Ready For The Jobs Report?

[CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS]( Hello investor, Ready For The Jobs Report? Today is going to be all about the new jobs report. Yesterday, the stock market was virtually dead flat because traders didn’t want to make major bets before the jobs report. The report could indicate where the Federal Reserve could go with interest rates. If there was any clue, yesterday’s initial jobless claims came in at 207,000 for the week ending Sept. 30 – up just 2,000 from the prior week. That was below the forecast of 210,000. There was nothing about it that said the central bank could keep rates unchanged. - “We’re in the middle of a transition from what everybody thinks is a low rate environment, to a kind of more normalized rate environment. These adjustment periods are tough,” said Horizon Investments chief investment officer Scott Ladner. Scott Ladner, Horizon Investments’ chief investment officer (Photo: Bloomberg) Now for today’s jobs report, economists expect nonfarm payrolls for September to report a 170,000 rise in job gains. It’d be a slight slowdown from 187,000 in August. Wall Street is not praying for a recession, of course. But it wants the jobs market to cool down slightly, so the Fed wouldn’t feel inclined to hike rates. After all, higher interest rates could mean higher chances of a recession. Scott Lander believes that the labor market is showing healthy signs of cooling down – less hiring without mass firing. - “The totality of the labor market data is telling us that things are getting better. But they’re getting better in terms of numbers getting softer [and] less hot, and doing so in the most healthy way, which is essentially less less hiring, but still not very much firing,” Ladner said. Federal Reserve Bank of San Francisco President Mary Daly said the criteria for keeping rates unchanged is for the labor market and inflation to keep cooling. She argued that if inflation falls, it would make the current rates more restrictive. Meaning? The Fed Reserve wouldn’t be doing “nothing.” Rather, its policy will remain active in its fight against inflation even if rates stay unchanged. - “If we continue to see a cooling labor market and inflation heading back to our target, we can hold interest rates steady and let the effects of policy continue to work,” Daly said Thursday at an event hosted by The Economic Club of New York. - “Importantly, even if we hold rates where they are today, policy will grow increasingly restrictive as inflation and inflation expectations fall,” Daly said. “So, holding rates steady is an active policy action.” Daly also said the recent jump in bond yields could be worth a rate hike by itself. - “When bond yields rose, we saw the probability on the November meeting go down. To me, that says the markets are understanding how we think about things and they do have the reaction function in mind,” she said. Federal Reserve Bank of San Francisco President Mary Daly (Photo: CNBC) Soaring natural gas: Inflation shocks keep coming, as natural gas futures soared 7.3 percent yesterday after the Energy Information Administration’s data showed domestic gas inventories ended last week jumping above the five-year average in the same period of the year. Moreover, the U.S. exported more natural gas in the first half of 2023 than it ever did in the same period at an average of 20.4 billion cubic feet per day. The demand for U.S. natural gas likely jumped due to the ban of Russian oil.  Don’t Sleep On This Next Dividend Superstar Today’s Stock Pick: Howmet Aerospace ([HWM]() Howmet Aerospace has been in business for more than 80 years as a major manufacturer of jet engines. Clearly, this is a trust-based industry. A new competitor cannot enter the market easily because manufacturing jet engines is a high-stakes game. So, Howmet is a fantastic investment as a market leader in a high barrier-to-entry industry. (Source: Howmet Aerospace) Here’s the interesting thing about Howmet Aerospace. It was originally founded as Austenal – a company manufacturing materials for dental appliances. That was far away from jet engines. Eventually, the company became Alcoa, which spun off its bauxite, alumina, and aluminum operations. That business is known as Alcoa. The remaining units from old Alcoa was split into two businesses on April 1, 2020, and one of them was renamed to Howmet Aerospace. Now, Howmet earns nearly 80% of its sales from commercial and defense aerospace operations. (Source: Howmet Aerospace) Recovering business: The pandemic was brutal for the aerospace industry, and Boeing’s production struggles didn’t help. Now, things are coming back. In recent earnings reports, airlines talked about surging travel, and they need more planes to meet the demand. Good enough, Howmet’s revenue grew 17% year-over-year. Because of its capital-intensive nature, any revenue growth could be amplified in its earnings. Its EPS exploded by 59% year-over-year. Thanks to a major boost to its free cash flow, the company bought back nearly 1.5% of its market cap in the first half alone. And it is just the beginning. Howmet’s board authorized the company to buy back $1.08 billion in shares. That would be 7.2% of the market cap! The future remains bright: Howmet expects the narrow-body aircraft production to increase. Airbus is ramping up its production, while Boeing is doing 737 MAX deliveries. Moreover, Howmet has a positive outlook for the build of wide-body aircraft in 2023. So, that would maintain Howmet’s growth momentum. You should also keep in mind that Howmet had a brutal two-year period before recovering slightly: (Source: Yahoo Finance) Bottom line: Howmet Aerospace has a phenomenal competitive moat with ~85% of its revenue from the number 1 or 2 market position. The company has a history of buying back shares, and its dividends could surge over the next few years. Own this company just before it completes a full recovery.   [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.