The Federal Reserve spilled the beans... Interest rates are going up soon.

Read This Before Buying a Bank Stock By Marc Gerstein, director of research, Chaikin Analytics The Federal Reserve spilled the beans... Interest rates are going up soon. The central bank indicated last week that it plans to raise the benchmark federal funds rate from near zero as soon as March. Many analysts expect at least three rate hikes in 2022. That sounds great for one of Wall Street's most prized rising-rate strategies – bank stocks. After all, the common thinking is that higher rates equal higher profit potential for banks. But as I'll explain, you shouldn't just blindly buy any bank stock today...   Recommended Links: CRITICAL BRIEFING FOR ALL READERS This may be the most important investment recommendation you will see all year – a proven way to invest and tune out all the bad news... WITHOUT having to worry about whether you're in the right stocks... whether you have too much in the wrong stocks... or whether the Fed's next move will send your accounts lower. Details here. Millions of Americans to Be Evicted Soon? The average American can't afford a house at today's prices. According to CNBC, we're short more than 5 million homes. And builders simply can't make up the difference quick enough. But ONE innovation could change that... and deliver "10x" gains to early investors. Full story here. Let's start with a hypothetical example... We'll assume that Big City Bank collects $1 billion in five-year certificates of deposit (CDs). Banks offer investors a higher interest rate on these products in exchange for tying up their funds over a set period of time – five years, in this case. A year ago, the Fed hadn't indicated to the world that it planned to raise rates three times in 2022. Because of that, Big City Bank might've paid 0.5% interest on five-year CDs. At the same time, let's say that Big City Bank charged 5% on 10-year business loans. The 4.5-percentage-point difference is the bank's "net interest margin." That's a measure of its profitability potential. It helps folks decide whether or not to invest in the bank's stock. Today, investors know the Fed's plan and must look ahead... As the benchmark interest rate rises, CD rates in the coming year will also trend higher. But at the same time, banks will be able to charge higher rates on business loans, too. Let's assume by this time next year, Big City Bank will offer a 1% interest rate on five-year CDs. And the bank will charge 6% on 10-year business loans. The difference is five percentage points. In other words, with rates rising, Big City Bank's net interest margin will be higher. That's the logic behind buying bank stocks when interest rates rise – like they're expected to do in 2022. But as with most things in investing, it's more complicated than that... Net interest margin isn't the only metric that matters. If it were, we'd all buy bank stocks, sit back, and watch them soar. But in short, not every bank is in position to thrive today. Take JPMorgan Chase (JPM), for example... Management recently warned investors that the company's expenses are going up. Even worse, these costs of doing business will offset the benefits of a higher net interest margin. Investors don't want to hear bad news like that. It's the main reason why the financial giant's stock is down roughly 6% this year. JPMorgan's struggles show that investors shouldn't just blindly buy any bank stock because interest rates are expected to rise. Always do some digging to uncover the best companies... Regular readers know I rely on our Power Gauge for this research. It does the heavy lifting for me. It analyzes every bank stock, as well as many bank-focused exchange-traded funds. And right now, the Power Gauge is "bullish" or better on dozens of bank stocks. For example, the outlook is bright for Wells Fargo (WFC), M&T Bank (MTB), and KeyCorp (KEY). In the end, it's important to keep this idea in mind as rates start rising... Don't just throw your money at any bank stock. Do your homework to find the best ones. Good investing, Marc Gerstein Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 +0.77% 7 20 3 S&P 500 +0.68% 84 342 71 Nasdaq +0.68% 11 68 20 Small Caps +0.98% 189 1135 536 Bonds -0.47% Energy +3.56% 16 5 0 — According to the Chaikin Power Bar, Small Cap stocks are more Bearish than Large Cap stocks. Major indexes are mixed. *  *  *  * Top Movers Gainers UPS +13.98% MOS +9.09% CF +8.04% NFLX +7.02% TECH +6.68% Losers T -4.28% BR -3.70% TT -3.44% ETSY -3.13% NRG -2.96% *  *  *  * Earnings Report Reporting Today Rating Before Open After Close ABBV, ABC, CHRW CTSH, QCOM, MPC, MET, MCK, GL, AFL AVY, BSX, DHI, EMR, HUM, IDXX, ODFL, TMO HOLX, FBHS, LNC, MAA, FB, ESS, EQR, QRVO, AVB, ALGN HWM, ROP, WM IEX, WYNN, TMUS, JCI, DXC No earnings reporting today. Earnings Surprises MTCH Match Group, Inc. Q4 $-0.47 Missed by $-1.07 GILD Gilead Sciences, Inc. Q4 $0.69 Missed by $-0.92 EQR Equity Residential Q4 $0.15 Missed by $-0.09 BEN Franklin Resources, Inc. Q1 $1.08 Beat by $0.19 GM General Motors Company Q4 $1.35 Beat by $0.20 *  *  *  * Sector Tracker Sector movement over the last 5 days Information Technology +7.16% Communication +4.67% Energy +4.53% Discretionary +3.66% Financial +2.94% Materials +2.90% Health Care +2.65% Utilities +1.80% Staples +1.38% Industrials +1.34% Real Estate +0.34% *  *  *  * Industry Focus NYSE Technology Services 2 26 6 Over the past 6 months, the NYSE Technology subsector (XNTK) has underperformed the S&P 500 by -9.99%. Its Power Bar ratio, which measures future potential, is Weak, with more Bearish than Bullish stocks. It is currently ranked #13 of 21 subsectors and has moved down 1 slot over the past week. Indicative Stocks SNAP Snap Inc. SE Sea Limited ABNB Airbnb, Inc. *  *  *  * Chaikin Analytics LLC is not registered as a securities broker-dealer or advisor either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. Chaikin Analytics does not recommend the purchase of any stock or advise on the suitability of any trade. The information presented is generic in nature and is not to be construed as an endorsement, recommendation, advice or any offer or solicitation to buy or sell securities or any kind, but solely as information requiring further research as to suitability, accuracy and appropriateness. Users bear sole responsibility for their own stock research and decisions. Read the full disclaimer at https://www.chaikinanalytics.com/disclaimer. You have received this e-mail because you subscribed to PowerFeed, published by Chaikin Analytics. To stop receiving PowerFeed daily, click to unsubscribe. 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