Okay folks, so we got three things to discuss. Number one, we have to talk about the latest on rate hikes and the latest lip service we are hearing from the Fed. Number two, we have to talk about the latest forecast and warning from the Sacs over at Goldman. And then lastly, number three, we have to discuss which companies are going to be reporting earnings this week and what you need to know, which ones do you need to get ready for.

And what are my thoughts heading into some earnings on companies that we talk about quite a lot on this channel. But first, a quick plug our Valentine's Day sale on Ziptrader you will be expiring tomorrow night at midnight, so if you'd like to lock in lifetime access for the reduced rate now might be a good time to consider it. Coupon Code: Valentine Okay, so last week we talked about how Central banker James Bullard suggested he supported raising interest rates by a full percentage point by the start of July, and how he went super hawkish as to suggest that there's no reason you can't remove accommodation just as fast as you added it, and that same day bond yields surged to price in that extra hawkish rhetoric. But now we've got Mary Daly, who's in charge of the second largest Fed branch behind New York.

Saying this today quote, it is obvious that we need to pull some of the accommodation out of the economy, but history tells us with Fed policy, that abrupt and aggressive action can actually have a destabilizing effect on the very growth in price stability that we're trying to achieve. Nothing groundbreaking in that statement suggesting that the Fed needs to be strategic and not overly aggressive and overly responsive, but this is where it gets really, really interesting and her tone kind of shifts a bit from what we saw from Bullard. She says what I would favor is moving in March aka raising rates in March and then watching measuring, being very careful about what we see ahead of us, and then taking the next interest rate increase when it seems the best place to do that. That could be in the next meeting or it could be a meeting away.

She's essentially saying hey, wait a second Yes, we should raise rates in March, I believe we should. She's not very specific, could be anywhere between a quarter point or a half a point, but she's also saying that market shouldn't automatically assume that the Fed's going to be able to go hike, hike, hike. It's possible that we're gonna have to do a hike, and then we have to wait and see if it's appropriate to do another. Just because we have really hot inflationary data in February doesn't mean that come post March that we're going to have to keep going hike, hike, hike extremely quickly.

What she's saying and what we haven't seen much from the market at all is this word: be careful. She's not saying be careful of inflation because being careful of inflation isn't pausing and waiting and seeing being careful of inflation is going and said, okay, I'm going to go ahead and raise rates as fast as possible to make sure that we don't get any more inflation. She's saying be careful of the prospect of hiking interest rates too quickly and forgetting to watch and measure. She's hinting that if the Fed moves way too quickly and doesn't stop and watch and measure, while they may find themselves raising rates into a quickly dropping economy, one that may not even need the rates to rise as quickly, and one that certainly is going to be worse than by the rising rates.

Personally, I think the Fed should raise rates as fast as the economy can support it so we can pull the dam binky out of the baby's mouth, which is the market and the economy. But you have to keep in mind that if you're in a situation where the economy is slowing down, you can't raise rates as quickly and she's acknowledging, hey, it's possible that we're not going to be able to do as much as markets are pricing in here She says we have another print before the March Meeting on both the Employment, the Jobs Report and inflation. All of these things are very important. She's saying hey, yeah, Ideally, we need to get rid of this accommodation, but we have to do it in a way that's appropriate for the economy that we're removing it from.

If you remove it and the jobs data starts getting really, really bad even though it's already kind of rigged. But we don't want to talk about that if the economy already starts slowing down, bringing inflation with it. If all of these factors play out, the Fed may need to re-measure and decide how fast they want to remove accommodation. She's one of the people that are stressing, hey, we don't want a knee-jerk reaction Another interesting point that she touched on was this: she said financial markets have already priced in the removal of the asset purchases and have also priced in rate increases over the coming year, which is very, very interesting because I was reading a Bank of America analyst piece the other day and they seem to think the exact opposite.

In fact, they said that the key risk to stocks from a Fed hiking cycle remains that the Fed is embarking on a hiking cycle in an overvalued market. They even made an analogy to 1999, saying this ended poorly in the other instance. We saw this right before the dot-com bubble bust. But here you have Daley saying wait, no stocks have already priced in the tightening cycle and the current anticipated level of interest rate hikes.

