Red Momentum - Garrett's Take on the Fed | Only 2 Weeks Until US Companies Report On Their Q1 Earnings - What's Expected?

[] The Federal Reserve released its minutes from the March 15-16 meeting. Here are the primary takeaways as investors look at the economy in the coming months. Also, Dr. Bauer looks into what Q1 earnings have in store for different sectors of the stock market. [View in browser]( . The Federal Reserve released its minutes from the March 15-16 meeting. Here are the primary takeaways as investors look at the economy in the coming months. Also, Dr. Bauer looks into what Q1 earnings have in store for different sectors of the stock market. [View in browser]( . . [] [Havens Investment Letter] [] [Havens Investment Letter] [] [] [] This 12-time World Trading Champion Wants To Trade With You! He’s won the prestigious World Traders Challenge a total of 12 times... and it’s no wonder why, when he specializes in finding low-priced stocks that move 30%... 60%... even 100% in mere hours! Now he’s teaching his unique strategy to a small group of traders -- and inviting you to learn his system! [Click here to learn more!]( [] --------------------------------------------------------------- [] This 12-time World Trading Champion Wants To Trade With You! He’s won the prestigious World Traders Challenge a total of 12 times... and it’s no wonder why, when he specializes in finding low-priced stocks that move 30%... 60%... even 100% in mere hours! Now he’s teaching his unique strategy to a small group of traders -- and inviting you to learn his system! [Click here to learn more!]( [] --------------------------------------------------------------- [] [] U.S. Q1 Earnings Report Coming Soon Dear Investor, The markets are still mainly concerned with the impact of the war in Ukraine. But soon quarterly earnings will attract all attention again. In about 2 weeks, the Q1 earnings season begins in the United States. Growth Of The Largest U.S. Companies With A Look Back And Estimates [US Companies]( (Click to enlarge) Source: refinitiv.com Looking at the table, in the last 3 columns you can find the growth of revenues (top row) and the growth of profits (bottom row) for the whole year. In 2020, profits fell by 12.6%, which was directly attributable to the COVID-19 crisis. In the following year, the easing COVID-19 situation led to a strong jump in profits. With an increase of 52.4% (circled), 2021 stands out clearly. However, there is also a base effect there, due to the exceptionally low profits in the COVID-19 crisis year. For 2022, however, profit growth is expected to be only 8.8%. In Q1 2022, it is only 6.4% (in the box). This is already a noticeable decline from the growth of the previous quarters. One reason is the disappeared base effect from the COVID-19 year, but inflation and interest rate developments also weigh on the estimates. Analysts Are More Optimistic About Energy And Materials The energy and basic materials sectors are the main beneficiaries of inflation. Here, earnings growth estimates have risen most significantly over recent months. Thanks to high oil and gas prices, analysts expect earnings growth of 62.5% in 2022. In July 2021, they estimated only 27.8%. This makes the energy sector the one with the highest expected profit growth this year by far. But also in the basic materials sector, which includes, for example, steel production, which is very lucrative thanks to high prices, profit expectations climbed from 1.6% to 10.5% recently. For Consumer Goods Manufacturers, Earnings Estimates Slumped Significantly Inflation, and also rising interest rates, are having a negative impact on the consumer goods sector (Consumer Discretionary). Here, estimates for earnings growth have slumped massively in recent weeks to only 17.5%. The market fears that consumers are reducing their spending on a sustained basis. More expensive loans are further dampening the shopping mood. Financial Sector Feels The Enormous Headwinds The cycle of interest rate hikes launched by the U.S. Federal Reserve and the sharp rise in capital market rates are a bad environment for financial stocks because, for example, lending is falling. So how do you deal with this information as an investor? Don't Choose The Wrong Sector Now This formulation sounds a little too simplistic when you first read it, but it is a good rule nonetheless. Especially when there are significant changes in the investment environment, as is the case right now, sector selection is critical. Otherwise, you're fighting windmills as an investor. Avoid sectors where expectations are massively gloomy or even negative. But also be wary of sectors whose estimates have already climbed too high. Here, stock selection matters even more. Sectors that have stable, positive growth estimates are the easiest. This applies, for example, to the healthcare sector. Kind