Happy hump day folks! We hope you enjoyed our special report on inflation yesterday as the US figure was posted earlier this morning, right in-line with our expectations at 8.5% vs the street’s estimate of 8.7%. Read on for a traditional Coachman’s Report with two long picks for a change of pace!
“How much more grievous are the consequences of anger than the causes of it.”
The market is appreciating on lower than expected inflation numbers this morning with the Dow, S&P and Nasdaq up 119, 159 and 227 bps currently - with this surprise, the $VIX is also climbing slightly, currently up 2% to 22.14. It’s truly an inflection point for the market and the economy as this inflation print could substantiate the thesis for the Fed’s rate hikes having an effect - over the next month it is imperative to keep a watchful eye over key lagging indicators such as the US’ next jobs report and GDP update.
Long: Roblox Corporation ($RBLX-NYSE) | Timeline: 2 days
The company reported earnings this morning that were a slight disappointment to the street, as they missed EPS expectations by $0.05 or 20%, while missing revenues by -$47.397M or -7.42%. This comes in addition to a decline in bookings and a drop in the pace of user growth. These results are only natural as Covid restrictions loosen, while children begin to go back outside, and events are once again hosted in person. Realistically, elevated investor expectations led to massive disappointment, and a corresponding 15% drop in the pre market. However, we believe the market is overreacting with this drop, and that the company will perform well over the next two trading sessions, especially as the broader market is bolstered by the strong CPI data released this morning.
Long: Brookfield Asset Management Inc. ($BAM-NYSE) | Timeline: 2 days
Brookfield is reporting tomorrow in the pre-market with street consensus for EPS at $0.7 and revenue at $975M. Brookfield has stood the test of time and operated in a high inflation and high discount rate environment in the past. They’ve freed up capital to rotate into new projects recently and have managed to extract higher cash flows from Marquee assets - their infrastructure arm killed earnings last week and the same should run true tomorrow for this flagship arm of the company. The technicals are also posturing for a breakout of the share price as the 50-day approaches the 200, earnings tomorrow could be the catalyst needed to make this a reality.
Chart of the Day - Fixed Income Yields