It's interesting, because if the Fed thinks that the market and really more so, the broader economy has already priced in what they're going to do, they may be less reluctant to go further if need be. whereas at the same time some of these big bearish analysts are saying no, the market hasn't factored in this at all. It's way way way overvalued and thus any substantial timing is going to be a huge risk for the markets and the valuations. Now next, I do want to go over to what the Saks over at Goldman are saying.

Over this weekend, they cut their target for the year end S P 500 performance and they said quote. While our index Eps estimate remains unchanged, we adjust our valuation forecast. following our economist's revisions to the path of interest rates, blah blah blah. Since our November outlook, Inflation has surprised to the upside.

Oh really. They then go on to talk about how higher rates restrain the amount investors are going to be willing to pay per dollar of earnings. Which means even if a company is earning more, if investors aren't willing to pay as much for those earnings, if they're not willing to pay as much of an earnings multiple, then the multiples crunch. They go as far as arguing that if you get returns, it's likely going to be more based on the growth of earnings than versus the growth of multiple because multiples aren't going to be growing as interest rates are going to crunch multiples.

But what I really want to highlight and I think you're going to see value in, is the three case scenarios they presented. They said if there is a recession, stocks would fall 24 from peak to trough as they usually do during economic contractions. That means that the S P 500 would fall another 18 from current levels to 3 600. Keep in mind that the S P 500 right now as of this moment is at about 4 400..

Now in their second scenario, they said that if inflation remains and the Fed hikes more than expected, the S P 500 would only decline 12 to 3 900. And then the last scenario is if inflation recedes, you get fewer Fed hikes and stocks rally 24 from here and the S P 500 hits 5500. So there's a few takeaways here. One is that of course two out of these three scenarios result in a very, very challenging year for stocks.

The first one, you get a recession Boom S P 500 down 24 peak to trough. The second situation, which I feel like a lot of people are looking like this is going to be the most likely scenario. But in the second situation, you get continued inflation like we are seeing and the Fed has to hike more than expected and boom 12 more to decline. But in the last one where inflation recedes and you get fewer fed hikes, what happens? Well, they are anticipating a literal 24 rally from the S P 500 24 up in the S P 500, That's a banner year.

If the broader market averages 24, you're seeing tech stocks that are running up three four times that amount. You're seeing a huge comeback and risk on trading. You're seeing euphoria come back into the market. So basically Goldman Sachs is saying here: Wait a second.

The minute that these two boogeymen inflation and the equity chopping fed that follows inflation are out of the picture. All of this capital is going to go and pour in, and you're going to see a massive, massive euphoria rally. I do think it's worth mentioning because I believe that you're going to get to a point this year where inflation is receding. You get fewer rate hikes than expected.

But you also get some of the economic cooldowns that may seem similar to the start of a recession. But it's those cooldowns that are going to bring down a lot of those inflationary pressures. It's those cooldowns that are going to allow the Fed to take a step back and say, wait, the economy's starting to cool down. We're losing strength.

Maybe it doesn't make sense to raise rates at the same pace as the market is expecting, because if we do that, we risk giving back ground in terms of our employment goals and objectives. And at the same time, we don't need to raise it at the same pace. because, guess what? Well, inflation data is trending down. So I think at that point you're going to get maybe some of the bad trading in the recession category, which is going to cause the S P to go down even more.

But then after that period ends and the Fed has less rate hikes, and the Fed gives the go ahead for a slower trajectory in terms of tightening and has already done some tightening so that you're actually on a pace of some sort of healthy monetary policy trajectory. Well, it's at that point where you start getting into this category, which is that insane euphoria rally coming back, but you also have a nice dip buying opportunity. A lot of people are factoring in companies continuing to have insane profit margins and continuing to be able to pass on pricing pressures to consumers, but I think you're going to see some profit margin crunching, and that's going to hurt some of these companies in the next couple of quarters. But then you're going to see those inflationary numbers cool down.

You're going to see the Fed be a little bit slower. You're going to see a situation where the market is very, very investable. You got a lot of really good deals, and you have a lot of new opportunities for the market. To realize some upside, because the Fed has taken a slower pace at raising rates.

Moving on, now, we got earnings so we continue to get some big small to medium caps reporting this week. Of the most notable ones that I'm watching are Roblox, Upstart, Airbnb, and Win on Tuesday with Upstart, I'm looking at one thing: revenue growth. Because top line growth is the top driver of performance over the multi-year time span. People say, oh no.