regards, [Bauer Sig] Dr. Gregor Bauer Chief Analyst, European Markets [] --------------------------------------------------------------- [] [] U.S. Q1 Earnings Report Coming Soon Dear Investor, The markets are still mainly concerned with the impact of the war in Ukraine. But soon quarterly earnings will attract all attention again. In about 2 weeks, the Q1 earnings season begins in the United States. Growth Of The Largest U.S. Companies With A Look Back And Estimates [US Companies]( (Click to enlarge) Source: refinitiv.com Looking at the table, in the last 3 columns you can find the growth of revenues (top row) and the growth of profits (bottom row) for the whole year. In 2020, profits fell by 12.6%, which was directly attributable to the COVID-19 crisis. In the following year, the easing COVID-19 situation led to a strong jump in profits. With an increase of 52.4% (circled), 2021 stands out clearly. However, there is also a base effect there, due to the exceptionally low profits in the COVID-19 crisis year. For 2022, however, profit growth is expected to be only 8.8%. In Q1 2022, it is only 6.4% (in the box). This is already a noticeable decline from the growth of the previous quarters. One reason is the disappeared base effect from the COVID-19 year, but inflation and interest rate developments also weigh on the estimates. Analysts Are More Optimistic About Energy And Materials The energy and basic materials sectors are the main beneficiaries of inflation. Here, earnings growth estimates have risen most significantly over recent months. Thanks to high oil and gas prices, analysts expect earnings growth of 62.5% in 2022. In July 2021, they estimated only 27.8%. This makes the energy sector the one with the highest expected profit growth this year by far. But also in the basic materials sector, which includes, for example, steel production, which is very lucrative thanks to high prices, profit expectations climbed from 1.6% to 10.5% recently. For Consumer Goods Manufacturers, Earnings Estimates Slumped Significantly Inflation, and also rising interest rates, are having a negative impact on the consumer goods sector (Consumer Discretionary). Here, estimates for earnings growth have slumped massively in recent weeks to only 17.5%. The market fears that consumers are reducing their spending on a sustained basis. More expensive loans are further dampening the shopping mood. Financial Sector Feels The Enormous Headwinds The cycle of interest rate hikes launched by the U.S. Federal Reserve and the sharp rise in capital market rates are a bad environment for financial stocks because, for example, lending is falling. So how do you deal with this information as an investor? Don't Choose The Wrong Sector Now This formulation sounds a little too simplistic when you first read it, but it is a good rule nonetheless. Especially when there are significant changes in the investment environment, as is the case right now, sector selection is critical. Otherwise, you're fighting windmills as an investor. Avoid sectors where expectations are massively gloomy or even negative. But also be wary of sectors whose estimates have already climbed too high. Here, stock selection matters even more. Sectors that have stable, positive growth estimates are the easiest. This applies, for example, to the healthcare sector. Kind regards, [Bauer Sig] Dr. Gregor Bauer Chief Analyst, European Markets --------------------------------------------------------------- [] Pick the Perfect Apple Trade -- with 70% Success Rate and a 3-to-1 Reward-to-Risk Ratio [hand choosing apple]( [Learn the method here]( --------------------------------------------------------------- [] [] Pick the Perfect Apple Trade -- with 70% Success Rate and a 3-to-1 Reward-to-Risk Ratio [hand choosing apple]( [Learn the method here]( --------------------------------------------------------------- [] [] [] Red Momentum - My Take on the Fed [Garrett Pic]Dear Investor, On Wednesday morning, we had a negative momentum switch as investors continued to dump those “economy stocks” that I discussed on Friday. Consumer cyclical, technology (semis), industrial, and financial stocks remain under pressure. Institutions were not buying again on Wednesday, evidenced by the lower volumes that define this market. Today featured a “headline” event in the release of the Fed’s March minutes from its recent meeting. While we already knew that the Fed was moving to increase rates aggressively to tame inflation, there are a few BIG takeaways that we need to discuss. Let’s dive in. March Minutes As you know, I don’t care much about the rate hikes. I knew they were coming. So, I don’t give a hoot if the Fed raises rates by 25 or 50 basis points in May. And I’ve noted that the odds of higher rate hikes are pushing traders in various directions. There is now a slight chance (under 