One key economic data to watch out for

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If major indexes can hold their gains, it would mark the fifth straight month of gains. The latest catalyst was the Federal Reserve reaffirming that rate cuts remain on the table for this year. And of course, the AI frenzy remains alive and well — especially after Nvidia’s blockbuster earnings result. At the same time, history shows that stocks tend to drop after the first rate cut. It would be a classic example of “buy the rumor, sell the news.” - “Examining Fed rate cycles since the 1970s has revealed that, generally speaking, investors have more to fear from the first rate cut in a cycle than the pause, the period in which the central bank stops tightening and has yet to ease,” Strategas Securities analyst Ryan Grabinksi wrote in a Friday note. Strategas Securities analyst Ryan Grabinksi More importantly, the February personal consumption expenditures price index (the Fed’s preferred inflation gauge) will be out on Friday. The last two inflation readings showed an acceleration, so Wall Street will watch if this trend continues. The stock market will be closed on Friday in observance of Good Friday holiday, so any reaction from inflation data will happen during the following Monday. The earnings season has winded down, so the market is left with few catalysts. The next major question is the labor market and the inflation data. Fed Chair Jerome Powell already said that the Fed wouldn’t hesitate to cut rates if the unemployment rate climbs. Powell insisted that the inflation target is 2% over the long term, so the central bank might be willing to sacrifice some inches in its fight against inflation in order to prevent the labor market from deteriorating too much. That is one key economic data to watch out for — along with this Friday’s inflation data. A Pick And Shovel Play On The Fiber Optics Boom Today’s Stock Pick: Dycom Industries, Inc. ([DY]( Have you heard of a “pick and shovel” play? That term originated during the 1849 California Gold Rush. As people flocked to San Francisco, with dreams of getting rich, the odds of finding gold were extremely slim. Most people failed to find any gold. However, those who sold picks and shovels to those dreamers became fabulously wealthy. An immigrant from Bavaria, Levi Strauss, opened a dry goods company during the Gold Rush. He saw the demand for clothes built to endure anything. And he built a fortune selling blue jeans to gold miners. Today’s pick is a “pick and shovel” play on the boom of fiber optics and 5G. Dycom Industries offers engineering, construction, maintenance, and installation services for cable and telephone companies. In other words, companies like Verizon need Dycom to design, engineer and hook up fiber optics to households and businesses. It also builds towers, installs lines and antenna, and constructs all other key equipment to make wireless connectivity possible. Massive growth potential: The demand for network bandwidth and mobile broadband is taking off. With streaming devices and hybrid work, consumers expect fast internet at a high volume. In just two years, the average upload consumption per subscriber soared by more than two times. Just look at this comment from Frontier’s CFO: - “If you look in the last few years, data consumption has risen about 30% to 40% per year. And as that happens, demand for faster speeds, better service will continue to rise. Our current customer on fiber consumes almost 1 terabyte of data per month. That's up about 30% from pre-pandemic levels. And many of our customers, the top quartile are using 2-plus terabytes a month,” said Scott Beasley, CFO at Frontier Communications. Moreover, the Infrastructure Investment and Jobs Act will invest more than $40 billion in the construction of rural communications networks in unserved and underserved areas across the country. The outlook for fiber optics passings -- basically the number of homes/businesses that are hooked up – forecasts continuous growth over the next four years: (Source: Dycom Industries) Dycom is poised to make money from all of these trends. It offers a complete lifecycle services that go from the beginning (planning) all the way to the end (maintenance and program management): (Source: Dycom Industries) Strong competitive advantage: It is difficult to compete with Dycom’s scale. It has locations all over the country that would require massive capital expenditure for a competitor to match Dycom’s capacity to serve big corporations’ needs. (Source: Dycom Industries) Bottom line: Dycom’s growth looks rock-solid for the next decade. Billions of dollars are pouring into this industry to rapidly build out the infrastructure to serve the next-gen technology. Dycom stands to directly benefit from this. It is an excellent stock to own for the next two to three years. [EARN WHILE YOU LEARN! 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