I'm only concerned about if the multiple is going to expand in the direction that I need it to or if it's going to crunch. I say, hey, if you're going to do a high conviction company, look at the revenue growth, look at how much value they're providing to customers. Otherwise, you're just stuck in a guessing game of whether the market is going to be willing to pay a higher multiple now or a higher multiple later, and right now, the multiples aren't heading in the right direction. Let me just say that Airbnb is also reporting.

This is one that I have never been a huge fan of, but I've increasingly started to look at it. To me, it seems like they've been able to adapt to travel trends and even set travel trends themselves very, very well. You get the original founders and they just hired the chief creative officer from Disney I believe back in the fall. In terms of squeamishness obviously valuation and then regulatory problems that are coming in the foreseeable future as well as the ones that are already here, but at a certain price, if this gets beat down, I'm gonna have to start considering it a little bit more seriously.

Um, you've also got wind representing Vegas and Macau resorts and gambling now On Wednesday you've got shopify. You've got an advertising tech company, the trade desk, You've got Hilton Craft, Heinz, Nvidia, Applied Materials, Matterport, Quantum Scape, You've got Cisco Doordash, and Fastly Dash will be an interesting one. We know that Uber's Uber Eats segment was a lot hotter than people expected it to be. Now Thursday, we've got the Big Dog, the tear of the palate.

You want to see how Palantir is scaling their commercial customers into bigger and bigger spending. One of the problems with Palliator that we've talked about is that oftentimes, even if Pallentiers very very successful at getting their customers to spend more and more with them and get more ingrained with volunteer software, while if they're onboarding new clients at the same time, that could actually offset some of the gains from their clients that are spending more money with volunteer. The reason is because Palantir in order to acquire customers, leads with losses, right? They are demoing with these new customers. It costs money up front.

If the customers like them, they'll go and spend more with Palantir and over the years will skill pallenteer more and more into their business. But if there's a quarter where Palantir is doing very, very well, but Palantir gets offset by all these new onboarded clients that they're leading with losses on. Analysts will say ew Palantir once again, Big money losing clown company. Sell it.

Go buy a overvalued value stock because it says value in the name. It's sad because what's actually good for pallet here is on boarding new customers and then converting them. It's not. Oh, just converting new customers and then never trying to get any new customers ever again.

Things like customer acquisition research and development and strategic and strategic moves to grow your business in the future are actually a good thing for long-term valuation. Not a bad thing, but anyways, we'll cover them after earnings this week and I'll give you my thoughts. You've also got Roku, Walmart, Dropbox, Fiverr, Yeti, Redfin, and Sunrun. Now on Friday you've got Draftkings and John Deere.

So the King of Drafts is another growth company that has been getting no love. Recent launches in New York and likely new ones over the upcoming years will take center stage on Draftkings growth trajectory, and it seems likely that today's Super Bowl could drive some user growth. Their big issue is they haven't been able to get the cost to acquire customers under control and so I'd like to see some progress in that direction. And I'd like to see some growth trajectory projections for these new states that have legalized or are planning on legalizing.

Now in terms of other events that you're going to want to know about, the Putin Ukraine situation will be watched very, very closely. Any new piece of information has the ability to rock the markets. Putin so much just takes a sip of vodka. S P down Five percent Putin takes a sip of vodka from Kiev S P down 25 I made a video yesterday giving my complete breakdown and historical look at geopolitical events and the telltale signs of market issues related to them.

You can go ahead and check that one out if you'd like to, but overall certainly a dark cloud hanging on the market's head this week. The other event is that the Fomc meeting minutes are going to be released on Wednesday. We tend to get clarification on the tones of Central bankers and where they're leaning in terms of a trajectory of hawkish to dovish, and obviously they're flowing a little bit more over here. But if anybody has raised real points as to whether or not being super hawkish like the market is factoring in is actually the way to go.

those are things that can cause the market to do some little short-term rallies, But overall, we want tightening. We want a healthy trajectory, but we just don't want it to be super fast and we want it to be very, very strategic. Anyways, folks that caps off this video. if you have any questions, feel free to reach out to us below or join us on Ziptrader Circle if you're looking to learn how to trade.

We do have our best sale on Ziptraderu since Black Friday and that expires tomorrow night. Putting in coupon code Valentine before checkout will get you that discount lifetime access. so if you are looking to lock in that lowered rate now might be an interesting time to consider it. Anyways, that caps off the video.

have a good one and I'll see you in the next video.