Author Archives: Michael Murphy

Dear New World Investor: It’s been a week of Tariff Tantrums and Inflation Fears. This morning’s Consumer Price Index report for March showed less inflationary pressures. The headline index was up 2.4% year-over-year (YoY), its lowest increase in four years, a tenth under the 2.5% consensus and better than February’s 2.8%. Month-over-month (MoM) it fell 0.1%, the first MoM drop since May 2020. That was below the consensus estimate for a 0.1% increase and below February’s 0.2%. Click for larger graphic h/t Yahoo Finance The more important (to the Fed, anyway) core index was up 2.8% YoY, also the lowest...

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Dear New World Investor: Inflation is collapsing. @DiMartinoBooth wrote: “Per Truflation, on a time continuum, their metric tells you with near-perfect accuracy where the CPI will be 45 days hence. There was thus no irony in TJM Institutional Services’ Mark Gomez sharing first thing this morning that Truflation had printed at 1.32%, down from 2.70% when Federal Reserve policymakers last convened on January 31.” Click for larger graphic h/t Quill Intelligence Does that mean the economy is slowing? Yes. Into a recession? Too early to tell, but a short,shallow recession would make a lot of sense, even though the third...

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Dear New World Investor: To no one’s surprise, for the second meeting in a row the Fed made no change to interest rates on Wednesday. They also didn’t change their prediction for two rate cuts later year. But they did raise their estimate of the core Personal Consumption Expenditures (PCE) measure of inflation from 2.5% to 2.8%. I’d say that makes the two projected rate cuts more of a wish than a forecast. They also trimmed their 2025 real GDP forecast from 2.1% to 1.7%, and raised their unemployment rate a tenth from 4.3% to 4.4%. They may be inching...

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Dear New World Investor: Last Friday’s February payrolls report showed 151,000 new jobs, just under the 160,000 expected by economists. It was more than the 143,000 originally reported for January, which was revised down to 125,000. Although the DOGE personnel cuts are starting to bite, the unemployment rate only increased a tenth of a percent to 4.1%. The good news is that we really only need to add about 100,000 to 150,000 jobs a month to keep employment stable, and that’s exactly what happened. Click for larger graphic h/t Yahoo Finance Wednesday’s Consumer Price Index report for February showed a...

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Dear New World Investor: Last Friday’s Personal Consumption Expenditures Index report for January showed the headline number increasing 2.5% year-over-year, a tenth slower than December’s 2.6%. The month-over-month increase was 0.3%, the same as December and right on the consensus. Stripping out the volatile food and energy components, the Fed’s favorite inflation indicator, the core PCE, gained 0.3% last month after an unrevised 0.2% rise in December. Year-over-year, core inflation increased only 2.6% after climbing 2.9% in December. Click for larger graphic h/t Yahoo Finance The 2.6% annual core inflation rate is still too hot for the Fed’s liking, but...

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Dear New World Investor: The recent catch-up rallies in German stocks, financial sector stocks, China technology, and even the ARK Innovation Exchange-Traded Fund (ARKK) mean we are in a “broadening bull.” This is when we suddenly and very quickly have an aggressive broadening of the rally. It could be a “buy the laggards” meme or just a general broadening, but it normally happens in just a fraction of the time that the overall bull has been in place. So what are the next potential laggards to catch up? My guess is (1) junior miners catching up to record gold prices,...

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Dear New World Investor: The headline Consumer Price Index (CPI) increased 3.0% year-over-year in January, a tick above December’s 2.9%. The index for eggs increased 15.2% from December, the largest increase since June 2015. It accounted for about 2/3 of the total monthly food at home increase. Year-over-year egg prices have surged 53%. The index rose 0.5% in January, the largest monthly headline increase since August 2023 and a slight acceleration from the 0.4% rise in December. Economists had expected a 0.3% increase. The core CPI, which strips out the more volatile costs of gasoline and food like eggs, rose...

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