Author Archives: Michael Murphy

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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Dear New World Investor: It’s wild how quickly people forget Trump’s negotiation tactics. Step 1: Say something completely ridiculous that overshoots his desired outcome. Step 2: Retreat from that stance to something more “reasonable” that was the intended goal all along. Step 3: Get what you really wanted. Step 4: Repeat. Click for larger graphic h/t @AndreasSteno Last Friday’s core Personal Consumption Expenditures (PCE) index – the Fed’s preferred inflation gauge – was right on expectations. The year-over-year core rose 2.8% in December, the same as November. The month-over-month core rose 0.2%, a tenth faster than November’s 0.1%. No big...

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Dear New World Investor: As I expected, the Fed voted unanimously to hold interest rates steady yesterday, its first pause following three consecutive cuts at the end of 2024. They removed language noting that inflation had made progress toward their 2% goal, retaining only that “inflation remains somewhat elevated.” They also said that the unemployment rate has “stabilized at a low level in recent months,” getting rid of “eased.” They said job market conditions remain “solid,” which means they feel no pressure to cut further. We get the next core Personal Consumption Expenditures (PCE) index – the Fed’s preferred inflation...

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Dear New World Investor: Earnings season is upon us. The market is transitioning from rising earnings with easier financial conditions to rising earnings with tighter financial conditions. That’s not bad per sé, but it’s not as good as what we had in 2024 when two-thirds of the gains came from price/earnings multiple expansion. I do expect more mergers and acquisitions activity under President Trump, which means fewer public companies for money managers to invest in. That should underpin a steady rally in the S&P 500. Market Outlook The S&P 500 added 3.1% since last Thursday to new all-time highs today....

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Dear New World Investor: It’s Time To Invest In Human-Like Robots Artificial Intelligence will have many impacts on our economy and society. Large Language Models already are answering customer questions, helping coders debug programs, and designing biotech drugs. AI also will affect the physical world, from full self-driving cars to humanoid robots. Both need to quickly adapt to their environment and respond appropriately to new information. That’s why Tesla and Nvidia are making large investments in robot development, as well as the many robot-focused private companies like Boston Dynamics. Tesla’s Optimus robot already is working in their offices and factories....

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Dear New World Investor: Buy The Next Big AI Stock My position on Artificial Intelligence (AI) is that what we have and are likely to have for the foreseeable future actually is Imitative Intelligence, if only because no one understands how human intelligence really works. Using lots of very fast parallel-processing semiconductors, a.k.a. graphics processing units or GPUs, can make it seem like a computer is thinking, but really what it is doing is wowing us by retrieving and comparing data at speeds we’ve never seen before. We saw this when IBM’s Deep Blue computer beat world chess champion Garry...

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Dear New World Investor: The average New World Investor recommendation finished 2024 up 20.2%, or 16.7% including the two S&P put recommendations that expired worthless. The biotech and small cap stocks made it underperform the S&P 500 and Nasdaq Composite. Click for larger graphic Business Insider, 12/28/23: “Legendary investor Jim Rogers sees an epic market bubble and looming economic disaster. He hopes to short the ‘Magnificent 7’ stocks when the time is right.” Porter Stansberry, 12/22/23: “The Naughty List – 10 Stocks Headed Straight to Hell” Click for larger graphic Although some gurus were trying to scare people at the...

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Dear New World Investor: NOTICE: No newsletter next week and I’m sure you can guess why. The Santa Claus rally should start shortly and I’ll be back on January 2 with the 2024 performance results and some early thoughts on 2025. The Fed cut the Fed funds rate a quarter percentage point Wednesday to a new range of 4.25%-4.50% with newly-appointed Cleveland Fed president Beth Hammack dissenting, both as expected. It was the third consecutive rate cut of 2024 despite signs that inflation isn’t down to 2%. The consensus among Fed officials is for three rate cuts next year, down...

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Dear New World Investor: The headline Consumer Price Index (CPI) for November increased 2.7% year-over-year (YoY), the second consecutive increase in annual inflation – a trend not seen since April, and 0.3% month-over-month (MoM). Both were a slight uptick from October’s 2.6% YoY and 0.2% MoM. It was the largest monthly gain since April. But shelter costs, the largest component of the CPI that accounted for 40% of November’s overall monthly CPI increase, rose just 0.3% from October. This was lower than October’s 0.4% increase. On an annual basis, shelter costs rose 4.7% in November, down from October’s YoY gain...

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