This week the Federal Reserve meet and they are expected to stay on hold while repeating their belief that rising inflation is transitory. The latest US CPI data last week surprised heavily to the upside with both the month on month and the year on year data coming in above market maximum expectations. The core reading was +3.8% vs a maximum +3.6% expected for the year on year print and the headline came in at 5% vs a maximum expectation of 4.9%. So, the key question this week is this: Will the fed still see the rising inflation as transitory. If it does that could allow equity markets to keep rising.

Will Netflix move higher in keeping with its very strong seasonal pattern this year? Over the last 10 years, Netflix has gained in value every single time between June 10 and July 10. The largest gain was in 2012 with a 27.35% profit. Will Q2 earnings surprise to the upside? Will Netflix keep rising through June?

Major Trade Risks:

  • The main risk to this trade is from any risk-off tones which will weigh on equity prices
  • The recent gain in US inflation could mean the Fed taper bond purchases next week. If they do then the prospect of rising interest rates could weigh on US stocks.