March Moneymakers - UNH, JPM and XLRE. Now?
Two months down and ten to go.
As I wave goodbye to February and look forward to March 2024, I cannot help but wonder what’s gonna be in-stored for me, with one foot firmly jammed in the door.
Recap.
Now, more than ever, need to take stock of where we are, in order to have a rough inking of what is ahead, waiting for us.
(1) Inflation - CPI & PCE.
On 13 Feb 2024, US’s January 2024 consumer price index (CPI) came in at 3.1% versus market estimates of 2.9%. (see above)
The hotter-than-expected data unsettled markets and further adjusted the expected start point to Federal Reserve rate cuts.
The saving grace was January 2024 inflation data was still lower than December 2023 (3.4%).
On 29 Feb 2024, thankfully January 2024 personal consumption expenditure (PCE) met market estimates of 2.8%, once again giving market hope that Fed’s interest cut is on track again for H2 2024.
(2) Producer Price Index - February 2024.
On 16 Feb 2024, US’s January 2024 producer price index (PPI) came in at 0.9%.
Like CPI, it was higher than market expectations of 0.6%.
Like CPI, an increase in PPI suggests an upcoming hike in the prices of consumer goods.
(3) Gross Domestic Product - 2nd estimates.
On 28 Feb 2024, US gross domestic product GDP (second estimate) for Q4 2023 was released.
It showed a slight downward revision compared to the first estimate released in January. (see above)
Second Estimate: GDP grew at an annual rate of 3.2%.
First Estimate: GDP growth was estimated at 3.3%.
This contrast with market expectations.
In the first estimate, it came in “higher” than forecast. In subsequent estimate, it came in a silver lower than forecast.
The latest revision suggests that the US economy experienced slightly slower growth in the final quarter of 2023.
(4) US Non Farm Payroll - February 2024.
On 02 Feb 2024, US’s January 2024 Non-farm payroll data was released.
US economy created 353,000 nonfarm payroll jobs in January, more than the 185,000 expected by economists.
January’s data was also higher than December 2023’s data (333,000 jobs) too, indicating that US “tight” labour market has not let up yet.
(5) US Weekly Jobless claims.
On 29 Feb 2024, first-time claims for US unemployment benefits rose higher, for week ending 24 Feb 2024, according to a report released by the Labor Department.
Reported initial jobless claims climbed to 215,000, an increase of +13,000 from the previous week's revised level of 202,000.
The weekly claims are consistent with an overall low level of job-cutting, despite recent high-profile layoff announcements.
Unemployment rate has remained under 4% over the past 2 years, the longest such streak since the 1960s.
(6) Consumer Confidence.
On 27 Feb 2024, US’s February 2024 Conference Board’s consumer confidence report was released.
Consumer Confidence Index® fell to 106.7 (where base year 1985=100).
This marked a further decline from a revised January 2024’s index reading of 110.9.
February’s decline occurred after 3 consecutive months of gains.
As January was revised downward from preliminary reading of 114.8, the data now suggest that there was not a material breakout to the upside in confidence at the start of 2024.
What to make sense of all the report / data?
Inflation is definitely trending lower as the elevated interest rate effect continues to take effect the economy.
Labour market remains “tight” with fluctuations on a month to month basis. As there are as many jobs available, there are as many first-time claims as well; no let up on the current labour market conditions really.
US matured economy is showing resilience, coming in with at least a 3% growth, indicating that a recession is not on the card.
Consumer confidence is once again coming off its low experienced in (a) 2021, (b) between 2021 & 2022 and (c) end 2023.
In 2024, where should we invest our hard-earned monies ?
For starters it should be in companies where consumers are spending their monies - right ! (see below)
Looking at US Bureau of Economic Analysis (January 2024):
There are 3 broad categories of spendings, (a) consumer spending, (b) goods and (c) services.
In January 2024, consumers are still spending on categories (a) & (c) but has more than weaned off category (b).
Drilling down further, we get a clearer picture.
Top 3 items that consumers are spending less on :
Other non-durable goods (-15.5%).
Gasoline & other energy goods (-21.8%).
Motor vehicles & parts (-35.2%). Is that the reason why $Tesla Motors(TSLA)$ stock price remain languid? Ha, ha, ha.
Top 3 items that consumers are spending more on:
For each of the category, are these the go-to stocks to invest?
Healthcare (+18.1%). $UnitedHealth(UNH)$
Financial services & insurance (+27.2%). $JPMorgan Chase(JPM)$ OR the 5 insurance stocks (with details) in my previous post Cash proof investment: Insurance - Auto & Property. Click title to read!
Housing and utilities (+39.9%) $Real Estate Select Sector SPDR Fund(XLRE)$
We still have about 10 months to grow our monies. What are you waiting for ?
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