Inflation = STICKY?

Join TradeAlgo's Free Live Trading Session ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, Wall Street grapples with higher inflation Wall Street wouldn’t dare to make major moves before the big-time inflation report due to be out on Wednesday. Yesterday’s trading was mostly flat. The benchmark 10-year Treasury yield climbed 5 basis points to 4.43% — a sign that traders are starting to believe that there will be two rate cuts — rather than three. March’s CPI number will be important to determine whether two rate cuts are the right bet. Economists expect it to rise by 0.3% from last month and 3.5% year over year. If it comes in higher than expected, it could bolster the sentiment that inflation is sticky and will take a while for the Federal Reserve to start cutting rates. - “The theme of bad news being good for the equity market continues,” said Matt Rowe, head of portfolio management at Nomura Capital Management. “Much of the equity strength is driven off of hope for an implied cut, or a series of rate cuts this year, that won’t take down the cost of capital and present value of everything.” Matt Rowe, head of portfolio management at Nomura Capital Management (Photo: Bloomberg) Torsten Slok, chief economist at Apollo Global Management, believes the next few quarters will see higher inflation. He pointed to a recovery in manufacturing activity and recent upticks in inflation as an evidence that rates could be higher for longer. - “This repricing of rates, I think, is very important because it is telling you that we’ve been waiting for this slowdown for so long. Why isn’t everyone expecting this rate slowdown to come in the next several quarters, in particular with the tailwind of the stock market up $10 trillion since the November FOMC meeting?” Slok said. - “We have a dramatic tailwind to consumption and to capex over the coming quarters that will continue to support inflation to the upside.” The recent surge in oil prices is sure to slow down the Fed’s battle against inflation. The central bank enjoyed the advantage of falling oil prices in the last few months. But that advantage may disappear. Oil prices have recently hit a 5-month high which would contribute to higher inflation data. Moreover, the earnings season will kick off this Friday with the big banks reporting results. Big Tech is expected to lead the earnings growth story with the Magnificent Seven forecasted to show year-over-year growth of about 40%. Bet on The Boom of Sports Betting With This Stock Today’s Stock Pick: DraftKings (DKNG) There’s no doubt about it — sports betting is booming. It has become a part of the sports culture, despite some scandals of players and coaches making wagers on games. Investing in DraftKings is your opportunity to own the upside in the sports betting industry while it is still growing rapidly. Just look at the Total Addressable Market for DraftKings’ segments. For the existing states only, DraftKings expects the TAM to grow at a whopping 54%. The TAM was just $1 billion in 2019, but is expected to explode to $20 billion just four years later! DraftKings doesn’t disclose the latest number. The most recent information was released in its investor presentation back in November. But you can see the phenomenal growth in the graphic below: (Source: DraftKings) Moreover, the company expects the TAM to reach $29 billion by 2026: (Source: DraftKings) Now, let’s talk why now is good time to invest in DraftKings. Because of intense competition in sports betting, companies are spending a small fortune to acquire customers. Believe it or not, it takes more than two years for DraftKings to see the profit from its marketing spend (which the metric is called the customer payback periods.) However, that number is falling. The customer acquisition cost plummeted by about 20% each year since 2021 while customers acquired exploded by more than 40% CAGR since 2021. Meaning? The company can expect to see its margins soar. (Source: DraftKings) You can see how payback periods have fallen in the last few years below: (Source: DraftKings) Sure enough, DraftKings expects to see its adjusted EBITDA turn profitable in 2024. That is going to be a powerful growth catalyst for its stock price. Wall Street loves profit growth. The company expects its 2024 to show $400 million, while 2026 is poised to explode to $1.4 billion — or a 250% growth. Indeed, now is the perfect time to own DraftKings stock. (Source: DraftKings) Here’s the important point — the numbers I just shared were based on existing states alone. DraftKings expects more states to legalize sports betting. Three of the country’s biggest states haven’t legalized — Texas, California and Florida. Texas has introduced legislation to legalize online sports betting. Once more states legalize online sports betting, DraftKings’s growth story is going to be exponentially bigger. (Source: DraftKings) DraftKings expects up to $6.2 billion of annual adjusted EBITDA from future legalization. That’s a huge increase. (Source: DraftKings) Here’s the bottom line: DraftKings looks like a stock that is prepared to become a compounder over the next few years. The industry is rising rapidly just from existing states only. Once more states legalize, the industry will only grow even further. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](