It’s CPI Week & AI Momentum

Morning Traders! This is the Munny Tree newsletter. “Money doesn’t grow on trees”, you’re dad used to say. Turns out….he was right. But we are the next best thing 💵🌳

This week is a biggie:

• CPI data this week. It’s going to be a roller coaster

• Is the AI Trade slowing? And what could that mean for markets?

• Stocks to watch

But first let’s look at how last week went…

Last Week Performance (3/4/24 - 3/8/24)

First full week of March hit pretty strong. We acquired our first stocks for the month on Monday morning and the portfolio ended the week (despite Nvidia trying to screw it all up) up over 1% and double the S&P 500 performance. A few highlights:

• Ended up 1.09%

• Friday the market was down 0.65% (S&P) and 1.44% (NASDAQ)….thanks Nvidia. But while the market was falling all day, we had a ⬆️ day

What we own (as of market close Friday 3/8):

So, a good start to the week. But some treacherous waters are ahead…

CPI Week

It’s CPI Week!!! Aren’t you excited? More like walking a tight rope with a moat full of a gators waiting below. But there is a treasure on the other side if you can just get there.

Tuesday at 8:30am ET CPI comes out and it’s going to move the markets. Why? Because CPI and PCE (the Fed’s preferred inflation metric) are how Papa Powell is going to decide when/if to cut rates. Expect a 1% move on Tuesday, either up or down depending on how the number looks.

AI Trade over?

Friday saw Nvidia start up 5% at market open and then end the day down 5%+. That’s a 10% point swing in just a few hours. Nvidia lost $200 BILLION in value during just that period.

Nvidia must have announced something. Nope. Or governments started investigating them. Nope (or not more than they already are). Big downgrades by major banks? Nope. So…What the F@$%?!?!?!

This was a momentum pullback. As it approached $1000 per share many algorithmic funds started taking profits. Once people saw some selling, it caused more selling. Kinda ironic that the AI that Nvidia powers sold off the stock big on Friday.

Looks like the exhaustion in the AI trade is now…exhausted. We don’t expect huge sell offs of Nvidia or other Mag 7 stocks. This should keep the market happy for a bit. The main risk in the market short term is, and will continue to be, Papa Powell.

Trades And Stocks to Watch This Week

With CPI this week on Tuesday, we aren’t making any trades to start the week. Just too much risk. We are up and beating the market and expect to continue to be so even after CPI.

On Wednesday we will start to see how the dust settles and look at what opportunities might be available. But here’s what we are watching:

Current portfolio:

• AI (C3 AI): It crashed almost 10% on Friday, following Nvidia. Makes sense because in the AI space, as Nvidia goes so goes everyone else. It should come back. But we are reaching our pain threshold and might end of selling to limit our losses

• LFST (Lifestance Health): Last week this looked attractive. But now we are down 8% and the technicals are not saying “reversal” to us. We may be selling and allocating our funds to other opportunities. Hopefully it does reverse because the profit potential is large if it does.

New Stocks we are watching 👀

• RIVN (Rivian): Recently announced 3 new vehicles coming out over the next few years.

• SYM (Symbotic): Had solid earnings in early February. After initially seeing the price pop after earnings it fell back to previous levels. Fundamentals and Technicals are looking good.

• TDOC (Teladoc Health): Has finally hit what appears to be a floor and is starting to climb back up. Could have really strong growth in the short term

• VSAT (ViaSat): Stock price has been falling since start of 2024. $19-20 seems to be a support level. Lots of growth potential

• HTZ (Hertz Global): Like VSAT, Hertz has been falling since 2024 began. It appears to now be rebounding.