2%) that the central bank will set its benchmark rate up to about 3.5% by February 2023, according to CME FedWatch. But the large institutions that I advise effectively argue that we won’t get close to this… Why? Because “Smart Money” is expecting that rate hikes and tightening consumer spending would create weaker economic conditions toward the end of the year and Q1 2023. The institutions expect that the Fed will start to aggressively increase rates over the coming months and create enough runway that the central bankers can cut rates to support the economy. That’s a VERY BIG gamble, but it wouldn’t be unprecedented. This chart from Bloomberg shows that the markets expect significant rate hikes over the next 12 months. However, the market is starting to price in rate CUTS in 2023/24 when the economic fallout happens. Simply put, we’re facing a very unpredictable market. [Rate Hikes] Momentum Tells Us What I am watching momentum right now turn negative. This enhanced selling pressure could last three days or three weeks. But we are always at the risk of Bull Traps - events where there are lower highs and higher lows as the market starts to drop. There is never a straight line down like what we saw on Black Monday in 1987. Instead, the market chops as algorithms spasm to squeeze dollars and draw new buyers into the market. In red momentum markets, I’m typically sitting on cash, but there are opportunities in the short-term in positive sectors like natural gas and shipping. That said, I’m looking out to June as the next time we see robust volatility. Not only is that the time where we could see the Fed hike rates by 75 basis points in a single meeting, but that is also the likely time that the Fed starts to reduce its $9 TRILLION balance sheet. [Fed Balance Sheet] As of July 2021 Today, the Fed said it would begin to cut $95 billion per month from its balance sheet per month - and start soon. There isn’t a lot of data on this process. However, back in 2018, when the Fed cut $50 billion in nine months during 2018, we had a pretty large peak to trough decline. We’re talking about an even faster decline in liquidity from the market than what we saw. Here we’re talking about $60 billion over three months. That would also tack on another $35 billion in mortgage-backed securities, a pace much faster than we saw in 2018. Simply put, it’s time to put on your seatbelt. The Fed has been backed into a corner, and it must start raising rates and tapering that balance sheet. It could create some VERY WILD moves in the markets and in your more illiquid assets in housing, metals, or private investments. A recession is very likely if the Fed can’t provide necessary support anymore. I do believe that the play will be to raise rates and lower them later. The good news is that when we enter a bear market… you’ll be prepared to make a lot of money over the long term. We’ve got a long nine months ahead of us, and I’ll be here to help navigate you through this. Remember… cash is your friend right now. Enjoy your day, [Garrett Sig] Garrett {NAME} Chief Analyst, American Markets [] --------------------------------------------------------------- [] [] Red Momentum - My Take on the Fed [Garrett Pic]Dear Investor, On Wednesday morning, we had a negative momentum switch as investors continued to dump those “economy stocks” that I discussed on Friday. Consumer cyclical, technology (semis), industrial, and financial stocks remain under pressure. Institutions were not buying again on Wednesday, evidenced by the lower volumes that define this market. Today featured a “headline” event in the release of the Fed’s March minutes from its recent meeting. While we already knew that the Fed was moving to increase rates aggressively to tame inflation, there are a few BIG takeaways that we need to discuss. Let’s dive in. March Minutes As you know, I don’t care much about the rate hikes. I knew they were coming. So, I don’t give a hoot if the Fed raises rates by 25 or 50 basis points in May. And I’ve noted that the odds of higher rate hikes are pushing traders in various directions. There is now a slight chance (under 2%) that the central bank will set its benchmark rate up to about 3.5% by February 2023, according to CME FedWatch. But the large institutions that I advise effectively argue that we won’t get close to this… Why? Because “Smart Money” is expecting that rate hikes and tightening consumer spending would create weaker economic conditions toward the end of the year and Q1 2023. The institutions expect that the Fed will start to aggressively increase rates over the coming months and create enough runway that the central bankers can cut rates to support the economy. That’s a VERY BIG gamble, but it wouldn’t be unprecedented. This chart from Bloomberg shows that the markets expect significant rate hikes over the next 12 months. However, the