The stock market sure kept us on our toes this week: earnings reports … an announcement from the Federal Reserve … ongoing infrastructure bill drama … rising COVID-19 Delta cases.

And it’s all affecting one corner of the market in particular, which gives us important clues about the sustainability of this current rally.

Today I’ll dig into the details to prepare you for what comes next.

The Dreaded “S” Word

On Wednesday, July 28, Fed Chairman Powell projected a lot of confidence about the markets. Yet, as I mentioned in Wednesday’s Bauman Daily, investors could be facing the dreaded “s” word — stagflation.

It’s an unavoidable situation that occurs when economic growth rates are slow and sluggish, but unemployment and inflation are high. Regardless of this pressure, Powell managed to keep the Fed’s tapering timeline a mystery.

Yet, there was one small detail I noticed when parsing through Powell’s statement. Other investors spotted it as well, and the market popped sharply higher yesterday.

In today’s video, I share this detail with you and present a very alarming chart showing WHY the Fed may be holding back.

Click here to watch this week’s video or click on the image below:

(Click here to view video.)

Best regards,

Clint Lee
Research Analyst, The Bauman Letter