Summary
- See Singular's coverage list performance.
- Brief economic update.
- Are we headed for a recession?
Singular Research
Singular Research
For January, markets rebounded as the Nasdaq posted its best January since 2001, delivering a return of 11%. Small and micro-cap stocks were not far behind, as those two indices returned 10% for the month. Investors were optimistic that declining inflation, with total CPI decreasing 0.1% month-over-month, will lead to a slowing pace of interest rate increases by the Fed. Indeed, that has been the case as the Fed raised rates by 0.25% at their most recent meeting on February 1st. Analysts are expecting the Fed to raise rates by another 0.25% in March and hold rates between 5% and 5.25% for the remainder of the year. Job creation surprised to the upside after 223,000 new jobs were created versus a consensus estimate of 205,000. With these results in mind, investors are hoping that the Fed can avoid sending the economy into a deep recession.
However, we do not appear to be out of the woods just yet as fourth-quarter earnings have declined five percent, compared to an expected 3.2% decrease. Furthermore, Treasury yields remain inverted as the ten-year yield was 3.5% to end the month while its two-year counterpart sat at 4.2%. Certainly, there appears to be more visibility in the possible outcomes to markets, and as a result, markets rallied for January.
The January Manufacturing Purchasing Managers Index® ((PMI)) registered 47.4 percent while reading 48.4 percent in December. Similarly, the Conference Board Leading Economic Index® ((LEI)) declined by 0.8 percent in December to 110.7 (2016 = 100), following a decline of 0.8 percent in November. The LEI is now down 3.8 percent from June to December of 2022. The unemployment rate decreased to 3.4% in January (3.5% in December).
Singular Research
For the month, the Singular coverage list outperformed the S&P 500 (SP500) and Russell 2000 (IWM) by 979 and 627 basis points, respectively. Since our 2004 inception, the Singular coverage list has outperformed the S&P 500 and Russell 2000 by an annualized 327 and 343 basis points, respectively.
Singular Research
DMG Blockchain Solutions ( DMGGF ) and Riot Platforms ( RIOT ) were our top performers for the month, as Bitcoin appreciated 43% for the month. EVC also had a strong month as the Company increased its quarterly cash dividend by 100%. Independence Contract Drilling ( ICD ) and Adams Resources & Energy ( AE ) were strong performers, as the average price of a barrel of oil in January was $82.50.
Singular Research
Mammoth Energy Services ( TUSK ) was our weakest performer of the month on an unfavorable FEMA ruling. Ebix ( EBIX ) and Crexendo ( CXDO ) had poor months on general market volatility and no company-specific news.
For the month, we had no new initiations.
We wish to thank our clients for their support and belief in our process.
Thank you,
Robert Maltbie, CFA
Singular Research,
President 818-222-6234 (office)
For further details see:
Singular Research's January Director's Letter