Author Archives: Michael Murphy

New World Investor – 2.15.24

16
Feb 24
Dear New World Investor: Rents were high a year ago, so the S&P 500 fell 68 points on Tuesday after the Consumer Price Index for January was announced. If that doesn’t make any sense to you, this is how Wall Street shakes out the weak hands so they can buy cheap stock. Headline inflation dropped from December’s +3.4% to +3.1%, but – horrors! – economists expected +2.9%. Core inflation rose 3.9%, matching December and above the +3.7% expected. The Bureau of Labor Statistics said: “The index for shelter continued to rise in January, increasing 0.6% [that’s year-over-year – it was...

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New World Investor – 2.8.24

09
Feb 24
Dear New World Investor: New Recommendation: Vermilion Energy (VET) – See below under Oil Last Friday, stocks rallied sharply after December payroll additions were revised up from +216,000 to +333,000. We learned that the US added another 353,000 jobs in January, the most since January 2023, nearly twice the consensus estimate (180,000) and the largest increase in a year. Or did we? Wait – January? Every year in January, the Bureau of Labor Statistics conducts its “annual re-benchmarking and update of seasonal adjustment factors.” Long story short, what was until December some mediocre jobs numbers have now been miraculously transformed...

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New World Investor – 2.1.24

02
Feb 24
Dear New World Investor: New email delivery rules from Google and others go into effect today. If you didn’t get the usual email saying this issue is posted, that’s why. I’ve wasted spent hours working to comply with their constantly changing rules, despite never in the history of NWI sending a single spam message. I thank you for your understanding and I will get this fixed. Yesterday, the Fed continued their pause and said: “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward...

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New World Investor – 1.25.24

25
Jan 24
Dear New World Investor: The final Atlanta Fed’s GDPNow model estimate for December quarter real Gross Domestic Product (GDP) was +2.4%, stronger than the Blue Chip economists’ consensus for +1.5%. The first government announcement this morning was an even stronger +3.3%. September quarter GDP was revised down to +4.9%, and I expect December to be revised down a little in the second and third estimates coming in February and March. But it was a good quarter, no doubt. Click for larger graphic But the market is forward-looking, so what’s next? According to S&P Global’s flash US composite PMI, which includes...

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Flash Alert – ATH – 1.20.24

20
Jan 24
Dear New World Investor: There’s now $8 trillion in money market funds and CDs. Most of that will stay in some form of fixed income, but some has been waiting for a market drop to buy stocks. Friday’s record S&P 500 close should get some of the sideline money throwing in the towel and buying stocks. Historically, after an all-time high the S&P 500 has outperformed its long-term average one-, three-, six-, and 12-months later. The one-month returns are not quite as strong, suggesting a short-term overbought condition in some cases. One year later, the S&P 500 has risen 13...

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New World Investor – 1.18.24

18
Jan 24
Dear New World Investor: So December retail sales were up 0.6% and that was enough for the market to fear the bogeyman…err, Chairman Powell…might not cut rates as soon as they thought. So down went stocks yesterday. Well, duh. It’s important for you to know that my economic outlook for 2024 is pretty different from Wall Street. A recent BofA poll showed US stock optimism at the highest level since 2021. BofA said there is “record optimism on rate cuts” and 79% of survey respondents expect the global economy to experience either a soft or no landing in 2024. Most...

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New World Investor – 1.11.24

11
Jan 24
Dear New World Investor: Last Friday’s payroll number was stronger than expected and this morning’s December Consumer Price Index announcement came in hotter than expected. In part, it was driven by base effects – a low December 2022 number – and will drop significantly next month due to…base effects. The headline annual increase was 3.4% year-over-year (YoY), just above the 3.2% estimate and November’s 3.1%. The month-over-month (MoM) increase was 0.3% versus estimates of 0.2% and last month’s 0.1%. However, the shelter index, which is 32% of the CPI, was up 0.5% from November and accounted for over two-thirds of...

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New World Investor – 1.4.24

04
Jan 24
Dear New World Investor: Click for larger graphic 2023 was a good year for the market but a disappointing year for us. Although I (barely) outperformed the S&P 500 Index, I lagged way behind the Nasdaq Composite. In part that was due to my bias towards smaller companies in a year the Russell 2000 did poorly, and in part to the biotech bear market that (A) just started to recover at the end of the year; and, (B), I underperformed badly. I spent part of the holidays thinking about lessons learned and changes to be made. Digital Dominators Click for...

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New World Investor – 12.21.23

21
Dec 23
Dear New World Investor: Due to the lack of news, the holidays, and a daughter home from college for an all-too-brief visit, I’m going to do my annual holiday skip of next week’s issue and be back on January 4 for a much better 2024. The markets are about to extend what is now the longest string of weekly gains since 2017. This has been one of the biggest Christmas rallies in history. On January 3, 2022, the S&P 500 hit a record high closing level of 4796.56, just 50 points away from today’s close. We could see a new...

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New World Investor – 12.14.23

14
Dec 23
Dear New World Investor: As we come to the end of the year, company news flow shrinks sharply. They enter a blackout period when they can’t buy back stock and don’t want to comment on how their December quarter is going, unless it is much better or much worse than what they’ve said previously. With the companies mum, brokerage firm conferences stop. At the same time, Wall Street gets ready for the annual tsunami of pension fund cash from corporations – yes, that’s still a thing – by buying stocks before their customers can. All eyes turn to bigger news,...

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