The Fed Is Wrong (Again) – Here’s How We’re Playing It

By Chris Lillard

LikeFolio consumer data is already showing that consumers are facing significant economic challenges:

Credit cards are getting maxed out, people are falling behind on payments, and everyone is worried about the price of food and gas.

Consider the consumer’s perception of inflation.

LikeFolio’s unique data shows that the average person is growing more worried about inflation by the day.

When consumers begin to expect high inflation levels as a “new normal,” they begin accepting rising prices on goods and services more readily and begin demanding higher wages to compensate for higher consumer prices.

If the Fed is looking to “cool off” the economy, it needs to look no further than the collective consciousness of the American consumer.

What we see in this macro trend data will almost certainly be borne out in the backward-looking datasets the Fed relies upon in the months ahead.

What to Know

When I look at the LikeFolio data, I see a quantified display of what I am hearing from real people each and every day.

“I can’t keep this up.”

Just like the Fed fell behind when it came to fighting inflation, I believe it is in serious danger of overshooting on interest rate policy, which could do severe long-term damage to the U.S. economy.

So, the current environment is tricky, to say the least.

The investment landscape is filled with land mines, and stock prices are dropping by 20% or more on relatively minor earnings misses.

Some of these companies will never come back.

Poor management will ultimately lose out to high-interest rates and a tapped-out consumer.

But there are bright spots.

We’re beginning to see some of the best single-stock opportunities that we’ve seen since the COVID-19 crash in early 2020.

Like then, we are seeing companies get tossed out by Wall Street, while their internal business – and most importantly, their value to consumers — continues to grow at a rapid pace.

These MegaTrend companies are the ones I feel are most likely to emerge from the “financial winter” that is upon us.

And not only survive — but thrive.

While we wait for the Fed to see what’s right in front of its face, I hope you’ll join me in the camp for optimists. Because we’ll be the ones to discover future gems to own right now.

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