New debate: 25 basis-point or 50 basis-point?

Earn While You Learn! ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, New debate: 25 basis-point or 50 basis-point? We got another good inflation news yesterday that may have sealed the deal for an interest rate cut this September. The consumer price index increased 2.9% year-over-year, down from 3% in June. As for month-over-month, it climbed 0.2%. Core CPI rose 0.2% on the month, as well. With a cooling labor market, recent inflation readings make it likely for the Federal Reserve to cut rates during its September meeting. The question shifts to the size of the cut. Will it be a 25 basis-point or a 50 basis-point cut? - “It may not have been as cool as yesterday’s PPI, but today’s as-expected CPI likely will not rock the boat,” said Chris Larkin at E*Trade from Morgan Stanley. - “Now the primary question is whether the Fed will cut rates by 25 or 50 basis points next month. If most of the data over the next five weeks points to a slowing economy, the Fed may cut more aggressively.” The decision will likely depend on the health of the labor market. If it cools down further, the central bank may feel inclined to go for a jumbo cut to try and avoid a recession. - “This is now a labor data-first Fed, not an inflation data-first Fed, and the incoming labor data will determine how aggressively the Fed pulls forward rate cuts,” Krishna Guha at Evercore said. Krishna Guha at Evercore (Photo: CNBC) However, a 50 basis-point cut looks unlikely since inflation remains above the 2% target. A surprise decline in the health of the labor market is a scenario that can bring a jumbo cut on the table. Future readings on unemployment rates will be important before the September FOMC meeting. - “The soft CPI report will likely give Fed officials modestly more confidence that inflation is on the way down,” said Anna Wong and Stuart Paul at Bloomberg Economics. - “Even though July’s core PCE inflation print won’t be as good, we expect the Fed to cut rates in September due to the rising unemployment rate.” Wall Street expects just over 1% worth of rate cuts in 2024. There are three Fed policy meetings scheduled this year, so traders project one of these meetings to result in a 50-basis point cut, in addition to two 25 basis-point cuts. We will get retail sales data today. The reading will offer insights into the health of consumer spending. The Federal Reserve will probably not weigh heavily on this data, but it offers an insight into whether the economy can pull off a soft landing. After all, consumer spending is the driving force of the economy. Initial jobless claims and industrial production will be out today, as well. Housing starts and University of Michigan consumer sentiment are due tomorrow. You May Hate This Company But Love Its Dominance In Its Niche Today’s Stock Pick: Verra Mobility Corp. (VRRM) TRIGGER ALERT! You may have an unpleasant flashback that could make your blood boil. Verra Mobility is the technology behind toll and violations management. That’s right. Remember the ticket you received for running past the red light? (BTW, I know you didn’t do it -- you did beat the yellow light.) That was probably from Verra’s red-light and speed cameras. Governments use Verra’s technology to install cameras around the cities. Verra also handles the billing and payments. In short, governments do nothing. They pay Verra to handle everything – installing and managing the system. In return, Verra earns service fees. It is an incredibly simple business model. Verra owns this market to itself, and it doesn’t know any competitor that offers similar “all-in-one” solutions in this space. Its only competitors are governments who choose to handle these internally. As for the Commercial Services segment, Verra handles automated toll and violations management solutions for major fleet owners in North America. Take rental cars for example. It installs devices inside rental cars for Hertz, Avis, and Enterprise, and these devices would track toll charges incurred by the customers. Without Verra’s management solutions, these rental car companies will bear the excruciating administrative headache of matching tolls or violations to the responsible vehicle and driver. And then, they must transfer liability or pay the fee or fine directly (for which it may then need to bill the driver) Verra have long relationships with the three largest RACs in the United States – Avis Budget Group, Enterprise Holdings, Inc. and The Hertz Corporation. And it works with the six largest fleet owners in the USA -- Element, ARI, Enterprise Fleet Management, Wheels, LeasePlan and Donlen. As you can see, Verra owns the relationship with top three largest rental companies and the top six largest fleet owners, reinforcing its dominance in the market. (Photo: Verra Mobility) Financials: The business is, indeed, good. The year of 2020 was forgettable. Rental car companies were pounded hard, with Hertz flirting the bankruptcy. Plus, local governments’ budgets were tight. The revenue declined in all quarters. Excluding that year, the company has an excellent track record of growth. Revenue grew by 45% CAGR in the four-year period from 2016 to 2019. Then its revenue dropped by 24% in 2020. The company went back on the growth track quickly. Revenue grew 25% CAGR since 2020. Adjusted EBITDA also grew at a similar pace with a 24% CAGR: Share buybacks: Verra has bought back ~$375 million in the past three years. That was 8.4% of the current market cap. Clearly, the company is a shareholder-friendly one. Future growth: Verra made a major acquisition of T2 Systems, which is in the parking management business. The company has had its eyes on this industry for a while. Finally, they pulled the trigger with the acquisition. The concept is similar to its toll and violations management business. It helps universities and municipalities to handle curbside management. Verra estimates this to be a $13 billion TAM. So, that would represent another long-term growth opportunity. Bottom line: You have to love the competitive moat built by Verra. The company expects a ~8% revenue growth for this year. This is a stock that can turn into one of the best compounding stocks due to its competitive moat and shareholder-friendly program. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](