Will This Be The Final Rate Hike?

JOIN OUR LIVE SESSIONS! Our LIVE session starts when the big institutions and elite traders do before the opening bell. We'll look at real-time dark pool data as the market movers position themselves for the trading day in secret off-market exchanges. [JOIN OUR LIVE TRADING SESSION @ 6am PT / 9am ET]( [Shadow] Hello investor, Fed Chair Jerome Powell and his crew announced a 25 basis-point hike. No surprise there. But the question was whether it would be the final hike. Powell was noncommittal during his press conference. Same thing with the central bank’s official statement. Notably, it removed a line from its previous statement that said the committee “anticipates that some additional policy firming may be appropriate.” Instead, it said: “The committee will closely monitor incoming information and assess the implications for monetary policy.” Powell confirmed that the central bank’s thinking has changed. “That’s a meaningful change that we’re no longer saying that we anticipate” further rate hikes, Chair Jerome Powell said at a press conference when asked if the statement indicates that the central bank is prepared to pause rate increases in June. But no decisions have been made yet. Its June decision is going to depend on incoming data. - “So we’ll be driven by incoming data, meeting by meeting, and we’ll approach that question at the June meeting,” said Powell. The recent increase takes the benchmark federal funds rate to a target range of 5% to 5.25% -- the highest level since 2007. That was a lightning-fast rise from nearly zero early last year. (Source: Bloomberg) What about rate cuts? Wall Street has been anticipating rate cuts as soon as this year. But Powell said officials’ outlook for inflation does not currently support rate cuts anytime soon. Powell also touched on the banking sector. He said the sector had “broadly improved” since early March. That was good. But he said the banking crisis “appear to be resulting in even tighter credit conditions for households and businesses.” “In turn, these tighter credit conditions are likely to weigh on economic activity, hiring and inflation,” he said. “The extent of these effects remains uncertain.” However, Powell still doesn’t expect a serious recession. Yes, a mild recession is possible. But Powell thought “the case of avoiding a recession is in my view more likely than that of having a recession.” He pointed to the progress in wage increases where they were moving down along with falling job openings, but the unemployment rate hasn’t jumped much. (Photo: Alex Brandon/AP/FILE) Ed Moya, senior market analyst at Oanda, believes that this rate hike “will likely be the last one in this cycle.” Why? Tighter credit conditions. The central bank may allow the pullback on lending to replace rate hikes as the catalyst to slow down the economy and bring inflation down. - “The Fed is concerned that tighter credit conditions will weigh on economic activity and hiring, while helping maintain disinflation trend,” Moya said. - “Credit tightening is about to cripple the economy and it appears that as long as we don’t get a perfect storm of hotter-than-expected labor and inflation data, the Fed will keep rates on hold for at the very least till the end of the year.” Buy This Software As It Prepares To Focus On Profitability Today’s Stock Pick: HubSpot ([HUBS]( Data is the new oil. That’s a popular saying nowadays. Sure, data can be incredibly powerful for a company to tap into. But here’s a problem... Customers expect a company to be integrated. Meaning? Let’s imagine a scenario. A customer views HubSpot’s articles on creating mouthwatering content. It is obvious that the customer is interested in something related to creating content. But a HubSpot salesperson would contact that customer trying to talk about HubSpot’s sales tools. That wouldn’t be the right topic to start a conversation about, right? A salesperson must be able to view the customer data from the marketing team and decide which conversation he/she should start with. That requires the company to integrate data into one platform where employees from different departments can view. That is what HubSpot offers. (Source: HubSpot) There are two major leaders in this space: Salesforce and HubSpot. Let’s start with Salesforce. It is the industry leader for the CRM, but HubSpot offers unique solutions for small- and medium-sized businesses. Its platform is easier to use where entrepreneurs don’t need full-time IT staff to manage the platform. In other words, HubSpot is like Apple while Salesforce is like Microsoft. HubSpot has about 167,000 customers in 120+ countries, giving it nearly unlimited opportunities to expand revenue from its existing base of customers. As a result, HubSpot has one of the strongest track records of quarterly revenue growth. In the graphic below, you can see that the company never failed to grow its revenue since first quarter of 2017: (Source: HubSpot) More importantly, HubSpot has been growing its profitability steadily with a 428% growth since 2017. Its operating profit margin grew alongside total profits. In other words, HubSpot is becoming more and more profitable over the years. This is the type of metrics that investors want to see nowadays. It’s all about growing profitability now. (Source: HubSpot) Notably, HubSpot is aggressive in its research & development budget. The company allocated between 18% to 19% of its revenue to R&D since 2020, ensuring that its products will continue to be one of the best on the market. At the same time, HubSpot sets a long-term target of an operating margin of 20% to 25% -- a significant jump from 2022’s 10%. How will this be possible? HubSpot will cut its Sales & Marketing allocation from 45% to 30% to 35%. (Source: HubSpot) That is a massive jump in operating margin! Now is the good time to buy as HubSpot is transitioning to a more profitable company. As a bonus, its TAM is large and expanding. HubSpot projects its TAM to grow by 10% CAGR from 2022 to 2027: (Source: HubSpot) Bottom line: HubSpot is pivoting its focus to become a more profitable company by doubling its operating margin as a long-term target. Now is a good time to buy while the company makes its transition, and you would also enjoy software-type growth that the stock market loves. 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THE FINAL HOUR Starts Noon PT / 3pm ET According to Wall Street Journal approximately 20% of the trading volume happens at the last 30 minutes of the day. Institutions make the majority of these trades in private dark pool exchanges -- away from the public’s eyes. The timing happens for two reasons: 1) Index funds make their trades to mimic the closing price of a stock. 2) Billionaires trade near the end of the day because they anticipate major news that will be released during after-hours. Because they trade in dark pools, the public doesn’t know about these trades until one day later. We’ve consistently spotted the correlation between a spike in dark pool volume at the end of the day and the next day’s price movement. In the Golden Hour we will identify and analyze these movements so you can trade with confidence. CATCH THE SPARK Starts 4pm PT / 7pm ET Catch The Spark is led by trading expert Luke Russell, starting at 4pm PT / 7pm ET. 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