The market this week. Inflation, retail sales, and the market rally broadens: What to know this week https://finance.yahoo.com/news/infl...roadens-what-to-know-this-week-115519066.html (BOLD is my opinion OR what I consider important content) "Stocks finished last week lower after a sell-off in tech that saw the Nasdaq Composite (^IXIC) lead the losses, falling more than 1%. Still, the equal-weighted S&P 500 logged a weekly gain for the 7th straight week as investors continue to look outside the "Magnificent Seven" tech leaders to power the next leg of the market rally. In the week ahead, investors will face the final major test before the Federal Reserve's March 20 meeting with the February Consumer Prince Index (CPI) report out Tuesday, which offers an updated look at inflation. Retail sales and consumer sentiment reports will feature on the economic calendar in the back half of the week. A lighter earnings schedule is on deck with Dollar Tree (DLTR), Dollar General (DG), Dick's Sporting Goods (DKS), Adobe (ADBE), and Ulta Beauty (ULTA) highlighting the list of quarterly reports. Price check Federal Reserve Chair Jerome Powell has said repeatedly the central bank wants more "confidence" in inflation's path downwardbefore cutting interest rates. Tuesday's CPI reading follows a hotter-than-expected January report that showed inflation's decline could be "bumpy," and prompted investors to price in fewer interest rate cuts this year. For February, Wall Street expects headline inflation to log an annual gain of 3.1%, unchanged from the headline number in January, according to estimates from Bloomberg. Prices are set to rise 0.4% on a month-over-month basis, an increase from the 0.3% rise seen in January. On a "core" basis, which strips out food and energy, prices are expected to have increased 3.7% year over year, a slowdown from the 3.9% increase seen in January. Monthly core price increases are expected to clock in at 0.3%, lower than the 0.4% increase seen in January. "January's CPI data came in hotter than expected and renewed concerns about how quickly inflation could be brought to a heel," Wells Fargo's team of economists led by Jay Bryson wrote in a research note on Friday. "Despite the strong start to the year, we ultimately believe the disinflation trend remains in place. We expect the February data to show that while inflation remains frustratingly high, the underlying trend is not strengthening." Retail rebound? In January, retail sales posted their steepest decline since March 2023. But economists don't expect that trend continued in February. Economists expect Thursday morning's report will show retail sales grew 0.8% month over month in February, a rebound from the 0.8% decline seen in the first month of the year. Excluding autos and gas, economists project sales increased 0.2% month over month compared to a 0.5% decline in January, according to data from Bloomberg. "Retail sales will bounce back in February following the weather-related weakness in January and the stronger tax refund season," wrote economists at Oxford Economics in a note on Friday, "which would leave consumption growth on track for an above-2% annualized gain in Q1, a strong pace." A shift in the market The market action following Friday's jobs report showed a distinct shift in trading action. After weeks of an AI-fueled stock market rally, Nvidia (NVDA) fell nearly 5%. Other popular tech trades that caught a bid in the AI euphoria also slumped, including roughly 4% drops from Arm Holdings (ARM) and Dell (DELL), among others. The move follows a divergence in the Magnificent Seven trade that has emerged —notably, lagging performance from Apple and Tesla. This, strategists have argued, could continue to open a lane for a broadening of the market rally. This trend was seen throughout the week, with the equal-weight S&P 500 hitting its first record high in more than two years. Both that index and the small-cap Russell 2000 Index (^RUT) outperformed the broader market during Friday's sell-off. "We think the Mag Seven is going to become the Lag Seven," Piper Sandler chief market technician Craig Johnson told Yahoo Finance Live. "At this point in time, we're going to start to see a broadening out of this market." Fewer companies mention recession Johnson's call for a broadening out of the market rally has been a common one across Wall Street to start 2024. The case for other stocks to rally is rooted in increasing earnings estimates for stocks outside the tech leaders and the overall health of the US economy. That story largely remains intact. JPMorgan chief US economist Michael Feroli noted after the February jobs report that continued strength in the labor market pushed the firm's outlook for second quarter gross domestic product (GDP) to 1.5% annualized from 0.5%. Strategists believe these increased economic forecasts will be reflected in company earnings beyond just tech stocks. And companies are telling a similar story. During earnings calls spanning from Dec. 15 to March 7, 47 S&P 500 companies cited the term "recession," according to research from FactSet. It was the lowest number of companies mentioning the phrase in two years and was below both the five- and 10-year averages of mentions." MY COMMENT On one hand above you have the short term....hindsight illustrating...events of the week above. On the other you have the usual suspects bloviating their opinions above about what and how the market should do. I will simply....IGNORE IT ALL. The experts....usually wrong. The weekly stuff....simply short term. I will hide out in the LONG TERM WEEDS.
