Anyone making plays tomorrow specifically for the FOMC meeting results and JPOW presser?

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Things to watch at FOMC:

Yield Curve Control

Increases our debt tremendously adding to inflation. Lowers yields on treasuries that have been mooning lately, as they vastly increase the amount of bonds they buy to decrease the yield. We’re already doing this somewhat, as the Fed spends $120b a month on bonds.

Supplementary Leverage Ratio

When covid first caused havoc, the Federal Reserve eased the leverage rules for large banks by exempting certain investments from their leverage calculations. If that sentence sounds like pig Latin to you don’t worry it doesn’t matter if you understand it, what matters is how to make money off the policy extension/ending. The banks were able to exempt any holdings in U.S. Treasury debt or deposits at the Fed from their calculations of the supplementary leverage ratio. It was supposed to end March 31st. Everybody thought that was the plan. J Pow even said a few months back they have no plans of extending it. But then the yields began to rise and fast.

Recently, J Pow shocked the public by hinting they might extend the SLR, or potentially make it permanent. They can’t afford to do YCC (they might anyways because they have a trend of positive short term outlook at the cost of long term growth), so if they get rid of SLR without YCC, more than likely every bubble pops. Not extending SLR means that every bank potentially sells off over a trillion dollars in treasuries, skyrocketing the yields, causing a huge tech sell off, and more than likely bringing the entire market with it, popping the stock market bubble. Mortgage rates move with the 10 year treasury, so mortgage rates skyrocket, popping the housing bubble. A popped housing bubble, will pop the credit bubble. And so on. Eventually sending us into a catastrophe worse than the covid recession (if you want to call that a recession), and potentially worse than the Great Depression. Higher yields means that the debt the Federal Reserve has put themselves in, becomes more costly, and the Federal Reserve and the United States government will become bankrupt and default on the debts we owe to foreign countries. However, lots of people on Capitol Hill are begging the Federal Reserve to not extend it, because SLR is one of the most important regulations for Wall Street to not take advantage of the average Joe, and was implemented after the 2008 crisis. The relaxed SLR covid policy is the reason why the wealth gap grew to levels unseen since 1929 (right before the Great Depression) during Covid.

Rather than fearing inflation and moving to cash (which is dumb as hell if there’s inflation on the rise, because your money becomes less valuable by the minute), use it to your advantage.

4 scenarios and how to play them:

YCC implemented, and SLR is extended

Play REIT ETFs (i have calls on VNQ expiring Friday that i bought at close last Friday). I might sell before the FOMC. The combo of both of these means inflation dramatically goes up, while yields will become incredibly suppressed, keeping real estate prices inflating, and mortgage rates low. Can also begin playing speculative technology again. I’d be cautious tho. Because there’s a chance people start selling bonds faster than YCC and SLR can support it. Collapsing the whole bond system, wiping 80%+ off of Nasdaq. J.P. Morgan predicted a minimum crash of 20% if the 10 year treasury yield hits 2.00%.

YCC not implemented, but SLR is extended

Yields might continue to rise, but not as fast as if YCC and SLR were both off the table. Probably could diversify with commodities and REIT. This one will be the least volatile and markets will probably continue to rise for a bit but slowly. This is the current state we’re in. Yields are still dramatically rising, but not as fast as they would with SLR being shot down. I’d play blue chips and value stocks IMO as well. If yields continue to rise, I’d begin shorting QQQ with puts, because once the 10 year hits 2.00%, there will be at least a 20% correction on the Nasdaq. I’d start buying puts around the 1.85% yield mark.

YCC not implemented, and SLR is not extended

Hold on to your seat belts. Yields are going through the absolute roof. Buy puts on TLT and make a fortune. Out of all the profit calculations on options I’ve ever done in history, this one is by far the most lucrative in terms of potential. Yields rise as bonds sell off. The lack of YCC and SLR will cause a massive sell of on bonds and potentially cause a gamma squeeze downwards. I’m talking 10k worth of puts being worth tens of millions in a months time.

YCC implemented, and SLR not extended

Massive increase in inflation, yields will probably go down. Commodities play. Don’t buy precious metals, because they’re not based off anything anymore. And they’re heavily manipulated. Buy ITB puts (home construction) and calls on commodity ETFs. Lumber will continue to skyrocket to the point that home builders will have to charge insane prices due to supply cost, leading to dramatically less demand. It’s currently forming a head and shoulders on the 1 month chart. Also the moratorium ends March 31st as well, leading to foreclosures. This will increase the supply of available homes on the market, thus, even less demand for home builders.

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