One Day Away From the First Rate Cut

Earn While You Learn! ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, One Day Away From the First Rate Cut A 50 basis-point rate cut is becoming popular on Wall Street. With inflation falling, more and more traders believe that the Fed will be aggressive in protecting the labor market. A soft landing is right there for officials to take. So, Wall Street believes they will seize the opportunity to get ahead of the curve. However, Callie Cox at Ritholtz Wealth Management believes the chatters around the size of the first rate cut are overblown. One rate cut won’t make that much of a difference. It is all about the pace of rate cuts over the next few months. - “We’re getting a rate cut of some sort this week absent an act of God,” said Callie Cox at Ritholtz Wealth Management. “The economic impact of one rate cut – regardless of whether it’s 25 or 50 basis points – will likely be insignificant. The path and degree of cuts over the next year or so matters the most.” Top White House economic adviser Lael Brainard declared a victory against inflation and encouraged the focus to shift to protecting the labor market. Brainard was a former Fed vice chair, and she didn’t suggest what the Fed should do during its FOMC meeting. - "Today, we are at an important turning point. Inflation is coming back down close to normal levels, and it is important to safeguard the important labor market progress we have made," Brainard said in remarks prepared for delivery. Top White House economic adviser Lael Brainard (Photo: REUTERS/Kevin Lamarque) Could this be positive for the labor market? Las Vegas and across Nevada have previously acted as a leading indicator for the labor market. The reason is simple — the city’s economy is driven by consumer spending. Las Vegas did well when consumers were flushed with cash. It did worse when the economy was tough. This time, Nevada is seeing few signs of trouble. Nevada’s unemployment rate is currently at 5.4%. It is the highest in the United States. Yes, the number is high but it hovered at this level in the last three years. The rate hasn’t broken out of the range yet. (Source: Reuters) Nevada’s casinos and constructions are higher. Ted Papageorge, the secretary-treasurer of the influential Culinary Workers Union, said numbers are up across key metrics for the state’s key industries. - "…the economy is doing well, visitation is up, profits are up, and growth is up," said Ted Papageorge, the secretary-treasurer of the influential Culinary Workers Union, which represents 60,000 workers in Las Vegas and Reno casinos, hotels and restaurants. What could this mean for the Fed’s interest rate decision? The Fed will conclude its two-day meeting this Wednesday and announce the interest rate decision. Officials are widely expected to cut rates, but the size of the rate cut will be in the spotlight. Officials will also update their quarterly projections. Traders will view the dot plot to try and gauge the Fed’s sentiment on the economy. Obviously, an aggressive rate-cutting cycle might indicate that officials believe the economy is at risk of a slowdown. After all, inflation is running just about 0.5% below the 2% target. Like Brainard said, the inflation fight is almost over. Future projections will likely depend on the risks of a labor market. Fed officials hope that the labor market is normalizing, rather than starting a downtrend. Key Stocks News - Shares of KLX Energy (KLXE) are up 2.8% to $5.20 after the company bumped its Q3 revenue forecast to $180 million to $190 million, slightly raising the lower end from the previous $175 million estimate. The stock’s had a solid year so far, gaining about 7.9% year-to-date. - NYCB (NYCB) saw its shares jump 5.7% after its unit, Flagstar Bank, brought on four new execs to beef up its commercial and private banking efforts. This move is part of the bank’s strategy to grow stable deposits and step back from commercial real estate lending. Private banking, which targets high-net-worth clients, is a pretty lucrative area for banks. Flagstar CEO Joseph Otting said the hires show their focus on delivering personalized experiences and strengthening their commercial and private banking game, which is key to their overall business plan. - Shares of Mosaic (MOS) dropped 4.8% to $25.13 after the company cut its Q3 production outlook, blaming equipment failures and Hurricane Francine. Mosaic expects potash production and shipments to drop by 200,000 to 300,000 tonnes due to issues at its Esterhazy and Colonsay mines, down from its earlier forecast of 2.1 to 2.3 million tonnes. The hurricane is also expected to hit phosphate production by 80,000 to 110,000 tonnes, compared to its previous estimate of 1.7 to 1.9 million tonnes. With this latest dip, the stock is down around 30% year-to-date. Wall Street Is Overlooking This Potentially Goldmine Turnaround Play Today’s Stock Pick: OneSpan Inc. (OSPN) Cybersecurity is becoming a massive issue nowadays. A security breach can devastate the entire world’s operations. Why? Global corporations have interests all over the world, and a single hack can bring operations to a grinding halt. A recent issue with CrowdStrike and Microsoft caused many flights to be grounded. Yes, it wasn’t a hack. But it shows the vulnerability of a hack. Corporations know. They are investing more dollars in cybersecurity. OneSpan is a niche leader of authentication and transaction signing solutions for global banks and other blue-chip companies. Virtually every big bank uses OneSpan — Bank of America, US Bank, Chase, HSBC, PNC, BMO, CreditSuisse, INC, and so on. (Source: OneSpan) It was somewhat late to the software license model. It is in middle of the transition from perpetual software license model to the SaaS model. About 75% of its total revenue is from software and services. Hardware is just ~25%. It was a huge improvement. Three years ago, the split was approximately 64% software, 36% hardware. The financial results may improve tremendously due to the better business model. For example, GAAP operating margin was now 43%. The main investing thesis: OneSpan has a powerful operating leverage. Its revenue growth is modest at 9% in the second quarter. ARR grew 15%. What about net income? It surged 136%. It might be a perfect time to buy the stock. OneSpan struggled in the last three years. Its EBITDA was unprofitable. The company, however, expects its adjusted EBITDA to be in the range of $55 million to $59 million. A pretty good turnaround, right? (Source: OneSpan) It would represent about 10% of its current market cap of $613 million. Its adjusted EBITDA in FY23 was $12 million. If the company accomplishes its guidance, the adjusted EBITDA growth would be a whopping 375%. (Source: OneSpan) If the EBITDA continues to improve, the stock price might rise even further to reflect the rapidly improving business fundamentals for OneSpan. What’s more, the company boasted a 112% NRR in the second quarter. Its Cash and Equivalents was $64 million. (About 10% of its market cap.) There are a lot of good things in there. Subscription revenue grew 29%. The adjusted EBITDA margin was 27%. (Source: OneSpan) Bottom line: OneSpan is going through a transformation that is poised to show huge earnings growth. The stock price hasn’t been fully priced in the future earnings growth, so this might be a good turnaround play. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](