A refreshing little bit of reality. Magnificent 7 Stocks Aren’t Too Pricey, JPMorgan Strategist Says https://finance.yahoo.com/news/magnificent-7-stocks-aren-t-085548101.html (BOLD is my opinion OR what I consider important content) (Bloomberg) -- The ranks of Wall Street strategists playing down concerns around a bubble in US technology megacap stocks are growing. The team at JPMorgan Chase & Co. was the latest to flag that valuations of the seven tech giants that have powered the record-breaking rally on Wall Street are currently lower relative to the rest of the S&P 500 than the average of the past five years. “There is a concern over the very strong outperformance of the Magnificent 7, but we note that the group is currently trading less stretched than a few years ago, given earnings delivery,” strategist Mislav Matejka wrote in a note. “This is not to say that the group is immune to profit disappointments ahead, but in the case of general earnings disappointment, these stocks could still hold out better than traditional cyclicals” reliant on strength in the economy, he said. Strategists at Goldman Sachs Group Inc. also said last week that while the US equity market’s concentration is the highest in decades, the top stocks trade at much lower valuations than the largest names did at the peak of the tech bubble. The Magnificent Seven stocks — comprising Apple Inc., Google parent Alphabet Inc., Amazon.com Inc., Facebook owner Meta Platforms Inc., Microsoft Corp., Nvidia Corp. and Tesla Inc. — had driven the biggest gains in the S&P 500 last year. The benchmark index has scaled all-time highs in 2024, but the performance of those mega-caps has diverged more recently. While AI darling Nvidia has soared to a record high, Apple shares entered a technical correction this month amid concerns about the firm’s slumping iPhone sales and regulatory pressures. A note from Bank of America Corp. last week showed technology funds suffered their biggest outflows on record. Still, strategist Michael Hartnett reiterated that technology stocks could have more room to rally." MY COMMENT I consider all the negativity about the BIG SEVEN as a great contrary indicator. Through ALL of market history the top ten stocks in the SP500.....have been the market leaders. DUH.....that is why they are the top ten in market cap. NOTHING is any different right now. The only difference is the obsessive focus on the......GASP.....market leaders. There is a really simple reason why the rest of the market and many other companies are LAGGING.......they are not as successful in business. DUH. AND....are not making as much money for their shareholders.
Elon MUSK....adds another little piece of the business empire that he is creating......xAI. Piece by piece he is assembling a GRAND PLAN. Most of it will be under the "X" label. Critics of his acquisition of TWITTER....can not and could not see that he has a BIG PLAN for where he is headed. Step by step he is putting the pieces in place. Will he be able to pull it all off? Will it become a cohesive whole? I dont know. BUT....I can see what he is building and where he is trying to get to. Elon Musk makes xAI's Grok chatbot open-source amid OpenAI spat https://finance.yahoo.com/news/elon-musk-says-ai-startup-090106014.html
A few more little hints about the future of the MUSK VISION. Musk says X will soon make long-form videos available on smart TVs X is planning to release an app that will make the platform's videos viewable on smart TVs, Elon Musk said https://www.foxbusiness.com/technol...oon-make-long-form-videos-available-smart-tvs It is too bad that most CEO's and companies dont have the long term vision that you see with ELON. He is a real long term thinker and visionary.
WELL....the market losses of the open are now moderating some as we mature into the day. Round and round we go....where we end nobody knows. Meta Falls Hard, Nvidia Bounces Back As Stock Market Indexes Trim Early Losses https://finance.yahoo.com/m/efff0e95-9b8f-33ab-9b62-380456ac4b37/meta-falls-hard-nvidia.html
Time to just sit and wait out the day. Nothing to see here and nothing going on. The most difficult part of being a long term investor.......having the GUTS to just sit and do nothing. To use a phrase hundreds of years old......."a watched pot never boils". AND.....getting too caught up in the daily INSANITY.....will drive you CRAZY.
