VantageRock's Avery Sheffield: Inflation likely to run warm to hot, pockets of opportunity remain

Market Overview - The economy and inflation are likely to run warm to hot, creating a bifurcated market [1][2] - The Fed wants the economy to do well and has the opportunity to cut rates if needed, supporting the environment [3] Investment Opportunities - Opportunities exist in stocks that benefit from pricing power and are not overleveraged, especially with low valuations [2][3] - Focus on finding undervalued pockets likely to outpace inflation due to their ability to raise prices [3] Specific Sectors of Interest - Autolevered stocks and consumer discretionary retail are interesting sectors [5] - Auto OEMs are managing tariffs better than anticipated, with strong demand despite high prices [5] - Auto dealers benefit from a strong market and 40% of their volumes in parts and service, with low valuations [7] - Multiple retailers in consumer discretionary, including apparel and jewelry retail, are in turnaround situations with low valuations [8] Risk Considerations - Cost pressures from tariffs and inflation are already priced into some stocks [4][8] - Concerns over high auto prices exist, but demand remains strong [5]