market is starting to price in rate CUTS in 2023/24 when the economic fallout happens. Simply put, we’re facing a very unpredictable market. [Rate Hikes] Momentum Tells Us What I am watching momentum right now turn negative. This enhanced selling pressure could last three days or three weeks. But we are always at the risk of Bull Traps - events where there are lower highs and higher lows as the market starts to drop. There is never a straight line down like what we saw on Black Monday in 1987. Instead, the market chops as algorithms spasm to squeeze dollars and draw new buyers into the market. In red momentum markets, I’m typically sitting on cash, but there are opportunities in the short-term in positive sectors like natural gas and shipping. That said, I’m looking out to June as the next time we see robust volatility. Not only is that the time where we could see the Fed hike rates by 75 basis points in a single meeting, but that is also the likely time that the Fed starts to reduce its $9 TRILLION balance sheet. [Fed Balance Sheet] As of July 2021 Today, the Fed said it would begin to cut $95 billion per month from its balance sheet per month - and start soon. There isn’t a lot of data on this process. However, back in 2018, when the Fed cut $50 billion in nine months during 2018, we had a pretty large peak to trough decline. We’re talking about an even faster decline in liquidity from the market than what we saw. Here we’re talking about $60 billion over three months. That would also tack on another $35 billion in mortgage-backed securities, a pace much faster than we saw in 2018. Simply put, it’s time to put on your seatbelt. The Fed has been backed into a corner, and it must start raising rates and tapering that balance sheet. It could create some VERY WILD moves in the markets and in your more illiquid assets in housing, metals, or private investments. A recession is very likely if the Fed can’t provide necessary support anymore. I do believe that the play will be to raise rates and lower them later. The good news is that when we enter a bear market… you’ll be prepared to make a lot of money over the long term. We’ve got a long nine months ahead of us, and I’ll be here to help navigate you through this. Remember… cash is your friend right now. Enjoy your day, [Garrett Sig] Garrett {NAME} Chief Analyst, American Markets --------------------------------------------------------------- [] [] A chance to make $490 on a stock every day the market is open? Every morning for the last few months, a notorious market veteran has been quietly sending out a list of his favorite high-potential stock picks to a small, select group of successful traders… And [open enrollment is still available to the public.]( A rare opportunity for everyday traders just like you! Trade “side-by-side” with a 20-year trading industry legend by trading the exact same stocks he is every single day the market is open. Every day, before the market even opens, you could be receiving this legendary trader’s personal “hot sheet” of top stock picks for the day. Stocks that have the highest probabilities of moving 5% to 10% in just a couple of hours each trading day. Giving you, starting as soon as tomorrow, a shot at making $490 (or more) every single day the market is open. A potential $98,000 a year in trading profits… All by simply following the same trading watch list of this seasoned trading pro. But you have to move fast… we don’t know how long this opportunity for the general public to join will last. [Click here now to get on the list.]( --------------------------------------------------------------- [] [] [] A chance to make $490 on a stock every day the market is open? Every morning for the last few months, a notorious market veteran has been quietly sending out a list of his favorite high-potential stock picks to a small, select group of successful traders… And [open enrollment is still available to the public.]( A rare opportunity for everyday traders just like you! Trade “side-by-side” with a 20-year trading industry legend by trading the exact same stocks he is every single day the market is open. Every day, before the market even opens, you could be receiving this legendary trader’s personal “hot sheet” of top stock picks for the day. Stocks that have the highest probabilities of moving 5% to 10% in just a couple of hours each trading day. Giving you, starting as soon as tomorrow, a shot at making $490 (or more) every single day the market is open. A potential $98,000 a year in trading profits… All by simply following the same trading watch list of this seasoned trading pro. But you have to move fast… we don’t know how long this opportunity for the general public to join will last. [Click here now to get on the list.]