WELL....I have only a couple of stocks up so far today. They are.....AAPL and GOOGL. I guess they are going to continue to be the market reverse indicators. When the markets are UP they are down and when the markets are down they are up....recently. Sentiment and media coverage on both of them got way too negative over the past few months. On a mild down day....I am just happy to have a couple of stocks in the green.
We are now pretty much done with earnings for the forth quarter. We are now in the GAP where we will be waiting for the next run of earnings which will start in about 4-6 weeks. At that point we will do it all over again. Here is ow we ended up this time around......as of March 8, 2024: EARNINGS INSIGHT https://advantage.factset.com/hubfs...k/Earnings Insight/EarningsInsight_030824.pdf "Key Metrics Earnings Growth: For Q1 2024, the estimated (year-over-year) earnings growth rate for the S&P 500 is 3.4%. If 3.4% is the actual growth rate for the quarter, it will mark the third-straight quarter of year-over-year earnings growth for the index. Earnings Revisions: On December 31, the estimated (year-over-year) earnings growth rate for the S&P 500 for Q1 2024 was 5.6%. Six sectors are expected to report lower earnings today (compared to December 31) due to downward revisions to EPS estimates. Earnings Guidance: For Q1 2024, 74 S&P 500 companies have issued negative EPS guidance and 32 S&P 500 companies have issued positive EPS guidance. Valuation: The forward 12-month P/E ratio for the S&P 500 is 20.7. This P/E ratio is above the 5-year average (19.0) and above the 10-year average (17.7). Earnings Scorecard: For Q4 2023 (with 99% of S&P 500 companies reporting actual results), 73% of S&P 500 companies have reported a positive EPS surprise and 64% of S&P 500 companies have reported a positive revenue surprise." MY COMMENT Some good discussion of the expectations for Q1 of 2024 in this little article. BUT.....i dont care about expectations....I am content to simply wait and see the REALITY in a month or two. if you want to see details of the Q4 2023 earnings....there are some nice charts at the end of the article. BUT....as usual....backward looking information. AND.....not that any of this has much relevance to the long term future.
OK....I was just looking at my actual ENTIRE portfolio, stocks and funds, and doing some portfolio performance data on SCHWAB. I was looking at the impact of the PANDEMIC and horrible year 2022.....on my returns. I looked at the data from 3-11-20 to 3-11-24. That time span encompasses just about ALL of the pandemic and ALL of year 2022. This data gives me a pretty good view of how things have gone over the medium/long term......FOUR YEARS. Over that time: Total portfolio gain +116.18% Annualized return +21.26% EVEN if you were simply sitting in the SP500 for that entire time with no individual stocks: Annualized return +17.34% IF you were invested in the NASDAQ with no individual stocks: Annualized return +18.17% All of these numbers are pretty good returns for the semi-long-term.....four years. Definitely above the historic averages. I am sure some on here did even better.....but....If I can SIGNIFICANTLY beat the SP500 over any four year time span....especially with a PANDEMIC and a VERY NASTY BEAR MARKET.....I will take it. THE POWER OF LONG TERM INVESTING.
A nice LOSS for me today in my nine stocks.....as the markets go through a little CONSOLIDATION of the recent gains. I also got beat by the SP500 by 1.18% today. As was the case all day long.....I had two stocks in the GREEN.....AAPL and GOOGL. Better than nothing......or......a poke in the eye with a sharp stick.
The last thing in the world that I care about as a long term investor is some....."poll"...of what the public thinks longer term inflation will be. NY Fed: Consumer outlook on longer-term inflation hit snag in February https://finance.yahoo.com/news/ny-fed-consumer-outlook-longer-150340895.html MY COMMENT. This was a top of the page news item. For me it should be buried on the back page. This sort of BLATHER....is simply a tool that allows for opinion to masquerade as news. Shame on the FED for wasting the money on this sort of survey.
Here we go again!! https://finance.yahoo.com/news/bitc...ust-the-beginning-184753964.html?guccounter=1
S&P kicking my ass for two days in a row of course, but you can’t win ALL THE TIME and bring 50-60% annual returns every year. Kind of refreshing feeling HUMAN again after all these wins. Next week I’m in S beach Miami for music week so I could care two shits if the market falls into oblivion… but when I come back I’ll probably be pissed I’ve travelled in states and abroad quite extensively and NOTHING beats south beach this time of year… particularly music week… such an exciting place with people from all over the world celebrating dance music and having a grand time. Add to that all the amazing restaurants, beaches, pools, amazing hotels and you wouldn’t wanna leave. I tried Cancun for the first time last year and we did Club Med and Hyatt Ziva, and while it was super nice and endless spoiling it didn’t match Miamis energy. so there
Sounds like a plan Zukodany. I am also going to be AWOL.....all next week and about half the week after. We have company coming, and after that family obligations that will take up that time. So I am giving everyone plenty of warning.....I will probably not be posting or if I get a chance it will be very little. I dont want to come back to a correction....so you guys get ready to take over the markets and get me some gains.
