Strategist: Fed Doesn't Matter Anymore

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JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, Strategist: Fed Doesn’t Matter Anymore Yesterday, Federal Reserve Chair Jerome Powell said it’s likely for Fed officials to wait longer than previously expected to start cutting interest rates due to sticky inflation. If inflation remains high, Powell can keep rates unchanged for “as long as needed.” - “The recent data have clearly not given us greater confidence and instead indicate that is likely to take longer than expected to achieve that confidence,” Powell said yesterday. - “Given the strength of the labor market and progress on inflation so far, it is appropriate to allow restrictive policy further time to work and let the data and the evolving outlook guide us,” he said. Jerome Powell (Photo: Samuel Corum/Bloomberg via Getty Images) Indeed, the economy has been red-hot. There were 300,000 jobs added in March — the most in about a year. Retail sales blew past the expectations. Oil prices jumped lately. All of this indicate strong inflationary pressures. As a result, Treasury 10-year yields jumped to 4.67%. Two-year climbed even further to nearly 5%, approaching its October high of about 5.2%. It showed that traders expect the Fed to keep rates higher for longer. (Source: Bloomberg) This complicated the global economy. Other countries are already struggling with strong dollar, and this makes it likely that the dollar will keep getting stronger with elevated interest rates. - “Authorities are a little bit frozen around the world as to how do you react to a generalized dollar strengthening?” said El-Erian, the president of Queens’ College, Cambridge. “How do you react to a generalized increase in interest rates in the US?” Interestingly, Citigroup strategist Chris Montagu said there are $52 billion of long positions on the S&P 500 and 88% of them are in a loss. So, he believes that any further loss would trigger more selling as stop loss targets are hit. - “Should the market turn negative, the move could be faster and larger due to the large, long positions already in the red,” Montagu wrote in a note. At the same time, there is still about $9 trillion sitting in money market funds. They could be deployed to stocks due to earnings strengths. James Demmert at Main Street Research believes that it will be earnings that drive the market — not the Federal Reserve. - “In the early phase of a new business cycle, it’s earnings — not the Fed - that drive stocks. Earnings have been far better than expected and we envision a similar outcome as earnings season is once again in full swing,” said Demmert. Top Med-Tech Stock With Big Growth Story Today’s Stock Pick: Natera, Inc. (NTRA) Natera is a DNA testing company that operates in an large, underpenetrated markets. What it does is simple. It tests blood to screen for fetal genetic abnormalities (such as Down syndrome). The non-invasive reproductive health segment has grown rapidly in every year since 2013. There were about 88,000 tests in 2013, and the number jumped to over 1 million in 2020. More and more well-respected organizations recommend screenings. The American College of Obstetricians and Gynecologists reaffirmed its recommend for chromosomal defect screening for all women in August 2020. So, many insurers will reimburse for the test with over 90% of all commercially covered patients are eligible for Natera’s Panorama test. As you can see, Natera operates in a rapidly-growing market. The company is considered as the leader in this market and have added several segments to test for — oncology, women’s health and organ health. (Source: Natera) Right now, the company has over 400 issued or pending patents. Over 10 million tests were processed for 12 products. (Source: Natera) As a result, Natera has one of the best growth stories in the stock market. Lookin gat year on year trend for the fourth quarter, it grew its revenue by about 80% in just two years — going from $173 million to $311 million. (Source: Natera) More importantly, the company is reducing its cash burn quarterly. Natera expects to be break even in the third quarter which can be a powerful catalyst for its stock price. Wall Street likes to buy stocks that just turned profitable and growing at a rapid pace. (Source: Natera) Adding the fuel to its growth story is expanding gross margin. Natera posted a full-year gross margin of 45.5% for 2023. (That was above the estimates.) Now it expects between 50% and 53% gross margin for 2024 — or a growth of 13% at the midpoint. The guidance for total revenue is between $1.32 billion. and $1.35 billion. That would be about 25% revenue growth. (Source: Natera) Bottom line: Natera operates in a fast-growing market that looks unstoppable. Keep in mind that it is priced as a growth stock. It offers more risk (but with potentially more upside) than your regular blue-chip stock. If you are looking to add a growth stock, this is the one to pay attention to. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](