Alpha Report Issue #2

Federal Reserve, FOMO, Potential Bubble, Economy cracks.

Brandon
November 07, 2024

Welcome to The Alpha Report 👋

Rich people don’t work for money, they make their money work for them.

Today’s Report Will Cover

✔️Major News Today

✔️Million Dollar Lesson

✔️Fear & Greed Index

✔️Federal Reserve Decision Today

✔️Important Earnings Today

✔️Potential New Trades

✔️Current Valuations + Price Targets

✔️Tip of The Day

✔️My Trading Account Value

(5 minute read)

Hey guys!

I will be sending out my Alpha Report for FREE every day the market is open! I always want to create more value for you guys and this report is only going to get better! Enjoy!

-Brandon

Today’s Heat Map:

Major News Today:

Jerome Powell @ the Fed cut interest rates by 25bps (0.25%)
Market pumps again on the heels of the trump win and bullish Fed.
Fed says economy is strong & rates should continue to fall.
30 yr fixed mortgage rate falls to 6.98 from 7.2% yesterday
Stock valuations continue to increase (overvalued)
Still opportunity, just gotta look harder.

Million Dollar Lesson:

The best days in the market are often after the worst days.

Do NOT let your emotions get the best of you.

Most new investors buy high and sell low.

Don't be like that.

Be greedy when others are fearful.

Be fearful when others are greedy.

Fear & Greed Index For Today

Up from 58 yesterday, now 60. (market is becoming more greedy/overvalued)

Notes On Federal Reserve Decision Today:

J Pow appears dovish.
He said we are still tight on policy.
This implies more cuts.
He said short term noise in yields going up doesn’t matter and he basically said he expects them to fall. (Good for TLT)
This is a Goldilocks situation. Cutting rates into a good economy
He is basically saying they defeated inflation
Said they will “carefully” cut to neutral
Doesn’t have to cut super fast cause economy is solid
He said they don’t need or want the labor market to soften anymore to hit inflation goal
“It will take some time to find the neutral rate”

Gif by cranksy on Giphy

Important Earnings Today:

Beats top and bottom
Beats on guide
Announces 4:1 split
Currently trading at $405/share after hours (down 6%)
The market was looking for “larger beats” vs what was delivered
Q3 24 EPS: $2.40
Q2 24 EPS: $2.10
Q1 24 EPS: $1.99
Q4 23 EPS: $2.08
Total TTM EPS: $8.57
405/8.57 =47 PE trailing.
EPS same quarter last year was $1.83 vs $2.40 now. That is 31% YoY earnings growth
Revenue same quarter last year was $1.51b vs $1.81b now. That is 20% YoY revenue growth
The stock is up 96% in the last year. I will not be buying ANET at these levels

Potential New Trades:

Google 1 yr+ play (buy calls/sell puts)
Amazon long term play 3+ yrs (sell puts/buy shares)
Nvidia on dip (Buy Shares)
TLT 1yr calls

Giphy

Current Valuations of The Market

The S&P 500 (Ticker: VOO) at a PE ratio of about 22 right now, we are a little lofty. (But not crazy expensive) BUT, rates are expected to fall and I agree with the expectations. Rates are like gravity on the market. If rates fall, stocks become the only game worth playing, which will push up valuations.
The Nasdaq 100 (Ticker: QQQ) at a PE of 32 is a little lofty also. So how do we value that? What do we price in? How much will Ai play into this growth? All things that nobody on earth knows 100% Me personally, I feel the earnings growth of the Nasdaq (QQQ) will be higher vs what the SP500 does. That is why QQQ is justified to get a higher PE ratio. Being its priced at a PE of 31, that is not crazy over valued in my opinion. Especially in an environment that is expecting lower interest rates. Most people do NOT put enough emphasis on how big of a deal rates are...
Rates are gravity. We are currently at 4.75% fed funds rate now. We are expected to be at 4 in a year. 1% is a decent cut and that will make a difference.

2025 QQQ Price Prediction End of Year: $530

2025 VOO Price Prediction End of Year: $580