Many of us on here own NVDA....but....I bet most of us are not in the ETF that generates DOUBLE the return of NVDA. Nvidia ETF That Delivers Double Gains Sees Record Flows https://finance.yahoo.com/news/nvidia-etf-delivers-double-gains-203219124.html (BOLD is my opinion OR what I consider important content) "(Bloomberg) -- Artificial-intelligence bulls are increasingly gravitating toward an ETF that amps up bets on Nvidia Corp. as trading volumes and inflows hit all-time highs. After notching a record $252 million in fresh capital last week, the GraniteShares 2x Long NVDA Daily exchange-traded fund (ticker NVDL) saw its second-biggest trading volume on Monday as Wall Street’s AI darling extended its Friday retreat. The fund, which gives investors two times the daily return of the underlying stock, has grown to $1.4 billion since launching at the end of 2022. NVDA has become a vehicle for investors big and small who are steadfast in their conviction that the Jensen Huang-led firm is riding profound technological shifts in the global economy that will create new wealth-generating opportunities in the stock market. On Friday when Nvidia dropped nearly 6%, the fund clocked in record trading volumes, with over $2 billion worth of NVDL exchanging hands. Investors piled a net $102 million into the fund that day, likely betting on a short-term reversal in the semiconductor stock. To Dave Lutz, head of ETFs at JonesTrading, “activity in NVDL is a key indicator of retail sentiment and activity,” given the size of the ETF’s trading volume. Meanwhile, short interest as a percentage of shares outstanding in the fund is low at just 1.5%, according to Markit Securities. The staying power of Nvidia’s rally will be tested on Tuesday, when a key inflation reading drops. Year-to-date NVDL’s returns stand at 156%. It’s the second-best performing ETF in the US in 2024. The best performing fund — the $269 million T-Rex 2X Long NVIDIA Daily Target ETF (ticker NVDX) — is up roughly 179%. NVDL traded as a 1.5x fund until mid-January, which accounts for its trailing performance. Even after Nvidia’s two-day drop, the stock is still up more than 70% so far this year." MY COMMENT I am a NO GUTS, NO GLORY type of guy....but this is way out there. Not for the faint of heart.
Looks like all the futures...right now....are making a move on the CPI release tomorrow. Do the market insiders know something that us....little people dont? I doubt it....probably just speculative fervor...but you never know. Regardless of why the futures are up....lets hope they are predictive of the markets tomorrow and the CPI. Here are the expectations by the usual...."economists"....regarding the CPI tomorrow at 8:30AM. Inflation expected to remain elevated amid higher gas prices, sticky core services https://finance.yahoo.com/news/infl...as-prices-sticky-core-services-172108297.html
I probably should not say this.....I will JINX us all. BUT....looks like the COMING MARKET UNWINDING......lasted for ....two days. The markets right now look perfectly normal....again. At this moment I have two stocks down....PLTR and of course....poor AAPL. Back to normal.
