This Week = A Glimpse at the Fate of 2024

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JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, This Week = A Glimpse at the Fate of 2024 Today will kick off a major part of the earnings season where 19% of the S&P 500 companies will report results – including Microsoft, Apple, Meta, Amazon and Alphabet. These Big Tech companies rallied in the last few months due to their earnings resilience, but they’ll need to maintain the momentum with strong guidance if the rally were to hold. The Federal Reserve will also begin its two-day meeting today. Officials are expected to leave rates unchanged, as the fed funds futures market shows a nearly 97% chance of that decision. But their outlook will carry a heavy weight. JPMorgan Chase’s Marko Kolanovic warns that a stubborn inflation could wipe out the current rally, especially since the markets are basically pricing in a “close to zero probability of recession.” - “A few bad inflation prints would likely upset both bond and equity markets, as risk markets could again start pricing a higher probability of ‘hard landing,’” he wrote. - “This outcome is very underpriced in large cap equities and credit, which price close to zero probability of recession, as the strong rally since the end of October has pushed both credit and equity markets into expensive valuation territory.” JPMorgan Chase Analyst Marko Kolanovic (Photo: CNBC) In other words, anything that changes the probability of a “no landing” could pour ice water on the rally. Inflation, economic data, and corporate earnings will be key to match the expectations. After all, investors are now demanding hard data to verify the speculation. - “In our view, stocks continue to price in an ‘immaculate everything’ scenario in which the Fed cuts deeply and the U.S. economy (at worst) glides down for a ‘soft landing’,” said Chris Senyek of Wolfe Research. “While we’re still not believers, our sense is that the Fed and economy are now ‘show me’ stories.” So, that’s why this week will be an important one for the markets. Corporate earnings will reveal whether AI has translated into higher earnings growth for Big Tech. The Federal Reserve will shed some light on its current outlook on interest rates. The jobs data could reveal the strength of the labor market. Expect trading to get busier this week. 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. 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. 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 2023, 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 226 million since 2010: Quarterly shares outstanding since 4Q 2009 (Source: MacroTrends) 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. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](