Bulls vs. Bears: Who Will Win The Tug-of-War?

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This week will have multiple key catalysts that could determine whether bulls or bears will win the current tug-of-war in the market. Wall Street is waiting for the next batch of Big Tech earnings reports. Amazon and Apple will release their first-quarter results. Analysts expect Amazon to see a solid sales growth, while Apple will have a tough quarter due to lower iPhone sales. Moreover, chipmakers Advanced Micro Devices and Qualcomm will also report their results. With Nvidia’s meteoric rise, Wall Street will pay attention to these two chipmakers to determine whether Nvidia can maintain its torrid pace. But the Federal Reserve may take the spotlight this week. Fed officials will meet today and tomorrow. Fed Chair Jerome Powell will hold a press conference on Wednesday to reveal his latest thoughts on the interest rate path. - “Last week, Big Tech enthusiasm outweighed concerns about sticky inflation,” said Chris Larkin at E*Trade from Morgan Stanley. - “This week, we’ll find out if Amazon and Apple can keep that momentum going, but traders will also be taking the temperature of the latest jobs data and what the Fed has to say about inflation and rate cuts.” Investors were originally spooked by higher interest rates, but the economy has generally resilient. As a result, earnings growth has been strong. The stock market typically does well when earnings are growing, so investors have to determine which will win out — strong earnings growth or higher interest rates that could push the economy into a recession. With inflation being sticky and the GDP slowing down, investors are starting to throw the word — stagflation — around. It would mean a slowing economy in a high inflation environment. Regardless, the AI remains the biggest bull case for those who are staying in the market. - “We remain constructive on US equities, and expect AI-related companies to drive strong earnings growth in the years ahead,” said Solita Marcelli at UBS Global Wealth Management. “It is key for investors to hold a healthy strategic allocation to tech stocks, but also advocate diversified exposure across regions and sectors.” At the same time, the stock market hasn’t rewarded these companies that beat expectations. Earnings results led to just 0.1% outperformance versus the S&P 500 so far in the season. (Source: Bloomberg) Some analysts pointed to this as an example of why the market is currently overvalued. - “While markets may enjoy the earnings results from the big tech companies, when earnings season is over, investors will be left justifying high market multiples in the face of interest rates that are likely to remain higher for longer,” said Megan Horneman at Verdence Capital Advisors. A Lovable Sneaker Brand Looks Poised for a Run-Up Today’s Stock Pick: Skechers (SKX) This sneaker company has been here for decades. But you’d be surprised by how much growth it has picked up in the last few years. Skechers was growing slowly between 2001 and 2012, but it woke up to explode in the next decade. It went from under $2 billion in 2012 to $8 billion in 2023. That was a 300% growth. You didn’t expect that from Skechers, right? (Source: Skechers) Thanks to its strong direct-to-consumer system, its profit margin expanded last year from 47.2% to 51.9%. Sales grow more than 13% in the recent quarter versus last year. Management expects sales to grow by 9% in the second quarter. What was its growth secret? International expansion. Europe region grew by 17% in Q1. International sales accounts for about 65% of the company’s total revenues. Indeed, Skechers views international markets as the ultimate gameplan to hit $10 billion in annual revenue by 2026. That would be wonderful for its stock price. (Source: Skechers) Suppose that Skechers hits $10 billion in 2026 while maintaining its operating margins of 10%, it could post over $1 billion in annual profit. That would be a 10 P/E. The stock is currently trading at 17 P/E, so there might be plenty of the room for the price to climb. Don’t sleep on this lovable sneaker brand. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](