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11/14/2023 10:13:06 AM Eastern Time

GONE FISHING?  
By Charles Payne, CEO & Principal Analyst

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Yesterday’s session had a summer-like feel with tight ebbs and flows and a lack of conviction on either side of the trade. Five sectors edged higher, led by Energy (XLE).

Amazing developments on the miracle fat loss drug front sparked buying after the initial sell-off.

Inflation Expectations from the NY Fed saw one-year ahead ease to 3.6% from 3.7% (it was the fifth consecutive monthly decline). 

Today, it's all about the Consumer Price Index (CPI) report, which is expected to decline to 3.4% from 3.7% and the Core Consumer Price Index (CPI) at 4.2% from 4.1%.

The Cleveland Fed Nowcast sees a 3.3% headline and a 4.2% Core CPI from a year ago.

The Street is looking for a 0.3% Core CPI from a month ago.

Today’s number is big, but other major data releases will impact the market this week as well.

Portfolio Approach

We are adding a new position in Consumer Discretionary in our Hotline Model Portfolio this morning.

Today’s Session

Inflation resumed its downward trend last month.

Super Core

Jay Powell’s favorite gauge kicks out housing from core services.

• 3.8% from a year ago was north of 6.0% in 2022
• 0.2% from month ago

Market Reaction

Bond yields are imploding.

Equity futures popped.

I’m excited because we have been positioning. But these numbers are still high, and too much for the average household.   The news rekindles hopes for a soft landing.

From our point of view, as investors, this was a good number, and it could spark some panic-buying.  

Long Idea: Ross Stores, Inc. (ROST) @ $124.02
Industry: Consumer Discretionary; Specialty Retail
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BACKGROUND: Ross Stores, Inc., together with its subsidiaries, operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's DISCOUNTS brand names in the United States. Its stores primarily offer apparel, accessories, footwear, and home fashions. The company's Ross Dress for Less stores sell its products at department and specialty stores primarily to middle income households; and dd's DISCOUNTS stores sell its products at department and discount stores for households with moderate income. Ross Stores, Inc. was incorporated in 1957 and is headquartered in Dublin, California.

SKINNY: ROST is scheduled to report earnings on November 16th and the retailer has a great record of positive earnings surprises, as it hasn't missed earnings consensus estimate in any of the last four quarters.

The stock has outperformed the retail ETF "XRT" driven by strong Q2 results that saw revenues to increase by 8%, prompting ROST to raise its annual earnings per share guidance by ~9%. It is one of the better-run names in the space. Our target is $150.