I like this little article. Weekly Market Pulse: Dare To Be Different https://alhambrapartners.com/2024/03/10/weekly-market-pulse-dare-to-be-different/?src=news (BOLD is my opinion OR what I consider important content) "I took my wife to dinner Saturday night at a local, boutique hotel. The Willcox Hotelwas established in the late 19th century to cater to the Winter Colony of wealthy northerners who spent their winters in South Carolina. Today it still caters to the wealthy, primarily in the horse industry. It is a great place to eat, have a drink, and pick up on all the local gossip. It’s also a great place to get a feel for what’s hot and what’s not, to listen in on the conversations of the wealthy investors who can usually be found at the bar talking about their latest triumphant trade (rarely does one hear about the trades that didn’t work out). The most common topic of conversation over the weekend – even on a weekend when we have horse races going on – was AI and its effect on the stock market. I heard glowing testimony to the virtues of Nvidia, Broadcom and Super Micro, just to name a few. I heard people (mostly men to be honest) talk confidently of the future that would be created by AI. Their knowledge didn’t extend much beyond the buzzwords though; I asked one gent what he knew about machine learning and got a blank stare. I asked another how long he thought it would be before we achieved AGI (Artificial General Intelligence) and he said I must be mixing up my acronyms because AGI stood for Adjusted Gross Income. I’ve been doing this kind of thing for a long time, listening to the “crowd” more directly; sentiment surveys often don’t capture the mood. Most of the time there isn’t a single, common topic of conversation in these types of situations but when there is, it usually means something. It could be something economic like fears over commercial real estate or the US debt burden, both of which I also overheard mentioned during dinner. Or it could be some hot investment, in this case, the AI stocks. Whatever it is, by the time it reaches the general conversation at the Willcox bar – or your version of it – it’s already over. It’s similar to the magazine cover indicator that says if a market or economic trend makes the cover of a general interest magazine, it has already played out. This is far from scientific and there are other ways to measure sentiment but it does give you a sense of how deeply something has penetrated the popular psyche. It doesn’t mean we should run out and short AI stocks but it does mean we should start looking for the next thing because this one, AI, at least for now, is probably near peak hype. Being invested in the popular AI stocks right now – or most of the tech sector – feels pretty good because you’ve got a lot of company, you’re doing what everyone else is doing. No, that isn’t a good thing. In one of his memos from 2006 titled Dare to Be Great, Howard Marks said: You can’t take the same actions as everyone else and expect to outperform. The search for superior results has to lead to the unusual, perhaps the idiosyncratic…..Unusual success cannot lie in doing the obvious….Non-consensus ideas have to be lonely. By definition, non-consensus ideas that are popular, widely held or intuitively obvious are an oxymoron. Investing is usually a matter of doing the obvious for an extended period of time. Adopt a simple but effective strategy and stick to it come hell or high water. Invest for the long term. Avoid high expenses. Have a budget and save. Set goals and implement plans (strategies) to achieve them. Everyone knows these things although, like diets, they are often hard to stick with. But there are also those idiosyncratic things, the non-consensus items, the lonely investments, that offer the opportunity to perform differently than the crowd. Now, different may not mean a higher absolute return; it could mean a higher risk-adjusted return; the same return as the average but achieved with less volatility. And sometimes investments are lonely for good reason; contrarian positions aren’t always right. These types of opportunities don’t always exist but when they do, you aren’t going to notice them if you’re down at the Willcox talking about AI stocks. There has been a subtle shift in the markets over the last few weeks that has gone unnoticed by most investors. Consensus has been – and still is – that the US economy is doing much better than the rest of the world, a fact reflected in the relative value of the dollar. From 12/27/2023 to 2/13/2024, the US Dollar index (DXY) rose nearly 4%, a pretty big move for such a short period of time. Currencies aren’t a perfect reflection of relative growth expectations – there are other factors that move currencies – but they do reflect investors’ preferences, which obviously turned strongly to the US at the beginning of this year. Since that February peak though, the DXY has given back half that gain and appears to have resumed its downtrend. That was my expectation all along and I wrote about it back in mid-January (updated in a blog post yesterday). There are several asset classes whose returns are dramatically impacted by the course of the dollar (as you can see in that blog post). I don’t know how many analysts and TV talking heads I’ve heard recently express bafflement about gold’s recent rise but the reason is obvious – the dollar is down. The same is true of international value stocks, European stocks, Emerging market stocks, and even British stocks, all of which have outperformed the S&P 500 and the NASDAQ 100 since the dollar peaked. British stocks are outperforming the S&P 500 and the NASDAQ 100 over the last three weeks? During the height of AI mania? It’s only a little more than three weeks so maybe it doesn’t mean anything but on the other hand, maybe we should revisit that consensus opinion about the US economy versus the rest of the world. There is little doubt that the US economy performed better than most of the world last year. US real GDP rose by 2.5% while the EU managed a mere 0.5% while the UK flatlined. 