The first quarter of the year has just ended, how did you all do? Here's a summary.

The Macro

Inflation data that came in Friday was OK. "It's along the lines of what we would like to see" said Jerome Powell. The PCE price index ex food and energy increased at a 2.8% annual rate, matching estimates.

The softening inflation boosted consumer sentiment, which hit a 3-year high at 79.4.

The Fed seems to be in no hurry to cut rates. For those of us in the baby boom generation, a 4% T-bill yield is historically normal. Getting a 5% yield on a CD is bringing back memories of the old days. Your cash is now getting a guaranteed return that's beating inflation. Nice!

The market is still expecting 3 rate cuts, though, with the first one in June.

Meanwhile, the GDP figure for Q4 2023 was revised higher to 3.4% YoY growth. US economy continues to show strength with no sign of any recession.

The Stock Market

The S&P 500 had a stellar quarter, ending Thursday at a record high, and up 10.2% so far this year. 80% of S&P 500 earnings reports have beaten estimates so far.

QQQ gained about 10% during the first 2 months of the year, but took a break and flattened out in March. We've seen a healthy rotation lately into financials (XLF), healthcare (XLV), energy (XLE) and even small caps. The IWM ETF looks like its about to break out.

AI Spending

Amazon plans to spend almost $150 billion on its data centers in the coming 15 years to handle an expected explosion in demand for AI applications and other digital services. That's a big number. Amazon has already committed to spending $148 billion over the past two years to build and operate data centers globally in new regions like Mississippi, Saudi Arabia, Malaysia and Thailand.

Not to be outdone, Microsoft and OpenAI are working on plans for a data center project that could cost as much as $100 billion and include an AI supercomputer called "Stargate" set to launch in 2028.

And who do you think is an obvious winner here when these 2 cloud giants announce over $200B of AI and data center spending over the next decade? I'll give you a clue. The company's name starts with "N" and rhymes with Lydia.

-Mechinv

Refs

cnbc.com - Pce inflation report february key fed inflation gauge rose annually as expected
fortune.com - U s economy GDP q4 revision growth
reuters.com - US consumer sentiment tops estimates march hit nearly yr high umich says
cnbc.com - Fourth quarter earnings shaping up to be the best of
nypost.com - Amazon pours into data centers to handle expected AI boom
finance.yahoo.com - Microsoft openai planning billion