
To chop or to not lower, that’s the query
In current days, two Fed members have hinted that price cuts may are available July.
Let’s go to our hypergrowth knowledgeable Luke Lango and Monday’s Day by day Notes in Innovation Investor:
The Fed chatter is popping friendlier.
On Friday, Fed Governor Christopher Waller mentioned a price lower may come as quickly as July, offered inflation stays tender.
[On Monday], Governor Michelle Bowman echoed these feedback, saying she’d help a lower in July if inflation information cooperates.
Charge lower odds for July have spiked—from 5% final week to 25% as we speak. And the market is now pricing in virtually three cuts by January 2026. Charge cuts are coming, people.
That’s gas for the financial system and shares.
However then, yesterday, in remarks earlier than Congress, Fed Chair Jay Powell went in the other way. Right here’s CNBC:
[Powell] emphasised the central financial institution’s dedication to retaining inflation in examine, saying he expects policymakers to remain on maintain till they’ve a greater deal with on the impression tariffs could have on costs…
He famous that inflation remains to be above the Fed’s 2% goal, with the impression that President Donald Trump’s tariffs could have nonetheless unclear.
“Coverage modifications proceed to evolve, and their results on the financial system stay unsure,” Powell mentioned. “The consequences of tariffs will rely, amongst different issues, on their final degree.”
This stress between Powell and his colleagues isn’t a contradiction – it’s a mirrored image of the Fed’s present bind
The Fed is hopeful about disinflation…however cautious as a result of varied unknowns.
So, you have got the Waller/Bowman camp warming to cuts as a result of softer inflation prints (because of this – as Luke famous – July rate-cut odds jumped from simply 5% final week to 25%) …
However you even have the Powell camp slow-walking cuts as a consequence of forward-looking inflation considerations (which is why those self same rate-cut odds fell from 25% to twenty% after Powell’s testimony).
Right here’s Powell from his remarks to Congress:
Should you simply take a look at the fundamental information and don’t take a look at the forecast, you’d say that we might’ve continued slicing.
The distinction, in fact, is at the moment all forecasters expect fairly quickly that some vital inflation will present up from tariffs. And we are able to’t simply ignore that.
Right here’s the more than likely takeaway for now…
Charge cuts may occur quickly, however the path is conditional.
If this Friday’s PCE report confirms the disinflation pattern, and we get by means of July 8 with out tariffs exploding larger, then the door to a summer season lower stays open, and a September lower is probably going.
But when inflation information surprises to the upside, or the reintroduction of Liberation Day tariffs muddies the water, Wall Road’s current bias towards extra price cuts shall be proved mistaken but once more…and we must always brace ourselves for a brand new spherical of volatility.
However extra volatility would deliver a brand new bevy of buying and selling alternatives
In yesterday’s Digest, I highlighted how as we speak’s market isn’t constructed for passive investing alone.
Better volatility is the brand new norm… AI is amplifying market strikes for an growing variety of shares… and buy-and-hold is going through headwinds (the S&P is up lower than 4% on the 12 months).
On this atmosphere, buying and selling is turning into extra important than optionally available. So, we’re going to be highlighting other ways to commerce over the approaching weeks to assist demystify the way it works.
In yesterday’s Digest, we profiled a brand new buying and selling instrument from our company associate TradeSmith. It scans 120 million information factors to establish prime buying and selling moments – “revenue home windows.”
This morning, TradeSmith’s CEO Keith Kaplan went dwell to exhibit how the instrument works. He offered back-tests of the outcomes (like 89% in 1 day… 339% in 18 days… even 776% in 17 days). He additionally gave away the names and tickers of three new alternatives for July 1 that might every shoot up 100% or extra in days.
If you missed it, you can check it out for free right here.
For our second installment of our buying and selling sequence, let’s flip to Luke Lango
On Monday, one among Luke’s trades in Breakout Dealer – Kratos Protection & Safety Options Inc. – pushed above the 200%-return milestone (they opened it in spring of 2023).
What’s the buying and selling technique behind this acquire?
For my part, it’s among the best medium-term, limited-stress programs on the market.
It depends on one thing known as “stage evaluation,” which you’ll start implementing in your personal portfolio as we speak.
The underlying concept is easy…
At any given cut-off date, an asset is both going up, down, or sideways.
To that finish, it’s at all times in one among 4 distinctive levels: 1) going sideways at a backside, 2) going up, 3) going sideways at a prime, or 4) taking place.
Stage evaluation is the science behind figuring out which stage a inventory is in, after which solely investing in a inventory when it’s surging in Stage 2.
This places all of the emphasis on value, which is the one variable that straight impacts your wealth.
