Author Archives: Michael Murphy

Dear New World Investor: Last Friday’s May Personal Consumption Expenditures (PCE) index increased 2.3% year-over-year, a slight uptick from April’s 2.2%. The month-over-month increase from April was 0.1%. The Fed’s favorite inflation indicator, the core PCE that excludes changes in food and energy prices, was up 2.7% year-over-year. Both the April increase and the consensus expectation for May were 2.6%. Month-over-month, the core PCE rose 0.2%, also a tenth above both the April increase and the consensus expectation for May. Click for larger graphic h/t Yahoo Finance “Supercore” PCE is a measure of inflation that focuses on the prices of...

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Dear New World Investor: Last September 16, CareerBuilder and Monster merged. The CEO said: “The combination of CareerBuilder and Monster brings together two strong, trusted, complementary brands to create a job board with greater scale and reach.” On Tuesday, a short nine months later, the merged company filed for Chapter 11 bankruptcy. What happened? This: Click for larger graphic h/t @DiMartinoBooth The latest Conference Board Consumer Confidence report said that households’ “appraisal of current job availability weakened for the sixth consecutive month” and consumers “were more pessimistic about business conditions and job availability over the next six months.” Weak help...

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Dear New World Investor: Well, you all just set a personal best – consecutive Fed days without panicking – as Chairman Powell et. al. held interest rates steady Wednesday at 4.25%-4.50% for the fourth meeting in a row since last cutting in December. They kept their projection for two rate cuts this year, which is two more than we’re likely to get unless the labor market falls apart. Click for larger graphic h/t Yahoo Finance They changed language that previously said “the risks of higher unemployment and higher inflation have risen” to “Uncertainty about the economic outlook has diminished, but...

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Dear New World Investor: May’s nonfarm payrolls jobs report showed the US economy added 139,000 jobs, more than the consensus expectation for 126,000. The unemployment rate held steady at 4.2%. The April number was revised down from 177,000 to 147,000. So in spite of President Trump’s tariff volatility, the labor market remains pretty resilient. It has softened for sure, but there’s no big retrenchment. At least so far. Click for larger graphic h/t Yahoo Finance What would you do next Wednesday if you were Chairman Powell? I’d watch and wait. The labor market isn’t falling apart and, just as Wall...

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Dear New World Investor: As you know, the core Personal Consumption Expenditures Index (PCE) strips out the volatile food and energy components from the headline PCE price index to provide a clearer picture of underlying inflation trends. I refer to the core PCE as the Fed’s favorite inflation indicator, because they have said it is. But there’s an even more refined measure, the Supercore PCE. It is a measure of inflation that focuses on the prices of core services like healthcare, education, recreation, and financial services that are less influenced by temporary supply shocks. It excludes energy services and the...

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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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