Wall Street Doubts Inflation Will Hit 2%

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It sees inflation being stuck between 3% to 5% for many years, even if we go into a recession. Citigroup agreed and said it is almost impossible for inflation to slow down with wage gains remaining extremely hot. BlackRock, Bank of America, and DoubleLine also warned of stubborn inflation. David Schassler of VanEck said inflation is likely to fluctuate over the time. What if there’s an economic downturn? Inflation might come down, but it is poised to jump sharply once the economy recovers. - “It’s going to come in peaks and troughs,” said David Schassler, head of quantitative investment solutions at VanEck. “What happens once the economy recovers? We think inflation will rebound as it has in the past,” Schassler said. And history supports his argument. Since 1960, inflation took 12 years on average to slow down to 2% or lower if the consumer price index hit above 5%, according to VanEck. (Source: Bloomberg) Anna Wong, chief US economist for Bloomberg Economics, said inflation could fall to 3% by mid-2024 if the economy goes into a recession in the second half of this year. But hitting 2% will be difficult because there is a limit to how much prices for goods, services and housing can continue to drop, Wong said. Invesco’s Jason Bloom also pointed out that US is about to spend a massive amount of money on infrastructure in the US. And the transition to clean energy will cost money, as well. Alternative energy isn’t always cheaper than fossil fuel. - “We haven’t seen a ton of evidence that inflation is going to get where the Fed wants it to get, which obviously means they would need to change their forecast and potentially hike further,” said Stuart Kaiser, Citi’s head of US equity trading strategy. Bet On This Software That Is “Control Tower” For Fortune 500 Today’s Pick: ServiceNow, Inc. ([NOW]( Some CEOs are born winners. They win everywhere they go. As an investor, you want to harness these prized horses and ride all the way to the winning circle, making a bundle along the way. ServiceNow CEO Bill McDermott is one of them. - Bill has won everywhere he went. He started as a working-class kid who worked three hourly wage jobs. As a 16-year-old, he bought a small deli store and ran the shop. And the earnings paid for his college education. - Then, he was a door-to-door salesman for Xerox. He won there, as well. He ranked number one in every sales position he held and became the company's youngest-ever corporate officer. - Eventually, he became the CEO of SAP in 2010. A monster success also followed. During his tenure, SAP’s market cap nearly tripled, soaring from $39 billion to $144.7 billion in eight years. No easy feat for a company of that size. After SAP, Bill could have any job he wanted after all these phenomenal successes. And he chose ServiceNow. No surprise there. The company has a tremendous product that solves excruciating pain points for the customers. - “ServiceNow is the control tower for digital transformation for every business, in every industry, serving every persona,” said CEO Bill McDermott. As a result, 85 percent of Fortune 500 companies use ServiceNow ([NOW]( to manage their IT infrastructure. (Source: ServiceNow) This is key because Mr. McDermott pointed out that the bulk of the big tech’s equity value relied on network effects, and that is what ServiceNow is building right now. - “About 70% of global tech equity value comes from firms that rely on network effects, and we see growing platform adoption across all of our businesses,” said Mr. McDemott. The future is outstanding. When you fill the sales pipeline with an abundance of opportunities at every stage, you can develop an intuition of what the future would look like. So far, it points to a bullish future. - “Based on this new business surge, we are giving a very strong guidance for 2023. Our guidance reflects a disciplined forecast that appropriately balances our well-founded optimism for ServiceNow's business.” ServiceNow had $5.9 billion in revenue in 2021 and $6.8 billion in 2022. McDermott expects the company to hit $10 billion, nearly doubling in just three years: - “Even in a complex operating environment, ServiceNow is executing at the rule of 58.5%. We are driving net new innovation, fast growth and operating leverage. ServiceNow is the proverbial safe harbor in all weather conditions,” said McDermott. (Source: ServiceNow) Want to know what’s astonishing? ServiceNow is notable for its ability to keep and increase the annual contract value from each customer over the years. In short: Once customers join, they end up buying more. In the chart below, you will see the annual growth rate from the original contract value of each customer. - Case in point: Let’s look at 2010’s customers. A customer that joined 2010 saw its contract value increase by 191% annually over the ten-year period. And it includes any losses incurred. (Source: ServiceNow) One more amazing piece of data: ServiceNow saw a big growth in the total number of customers (with over $1M contracts) in the last two years: - Total customers grew by 47% over the two years -- from Q4-20 to the most recent quarter. That’s good, right? But here’s another thing: The average contract value also grew by 20%! ServiceNow is not only signing more customers but also the company is signing bigger contracts in each of them. (Source: ServiceNow) Bottom line: ServiceNow ([NOW]( has a phenomenal product that keeps on growing in two key areas: total customers and total contract value. With its recurring subscription mode, the stock is a slam dunk for the next five years. [JOIN OUR LIVE TRADING SESSION @ 8am PT / 11am ET!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](