What to know today

  • The S&P 500 closed at an all-time high.
  • February CPI was just a little bit hot.
  • A select flavor of buy-and-hold…

Tuesday’s price action was pretty bullish.

Of course February CPI was Tuesday’s biggest story. And we take a Deep Dive into the most recent inflation data from the Bureau of Labor Statistics below. But let’s just begin by noting that the S&P 500 closed at another all-time high despite hotter-than-expected inflation data. We do have more on all of that. I think you’ll find, over time, that one of the things we like to do around here is slow things down, take a step back, and look at big pictures.

Here’s one, from four years ago yesterday:

That’s the S&P 500 plunging 9.5 percent on March 12, 2020, its worst day since the October 19, 1987, “Black Monday” crash.

It was the fourth-worst day in percentage terms in the 124-year history of the Dow Jones Industrial Average: 9.99 percent. The Dow’s only worse days came in 1929 and in 1987.

It’s almost impossible to imagine now that Nvidia $NVDA was a $160 billion company back then.

Today it was up more than 7 percent, and now there’s even more talk about its emerging market leadership.

Bitcoin’s $BTC advance slowed on Tuesday, and gold’s steady climb reversed. But just about everything is pointing in one direction, and that’s higher.

deep dive

More Data For The Fed To Digest

The Federal Open Market Committee will meet next week.

At first they said inflation came in “hotter than expected,” a good, exciting storyline. Equity futures turned from green to red right on the release, if only just barely.

Then they said it was “slightly hotter than expected,” another intriguing theme. Attentive eyes spied a steady two-year US Treasury note yield, a ho-hum response.

Less than an hour into the trading day, investors, traders, and speculators had digested what was perhaps best described as “warm” February Consumer Price Index data.

The Bureau of Labor Statistics said headline CPI was 0.44 percent month over month, 3.2 percent year over year. The six-month annualized rate was 3.2 percent.

Core CPI was 0.36 percent month over month, 3.8 percent year over year. The six-month annualized rate was 3.8 percent. The three-month annualized rate was 4.3 percent.

Nick Timiraos of The Wall Street Journal posted this in a preview of Tuesday morning’s release. But it’s at least as useful to look at a compilation of CPI forecasts by various global financial firms with the benefit of hindsight:

We’re not talking about much variation, and shoutout to the UBS folks for getting it just about right. They get the completely unofficial StockPick Daily Goldilocks Medal for March 13.

Here’s what the headline number looks like over a longer term:

And here’s a longer-term view of core CPI:

There’s still a lot of noise there, particularly at the shortest interval. But there’s also a lot of normalization there too.

As of Tuesday afternoon traders were pricing in a rate cut this summer. We’ll see how Jerome Powell likes the recent numbers.

deep dive |
March 13, 2024

More Data For The Fed To Digest

Exchange Traded Funds

How Do You Buy And Hold?

Start with a smart stock-picker.

“It’s not a stock market, it’s a market of stocks” is one of those in-the-know phrases you hear from time to time in this business.

“It’s not a stock market, it’s a market of Nvidia” is the kind of witty insight you get from Eddy Elfenbien on a regular basis.

Eddy is the longtime proprietor of the Crossing Wall Street blog. That’s where he originated his “Buy List” strategy. Eddy’s Crossing Wall Street Buy List includes 25 stocks. He changes it once a year, on January 1. He unveils the upcoming year’s list in late December.

Here’s a five-year chart of the AdvisorShares Focused Equity ETF $CWS, which is based on the Crossing Wall Street Buy List:

Note that neither the authors of this newsletter nor StockPick have any relationship with either Eddy or AdvisorShares.

I did own CWS for a significant chunk of that run up there, and it too helped me cover the costs of my daughter’s wedding last September. That was a good lesson in the idea that we invest not just for retirement but for life events as well.

And I do follow Eddy on X and occasionally engage with him there.

Now I’ll cut to the chase and tell you that the Buy List doesn’t include NVDA. It does include a bunch of names you’ve heard of, though, and probably a bunch you’ve never heard of.

Eddy’s Buy List has generated a cumulative total return of 573.30 percent since 2006 versus 447.04 percent for the S&P 500.

It’s a low-cost fund with a five-star rating from Morningstar, and it’s another way to do buy-and-hold.

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