Author Archives: Michael Murphy

Dear New World Investor: The second estimate of March quarter real GDP growth this morning was little changed on the surface, down 0.2% instead of the initial estimate of down 0.3%. But under the hood, the positive difference seemed to be inventory investments to beat President Trump’s tariffs. Personal consumption growth was revised down from +1.8% to +1.2%. That’s a relatively big revision in this series and probably means the economy is a little weaker than we thought. Market Outlook The S&P 500 added 1.2% since last Thursday in this holiday-shortened week. The Index is up 0.5% year-to-date. The Nasdaq...

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Dear New World Investor: Who are the bears with sideline cash to take the stock market to all-time highs? Well, hedge funds have added $25 Billion of short equity futures exposure over the last three Commitment Of Traders reports, the largest increase in the last ten years. Click for larger graphic h/t @WinfieldSmart Market Outlook The S&P 500 lost 1.3% since last Thursday as worries about the bond market overcame easing geopolitical factors. The Index is down 0.7% year-to-date. The Nasdaq Composite lost 1.0% and is down 2.0% for the year. The SPDR S&P Biotech Exchange-Traded Fund (XBI) climbed 2.2%...

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Dear New World Investor: The headline April Consumer Price Index was +2.3%, the slowest increase since February 2021 and a tenth below both market expectations and the March number even though many of President Trump’s tariffs were in effect. Month-over-month, prices increased 0.2%. That was better than the 0.3% estimate but worse than the 0.1% monthly decline in March. As usual, the lagging Shelter category accounted for about half of the increase. The Fed’s favorite inflation indicator, core inflation excluding food and energy, rose 2.8% year-over-year, the same as in March. It was up 0.2% month-over-month, better than the 0.3%...

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Dear New World Investor: Today is the 80th anniversary of VE Day – Victory in Europe at the end of World War II. The day celebrates the formal acceptance by the Allies of Germany’s unconditional surrender of its armed forces and military operations on Tuesday, 8 May 1945. About four months later, Japan signed its surrender documents and my dad came home from 3 ½ years in the Navy. After he’d been home a couple of weeks, I impatiently asked my mom: “When is he going to leave?” President Trump and many investors seem to be asking: “When is he...

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Dear New World Investor: “Stagflation!” cry the clickbait artists. Well…no. At least not yet. The first estimate of March quarter real GDP growth excluding gold imports was -0.3% compared to the consensus estimate for -0.2% and the Atlanta Fed’s GDPNow model estimate of -0.4%. The New York Fed’s Nowcast predicted +2.6% and the St. Louis Fed’s Nowcast was at +3.1%, which tells you why we follow the Atlanta Fed. This was the first negative number in three years and way lower than the December quarter’s +2.4%. But it was caused by a huge 41.3% surge in imports, which caused a...

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Dear New World Investor: The downturn is over. During the past two weeks we’ve seen historic breadth, including six days with more than 70% of stocks advancing on the New York Stock Exchange. This is NOT what you see in a bear market rally or a short covering rally. This is how new bullish phases start. Click for larger graphic h/t @RyanDetrick Click for larger graphic h/t @RyanDetrick Also, the Zweig Breadth Thrust, developed by Marty Zweig, is used to quantify market momentum. It is computed by dividing the number of advancing stocks on an exchange each day by the...

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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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