The S&P 500 Broke A Key Technical Level

[CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS]( Hello investor, Fed Sees “Significant Upside Risk” The Federal Reserve didn’t offer much good news to the stock market, as its minutes revealed that officials still see “significant upside risks” to inflation and may hike rates further. - “Most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” according to minutes. Moreover, they see a possible risk of the unemployment rate rising in the near future. - “Some participants commented that even though economic activity had been resilient and the labor market had remained strong, there continued to be downside risks to economic activity and upside risks to the unemployment rate,” the Fed said. But of course, Fed Chair Jerome Powell said that the central bank will decide meeting by meeting on whether to hike rates or not. It will all depend on incoming data before its September meeting. It’s still too early to tell. - “We intend again to keep policy restrictive until we’re confident that inflation is coming down sustainably to our 2% target, and we’re prepared to further tighten if that is appropriate,” Powell said on July 26. Wall Street generally expects a pause in September, but a hike in November and/or December is possible. Some officials believe that previous rate hikes haven’t fully kicked in, so there could be a lagging effect. So, a pause seems reasonable to see if inflation will keep falling without any further hikes. - “There was nothing here to derail our assumption that September will be another ‘skip,’ although another hike in November or December is firmly on the table if the data warrants,” said Ben Jeffery, a strategist at BMO Capital Markets. Ben Jeffery, a strategist at BMO Capital Markets (Photo: Bloomberg) Quincy Krosby of LPL Financial said the recent economic data looks too hot, and it may need to cool down in order for the central bank to put the final dagger in its inflation fight. - “Markets continue to sell off as the Fed minutes underscore that the economic backdrop needs to pull back so that demand softens accordingly,” said Quincy Krosby, chief global strategist for LPL Financial. - “Recent third-quarter GDP estimates, coupled with fresh retail sales data, suggest a much more robust underpinning to the economy, certainly not what the Fed wants to see as they navigate the so-called ‘last mile’ towards achieving price stability.”  Top Compounding Stock To Buy And Hold For A Decade Today’s Stock Pick: Fabrinet ([FN]() Fabrinet is a fascinating business that is wildly profitable and can enrich you for years to come. You will see why it is growing at such a phenomenal pace if you learn its business model. When I am finished explaining it, you will see how much it makes sense. It offers such a valuable service that will ensure the company’s future. Now, Fabrinet was founded in 2000 by Tom Mitchell. He is one of the best entrepreneurs in the world. Before this company, he co-founded Seagate Technology which earned $10 billion in revenue last year. Tom took $1 million from his bank account and funded the startup cost of Fabrinet. What is its mission? To create a “factory-within-a-factory” production of complex optical components for companies. Fabrinet founder Tom Mitchell (Photo: Fabrinet) Fabrinet focuses on complex prototypes and new product introduction services. Listen, companies want to innovate and create new products. But they need to validate the product in the market first. So, they need to produce these prototypes at a low volume. That is not what big manufacturing companies can offer. They focus on high-volume production. Enter Fabrinet. It offers engineering services in process design, prototyping, design for manufacturability, so products get to the market as quickly as possible. More importantly, Fabrinet’s manufacturing sites mirror the equipment used in its low-cost, high-volume manufacturing facilities. This ensures a fast, smooth transition to a low-cost production environment once the product is qualified. Makes sense, right? Sure enough, the stock grew by 380% from 2018 to its recent peak. “Factory-within-a-factory” production: This is a new concept. Fabrinet devotes manufacturing space to each customer. Even engineering teams are assigned to a customer. So, that’s where the “factory-within-a-factory” term came from. In short, each customer will get its own private factory space inside Fabrinet’s factory. This will maximize intellectual property protection and opportunities to reduce cost and improve time to market for our customers’ products. What would be the next step? Now, this is when things get amazing. The new product introduction manufacturing seems like a valuable service, but it also serves as new business development for Fabrinet. Why? If a product is validated in the market, a company will need to scale its production, right? Precisely, Fabrinet has factories in Thailand that specialize in low-cost, high-volume production. A booming industry: When we mix a beautiful business model with an exploding industry, we’ve got an atomic bomb! Fabrinet focuses on the Optical Communications market. That’s many of the megatrends are in, such as 5G, EV charging, LIDAR (self-driving), AR/VR, 3D sensing, and so on. (Source: Fabrinet) Cash flow machine: Fabrinet’s balance sheet is set up for a cash flow machine business. Interest payments eat into cash flow, but not Fabrinet. It has little debt at $15 million while holding $538 million in cash. (Its cash is about 13% of its market cap, by the way.) Its ROIC hovers above the 32% level which is spectacular: (Source: Fabrinet) Bottom line: Fabrinet offers a smart business model that nails the pain point of its customers with complex products. As soon as the product is validated in the market, its customer will become its long-term partner through Fabrinet’s low-cost, high-volume manufacturing facilities in Thailand. With the boom of Optical Communications industry, Fabrinet is a stock that is sure to see massive gains in the next five years. And its balance sheet is pristine and swimming in cash to return to shareholders.   [CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS](     © All Rights Reserved, Trade Alliance If you no longer want to receive these messages, you may [click here]( to unsubscribe.