Inflation Hit The Smallest Back-To-Back Month Increase

[CLICK HERE JOIN OUR LIVE TRADING & TRAINING SESSIONS]( Hello investor, Inflation Hit The Smallest Back-To-Back Month Increase New inflation data was in yesterday, and it posted the smallest back-to-back increases since late 2020. The core personal consumption expenditures price index (the Fed Reserve’s preferred gauge) increased just 0.2% from the prior month. If we include energy and food prices, the overall PCE price index also rose at 0.2%. This is promising data, as the current pace is much more sustainable. (Source: Bloomberg) But there was a concerning sign. Inflation-adjusted consumer spending jumped 0.6% last month – the strongest advance since the beginning of the year. This shows how resilient the consumers are. Thanks to low unemployment, pandemic-era sanvings and wage growth, consumers have the money to support the economy and keep a recession at bay. For example, applications for unemployment benefits fell to a four-week low, indicating that the jobs market remains robust. Services costs increased by 0.5% in July – also the biggest jump since the start of the year. Fed officials have pointed to this sector as something to be tamed. However, the category of portfolio management and investment advice was responsible for the half of this advance. If we exclude it, the so-called supercore services inflation gauge just increased by 0.25% from the prior month. Wall Street is now talking about rate cuts: A pause looks likely for the upcoming September meeting, so Wall Street is starting to debate when rate cuts will happen. Since the economy remains strong, Bridgewater Associates’s Co-Chief Investment Officer Karen Karniol-Tambour believes that the central bank is likely to cut rates slowly. It would require only a collapse in the economy for fast rate cuts, she said. - “When you look at what it takes to get fast rate declines, usually you need the economy collapsing pretty quickly,” said Karen Karniol-Tambour. “That’s very far from where we are today.” Bridgewater Associates’s Co-Chief Investment Officer Karen Karniol-Tambour (Photo: CNBC)  Top Compounding Stock With A 70%+ Market Share For Its Flagship Product Today’s Stock Pick: Intuit Inc. ([INTU]() Intuit knows how to do one thing: thoroughly dominate the market it enters. And I am not kidding. I am sure you’ve heard of TurboTax. It made filing taxes such a painless process for millions of Americans. Guess how much market share TurboTax has in tax preparation software? Believe it or not, TurboTax commands a whopping 73% market share. That’s just one product, though. You’ve heard of QuickBooks, too. It’s the gold standard in accounting software. Obviously, accounting is also a big pain for self-employed individuals and small- and medium-sized businesses. QuickBooks makes it insanely easy, and Intuit is well-rewarded for its top-of-the-line product. QuickBooks holds a 77% market share in accounting software! And of course, QuickBooks brings a marvelous recurring revenue to Intuit. The viable alternative is near zero. This accounts for nearly half of Intuit’s total revenue. And its customer base grew from 29 million to 103 million in July 2022: (Source: Intuit) Big acquisitions: Intuit acquired Credit Karma and Mailchimp. Why Mailchimp? Intuit found that the greatest pain point for small businesses is finding new customers. Being online and developing intelligent marketing campaigns are now the lifeblood of nearly any small business. That’s right in Mailchimp’s backyard. (Source: Intuit) Mailchimp does more than just email marketing. It offers e-commerce platforms, website building, analysis, and behavioral targeting. In fact, it generates 2.2 million AI-driven predictions every day. (Source: Intuit) It makes QuickBooks a natural extension to Mailchimp that manages the financials aspect of the business: (Source: Intuit) That’s for small- and mid-sized businesses. Now, Intuit has a tremendous number of consumers from its TurboTax business. But it’s seasonal, only busy during the tax season. Don’t you think it’s a lost opportunity with these consumers? That’s why Intuit acquired CreditKarma to add its offerings to TurboTax customers. Credit Karma offers a personal financial assistant to help consumers improve their lives by finding financial products to increase savings, pay down debt and access their money faster. Believe it or not, Credit Karma has over 100 million customers and half of all U.S. millennials. After these two acquisitions, Intuit boasts a valuable list of high-loyalty customers under its umbrella: (Source: Intuit) A classic compounder: Intuit is a textbook case of a compounding stock. Thanks to its recurring revenue and software-based business, Intuit routinely posts 20%~ annual earnings growth. Sure enough, Intuit saw a 1,644% return in the last 12 years. But it is only the beginning. Intuit has a strong competitive moat for QuickBooks, and it is starting to expand its business internationally. Credit Karma and Mailchimp will add future earnings growth. In other words, it’ll be business as usual for the next decade. (Source: Google Finance) Bottom line: Intuit is a compounding stock, which usually sees enormous gains after holding for a decade. This is a “blue-chip” software to own almost forever. 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