Author Archives: Michael Murphy

Dear New World Investor: Stocks hit new highs as Chairman Powell told Congress the central bank is in no hurry to ease policy, though he said rate cuts are likely to come this year. I’m still doubtful, although I think a mild recession will start this year. It takes the National Bureau of Economic Research about a year after a recession starts to call it. That delay will give the Fed enough cover to not cut unless the recession spirals into something much bigger than I’m expecting. The labor markets are slowly weakening. January’s Job Openings and Labor Turnover Survey...

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Dear New World Investor: Scotland Yard detective Gregory: “Is there any other point to which you would wish to draw my attention?” Sherlock Holmes: “To the curious incident of the dog in the night-time.” Gregory: “The dog did nothing in the night-time.” Holmes: ”That was the curious incident.”   – From The Adventure of Silver Blaze by Arthur Conan Doyle This morning’s January Personal Consumption Expenditures (PCE) Index rose 2.4% from last year, a slowdown from December’s 2.6%. The core PCE Index, the Fed’s favorite inflation indicator, rose only 2.8% from last year. That was the lowest annual increase since the...

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Dear New World Investor: As I expected, Nvidia (NVDA) reported a strong January quarter after the close yesterday and guided the April quarter above estimates. The stock was up $110.66 or 16.4% today to new record highs as Wall Street fell all over themselves to raise their ratings and target prices. Nvidia is a great company that I first recommended in 2000 in the California Technology Stock Letter and still recommend in Boomberg. CEO Jensen Huang told me in 2000 that Nvidia would be a bigger company than Intel (another Boomberg recommendation) and he was right. It’s a bad idea...

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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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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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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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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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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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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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