Wall Street is still talking about the jobs report

[CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS]( Hello investor, Wall Street is still talking about the jobs report Last week’s jobs data was nothing but positive for Wall Street. They showed that the labor market is cooling down. Just what the Federal Reserve prescribed. But it remains strong enough to prevent a major recession – at least for now. Even former Treasury Secretary Lawrence Summers (who remains steadfast in his forecast that the economy will experience a hard landing) was slightly impressed by it. - “These were good numbers,” former US Treasury Secretary Lawrence Summers said. “I still think the road to a soft landing is a very difficult one, but this was a step down that road.” (Source: Bloomberg) Wage growth showed the smallest monthly gain since February of last year. But the index of aggregate weekly payrolls – which Bloomberg defines as combining “the length of the workweek, wages and the number of people on private-sector payrolls” soared at an annualized 7.2% pace over the last three months. That pace was the fastest since November. Meaning? There is plenty of consumer purchasing power, while wage growth is moderating. Neil Dutaa of Renaissance Macro Research questioned whether it is possible for inflation to fall down to the Fed’s 2% target with the economr running this hot. - “This is a proxy for nominal GDP and indicates conditions are still quite strong,” Neil Dutta, head of economics at Renaissance Macro Research LLC, said in a note. “It is hard to see the Fed hitting its 2% inflation objective with aggregate incomes running this strong.” But there is still significant imbalance in the labor market. There are 1.5 job openings for every unemployed person seeking work – which remains above the historical level. (Source: Bloomberg)  The Safest Double-Digit Annual Return You Can Find Anywhere Today’s Stock Pick: Norfolk Southern ([NSC]() The first railroad charter in North America was granted to Stevens in 1815, and the first fourteen miles track was opened in 1830. So, the railroad industry is old. 192 years old, to be exact. And its longevity as a profitable industry is nothing short of remarkable. America’s first practical steam locomotive in 1825 (Photo: 150 Stevens) To this day, there’s no more efficient way to carry large and heavy loads across the country than using the train. Trucks can only carry one container. Maybe two, at most. Freights can’t carry heavy loads. Trains can carry a 16-mile-long carload, making it insanely cheap to ship items. Yes, Norfolk Southern had a public relations nightmare when its train derailed in Ohio while carrying hazardous materials. That was a tragedy. The incident is still under investigation, but the company still has very solid business prospects. After all, the next decade will continue to be profitable for the industry. But Warren Buffett disagrees. He thinks it’d continue for another century, writing in his recent shareholder letter, “I'll venture a rare prediction: BNSF will be a key asset for Berkshire and our country a century from now.” Norfolk Southern is a perfect company to invest in this ageless industry. In fact, the company announced a whopping $10 billion repurchase program, which represents… …21% of NSC's current market cap of $46B! It spent $918 million in shareholder distributions in the first half alone. Money-making business: The biggest lure for Norfolk Southern is its ability to increase revenue while keeping costs low. For the full year of 2022, revenues improved 14%... while… operating expenses only climbed by 8%. That’s huge operating leverage. How did they do it? Two things: (1) train weight, and (2) train length. Both metrics grew by 20%+. Therefore, a train can carry even more loads per trip: The company chose not to update its Productivity Journey in 2022, but you can see the overall trend in the graph below: (Source: Norfolk Southern) A “secret” software business that could be a huge growth catalyst: The pandemic transformed how CEOs approach supply chains. They now prefer the certainty of supply and locating inventory closer to customers. It means more demand for freights within the country. That’s just icing on the cake for an industry that would do wonderful even without this boosted demand. Norfolk Southern developed an innovative platform, which is called “Zillow-like,” that allows customers to search for rail and transload facilities on the map. This way, CEOs can make decisions about where to build factories or choose suppliers. (Source: Norfolk Southern) Solid year ahead: Norfolk Southern expects total revenue to be comparable to 2022. This may not sound much, but that’s the beauty of the industry. Norfolk Southern’s ROEs usually hover around the 20% level, which allows it to return cash to shareholders. We’ve touched on the new share buyback program. Norfolk Southern already shrank its shares outstanding from 372 million to 228 million since 2010: Quarterly shares outstanding since 1Q 2010 (Source: MacroTrends) For the year of 2022, NSC distributed $4.28 billion to shareholders through share repurchases and dividends. So, you’ve got a strong shareholder return purely through dividends and share buybacks. Any earnings growth would be an “icing on the cake” on this shareholder return. Let’s imagine that the company posts an average annual earnings growth of 3%, that would take us to a 12% return or more. In other words, NSC doesn’t need to perform a miracle to deliver rock-solid returns. Bottom line: Norfolk Southern is as safe as any stock you can find. Its business model is century-old and, according to Warren Buffett, it will remain profitable for another century. Your annual returns can be in the double-digits range with very, very, very small risk. Consider this stock for your defensive allocation. 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.