Right here’s Luke’s take:
…The one factor that can make a distinction to your portfolio is whether or not the shares you personal rise in worth whilst you personal them.
Let’s say you discovered a really atrocious firm – we’re speaking the other of a blue chip. It’s hemorrhaging money, has terrible administration, and is in a dying business.
However what if its inventory value had simply damaged out and, hypothetically, was on its approach to doubling from $5 to $10? Would any of these detrimental traits matter to you?
If what you care about is your private wealth, they shouldn’t. Why would they?
All that will matter is that the inventory is doubling whilst you’re invested…
Relating to wealth-building, the one factor that really issues is whether or not the share value strikes within the route you need throughout the interval you personal the inventory.
The sort of buying and selling system doesn’t incorporate any basic evaluation
Shares aren’t buy-and-hold heirlooms for the lengthy haul. As an alternative, they’re nothing greater than a instrument – solely as helpful as their means to generate wealth.
So, bullish momentum is what issues for this fashion of buying and selling.
Circling again to KTOS, as you may see under, Luke’s subscribers jumped in very early in its Stage-2 breakout (following its Stage-1 consolidation).
Yes, KTOS has experienced plenty of volatility since, but its Stage-2 breakout channel has remained intact. So, Luke and his subscribers have remained in the trade, resulting in that push beyond 200% I highlighted a moment ago.
Now, why has KTOS been surging?
In short, tailwinds in hypersonic tech and military drones. The company has won major government contracts and ramped up production. Add in growing defense spending, insider buying, and even index inclusion, and it’s no wonder this stock’s been climbing.
But for Luke’s purposes, asking “why?” is irrelevant…
If KTOS was selling toilet paper – yet its stock was breaking out in the same way – it would be on Luke’s radar.
Bottom line: With this style of trading, price is truth.
Overall, this type of trading is good if you don’t want to be too active, reacting to every market dip and surge
You’re generally hands-off.
As long as the trade remains in its Stage-2 breakout, you don’t have to do much.
As for trade length, you can be in a position anywhere from a few days to a couple years in KTOS’s case. The timing relates 100% to bullish price momentum.
From a “stress” perspective, stage analysis enables you to pullback and “see” the breakout, which helps provide greater peace about your exit.
Tip: Be sure to factor in a stock’s inherent volatility when thinking about stop-losses. A stop-loss that’s too tight relative to a stock’s natural volatility means you’ll sell too soon. One that’s too loose means you risk accepting a greater drawdown than you want.
This is why when Luke makes a new trade recommendation, he highlights the stock’s standard deviation. This plays a role in your stop-loss, which influences your expectation of volatility, and by extension, your position size.
Getting this right (or wrong) has a huge impact on your calm (or stress) when a trade is live.
Overall, stage analysis is a great trading system when you want to be involved – but not feel overly burdened by the need to check in too often. It’s also fantastic for visual traders.
More on our trading series to come when we highlight Jonathan Rose.
Two stocks on Luke’s radar today
We’ll dive into this in greater detail in a future Digest, but let’s put this on your radar…
Robots/humanoids are coming… it’s going to be huge… now is the time to get in before the masses.
There are many ways to do this which we’ve been profiling in recent months, but Luke just highlighted another.
Let’s return to his Innovation Investor Daily Notes:
We are very bullish on the emergence of AI-powered humanoid robots over the next several years. We think they’ll go from being nowhere today to being everywhere in factories by 2030 and everywhere in homes and on streets by 2035.
We are in the first inning of hypergrowth for humanoid robots. If so, that means we are in the first inning of hypergrowth for demand of rare earth magnets, too.
That’s because the most mission critical physical component of a humanoid robot is a motor or actuator.
These robots will have dozens of motors across their bodies that convert electrical energy into mechanical energy.
Magnets are key to that conversion.
We’re running long so I’ll jump to the bottom line…
As we’ve covered in the Digest, China controls about 90% of the rare earth element (magnet) market. Obviously, that could prove problematic given strained relations between the U.S. and China, as well as the Trump’s administration Made-in-America agenda.
So, if you’re looking to invest in a U.S.-based rare earth play, Luke points toward MP Materials (MP) and USA Uncommon Earths (USAR).
Luke calls MP the “huge canine within the U.S.” and USAR “a extra speculative startup that’s attempting to chop out a distinct segment for itself.”
Extra on this to return, however if you wish to get a bounce on this to your analysis, right here’s your heads-up.
In order for you Luke’s newest updates on these shares and his official suggestions in Innovation Investor, click here to learn more.
Have night,
Jeff Remsburg