2022 was a different story with the EU growing 3.6% and the UK 4.3% while the US managed 1.9%. But markets don’t move based on what happened yesterday or even what is happening today but rather what is expected tomorrow. The rate of change is important too; an accelerating economy is more attractive than one that is slowing, even if it maintains positive growth. So the question for the dollar is not whether the global economy will improve in 2024 but, if it does, will the US lead the effort? If the rest of the world improves while the US slows, investors’ market preferences will shift and so will currency values. A change in the trend of the dollar is a big deal for investors and offers one of the few opportunities to really outperform. The difference in returns for some assets based on the dollar trend is so stark that getting this one decision right can make a big difference in your overall returns. An investor who shifted to a purely domestic focus in 2014, when the dollar made its final low for the last downtrend, was massively rewarded by a strong dollar trend with the S&P 500 outperforming the EAFE 333.1% to 82.5%. Owning foreign stocks or commodities during that time only served to reduce returns. If the dollar trend changes, the benefit to the investor who recognizes it can be very large indeed. You are unlikely to catch the exact turning point but currency trends tend to be persistent so you don’t need to be precise to benefit from the trend. The obvious question then is whether the dollar trend has really changed. For now, the long-term trend, defined as 10 years, is still up. But if we look at 9 years instead, it is easy to call the trend neutral and that may be part of an important transition. Currency trends are not easy to change and take time as you go from rising (falling) to neutral to falling (rising). The shift from the strong dollar of the 90s to the weak dollar of the early ’00s took most of two years (2000-2002). The transition from falling to rising that followed took over 3 years (2008-2012). This shift so far only dates from October of 2022 so it may have more oscillating to do before the downtrend gets established and accepted. I’ve pointed this out before but the really long-term trend of the dollar index is neutral within three zones. Trips to the top zone don’t generally last long because a very strong dollar creates havoc in countries with dollar debts (and there are a lot of those). With the dollar now in the middle zone, stress on dollar debtors (mostly emerging markets but others too) is relieved, another positive in favor of the rest of the world improving relative to the US. If the dollar stays in the middle zone, the global economy is probably functioning pretty well and non-US investments should perform better than they did during the period when the dollar was strong and rising. The risk/reward looks attractive at this level if you assume another rapid rise back into the upper zone so soon after the last one is unlikely. If the dollar just falls to the bottom of the middle zone, you’ll gain nearly 12% on the currency alone and you’ll be investing in countries where the economic outlook is improving. The time to capture these future gains is now, when the dollar is still relatively strong. Yes, this is anticipating a move but don’t think of it as a prediction, merely an expectation. Expectations are fine and necessary for tactical investors, just don’t get attached to them. To paraphrase John Maynard Keynes, if the facts change, change your mind. Quickly. Wayne Gretzky said to skate where the puck is going to be, not where it has been. For a hockey player that is mostly a matter of vision and experience (mixed with some natural talent). For investors, it means you have to do the uncomfortable things, the lonely trades that buck the consensus, so it isn’t easy and certainly not intuitive. Humans are social animals and we crave the comfort and the perceived safety of the crowd. We want to fit in at the Willcox. But being comfortable isn’t going to deliver results different than the crowd. Dare to be different. And maybe great. MY COMMENT YEP....it is a good thing to buck the trend.....skip the latest FAD. I do this by simply being a long term investor. For most of my investing time....especially since about 1990.....being a long term investor was looked down on as old fashioned and stupid. When I started posting about my MODEL PORTFOLIO in the mid 1990's......I was consonantly derided for being a "BUY AND HOLD" investor. Today....the trading style of investing is still the modern trend. BUT....I am content to sit on my BIG CAP monster stocks for the long term and do nothing. PLUS....over the many years.....I have not seen many....probably not even a single trader or market timer style investor....that was able to beat my returns.....for the long term. AND......what matters is the long term.....not a few HOT years. Show me someone with good basic investing skills that is a long term investor.....and with compounding...they will beat just about everyone.