( --------------------------------------------------------------- [] [] Article Recap - [U.S. Q1 Earnings Report Coming Soon](#i572731) - [Red Momentum - My Take on the Fed](#i572028) - [A chance to make $490 on a stock every day the market is open?](#156387) --------------------------------------------------------------- [] Article Recap - [U.S. Q1 Earnings Report Coming Soon](#i572731) - [Red Momentum - My Take on the Fed](#i572028) - [A chance to make $490 on a stock every day the market is open?](#156387) --------------------------------------------------------------- [] © 2022 Godesburg Financial Publishing, Inc. 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Please be aware that the claims regarding investing or trading results of non-employees are not tracked by GFP nor can they be verified. As always, past performance is not necessarily indicative of future results. Therefore, results presented in this email should NOT be considered TYPICAL. Actual results can and will vary based on everything from experience, ability, risk mitigation practices, and market volatility... to the amount of money exposed in the investment or trade. Investing and trading are speculative and carry serious risk. You may lose some, all - or possibly more - than your original investment or trade. GODESBURG FINANCIAL PUBLISHING IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER: GFP, including its owners and employees, are NOT registered as securities broker-dealers, brokers, or any sort of registered investment advisors with the U.S. Securities and Exchange Commission, any state securities regulatory authorities, or any self-regulatory organizations. GODESBURG FINANCIAL PUBLISHING EMPLOYEES MAY HOLD SECURITIES DISCUSSED: If a writer holds any securities in a communication, it will be disclosed along with the information on the potential investment or trade. HIR, its owners or employees, have not been - or ever will be - paid by the issuer of a security mentioned in our services or communications. GFP, its owners and employees are paid entirely or in part from commissions based on sales of their services to subscribers. For more information, please visit [our disclaimer page here.]( Sent to: {EMAIL} [Unsubscribe]( Godesburg Financial Publishing Inc., 251 Little Falls Drive, Wilmington, DE 19808, United States [] © 2022 Godesburg Financial Publishing, Inc. DISCLAIMER: COMMUNICATIONS FROM GODESBURG FINANCIAL PUBLISHING (GFP) ARE FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY – NOT INVESTMENT ADVICE: GFP and all the services it offers are for educational and informational purposes only and should NOT be understood to be securities-related offers or solicitations. None of GFP’s communications should be considered or used as personalized investment advice. GFP recommends that you speak with a licensed professional before making any investment decision. RESULTS PRESENTED ARE NOT NECCESSARILY TYPICAL OR VERIFIED: GFP communications may include information regarding the historical trading performance of gurus in their services (all verified by a third party), as well as testimonials of non-employees depicting profitable investments and trades that are believed to be true based on the representations of the persons providing the testimonial of their own free will. Please be aware that the claims regarding investing or trading results of non-employees are not tracked by GFP nor can they be verified. As always, past performance is not necessarily indicative of future results. Therefore, results presented in this email should NOT be considered TYPICAL. Actual results can and will vary based on everything from experience, ability, risk mitigation practices, and market volatility... to the amount of money exposed in the investment or trade. Investing and trading are speculative and carry serious risk. You may lose some, all - or possibly more - than your original investment or trade. GODESBURG FINANCIAL PUBLISHING IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER: GFP, including its owners and employees, are NOT registered as securities broker-dealers, brokers, or any sort of registered investment advisors with the U.S. Securities and Exchange Commission, any state securities regulatory authorities, or any self-regulatory organizations. GODESBURG FINANCIAL PUBLISHING EMPLOYEES MAY HOLD SECURITIES DISCUSSED: If a writer holds any securities in a communication, it will be disclosed along with the information on the potential investment or trade. HIR, its owners or employees, have not been - or ever will be - paid by the issuer of a security mentioned in our services or communications. GFP, its owners and employees are paid entirely or in part from commissions based on sales of their services to subscribers. For more information, please visit [our disclaimer page here.]( Sent to: {EMAIL} [Unsubscribe]( Godesburg Financial Publishing Inc., 251 Little Falls Drive, Wilmington, DE 19808, United States