Of course this WAS the story of the day. I say "was" since we have already moved on just a few hours later. Consumer prices rose 0.4% in February and 3.2% from a year ago https://www.cnbc.com/2024/03/12/cpi-inflation-report-february-2024-.html (BOLD is my opinion OR what I consider important content) "Key Points The consumer price index, a broad measure of goods and services costs, increased 0.4% for the month and 3.2% from a year ago. The monthly measure was in line with expectations while the 12-month reading was slightly higher. The core CPI rose 0.4% on the month and was up 3.8% on the year. Both were one-tenth of a percentage point higher than forecast. A 2.3% increase in energy costs helped boost the headline inflation number. Food costs were flat on the month, while shelter climbed another 0.4%. Inflation rose again in February, keeping the Federal Reserve on course to wait at least until the summer before starting to lower interest rates. The consumer price index, a broad measure of goods and services costs, increased 0.4% for the month and 3.2% from a year ago, the Labor Department’s Bureau of Labor Statistics reported Tuesday. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus. Excluding volatile food and energy prices, the core CPI rose 0.4% on the month and was up 3.8% on the year. Both were one-tenth of a percentage point higher than forecast. While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week. A 2.3% increase in energy costs helped boost the headline inflation number. Food costs were flat on the month, while shelter rose another 0.4%. The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. Gasoline jumped 3.8% on the month while owners’ equivalent rent, a hypothetical gauge of what homeowners could get renting their properties, rose 0.4%. “Inflation continues to churn above 3%, and once again shelter costs were the main villain. With home prices expected to rise this year and rents falling only slowly, the long-awaited fall in shelter prices isn’t coming to the rescue any time soon,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Reports like January’s and February’s aren’t going to prompt the Fed to lower rates quickly.” Airline fares posted a 3.6% increase, apparel prices rose 0.6% and used vehicles were up 0.5%. Medical care services, which helped feed a higher-than-expected CPI increase in January, decreased 0.1% last month. The year-over-year increase for headline CPI was 0.1 percentage point higher than January, while core was one-tenth of a point lower. Wall Street opened higher following the report, major stock averages as well as Treasury yields positive in early trading. While the 12-month pace is off the inflation peak in mid-2022, it remains well above the Fed’s 2% goal as the central bank approaches its two-day policy meeting in a week. Fed officials in recent weeks both have signaled that rate cuts are likely at some point this year and expressed caution about letting up too soon in the battle against high prices. The statement after the January meeting indicated that policymakers need “greater confidence” that inflation is moving back to target. Chair Jerome Powell, in congressional testimony last week, echoed those concerns, though he did mention that the Fed is probably “not far” from the point where it can start easing up on monetary policy. Tuesday’s report “leaves Fed officials some way from attaining the ‘greater confidence’ needed to begin cutting interest rates,” said Paul Ashworth, chief North America economist at Capital Economics. For financial markets, the shift in the Fed stance from its apparent policy pivot in late 2023 has meant a repricing on the pace of rate cuts. Where futures traders entered the year expecting cuts to start coming in March, with six or seven total on the year, they have pushed out the first reduction to June, with two or three to follow, assuming cuts in quarter percentage point increments. A bustling economy has helped the Fed focus on incoming data and allowed policymakers to avoid having to rush to lower rates. Gross domestic product expanded at a 2.5% annualized pace in 2023 and is on pace to increase at a 2.5% pace in the first quarter of 2024, according to the Atlanta Fed’s GDPNow tracker. One key ingredient in that growth has been a resilient consumer boosted by a strong labor market. The economy added another 275,000 nonfarm jobs in February, though the increase skewed heavily to part-time positions and the unemployment rate rose to 3.9%. Such strength can be a double-edged sword: While the growth in the face of aggressive rate hikes has bought the Fed time on policy, it also raises concerns that inflation could be more durable than expected. Housing costs in particular have caused concern. Shelter comprises about one-third of the CPI weighting and has been slow to decelerate, at least according to the BLS measure. Fed officials see rental prices coming down through the year, and other measures outside the CPI computation of owners-equivalent rent have shown easing price pressures." MY COMMENT A perfectly in line with expectations report. The difference between 3.1 and 3.2 is meaningless....probably well within the margin of error. Inflation right now is exactly in the sweet spot of the historical data.....between 3% and 4%. This area has always indicated a good healthy, growing economy, in the USA. The two percent target....RIDICULOUS and based on fantasy. Experts and people in the investing business know this.......and that is why the market is not reacting. In addition....the vast majority of the current inflation data is being driven by OIL/GAS and shelter costs. Not really great reflections of the general economy. AND.....this report is now INSTANTLY hindsight and meaningless. I have said for a long time the expectations for 6-7 rate cuts starting in March was CRAZY. I see the first cut being in June....or later. I also see two or three rate cuts at most. I do not consider that a negative....I consider two or three rate cuts this year as very positive.
Other than the above....there is no news today. It is nice to once again be experiencing a NORMAL investing day. Once in a while we are given the.....GIFT....of a day with ZERO fear mongering and ZERO breathless opinion from the financial media and all the experts being crammed down out throats. Fortunately all the 24/7 stuff now is simply a din in the background......a constant background noise......that is simply ignored by everyone.
