A Welcome Addition and an Unwelcome Guest

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June 25, 2023

WELCOME CHARLES!: I want to introduce you to the newest member of the Stonecrop team. Charles Blachford has joined us! He will be working directly with clients, especially with our nonprofit institutional clients. But he will also work with new families and individuals. I have known Charles for several years, being on the board of a nonprofit institution where he was most recently employed. You can check out his biography here. We are very excited to have Charles join our team. If you want to welcome him, his email is cblachford@stonecropadvisors.com.

RATE HIKES: While the U.S. Federal Reserve Bank paused its rate hiking, other central banks have been busy doing the opposite. The Bank of England increased its key interest rate by half a percentage point to 5%, the highest this rate has been in fifteen years. Canada raised its rate to a 22-year high of 4.75%. New Zealand raised it rate to a 14-year high of 5.5%. Australia raised its rate to an 11-year high of 4.1%. The European Central Bank raised its rate by 0.25% to 3.5%, its highest in 22 years. Norway, Sweden, and Switzerland also raised key interest rates.

GLOBAL GROWTH SLOWING: According to S&P Global, global economic growth picked up in the first quarter due largely to China lifting COVID restrictions. However, new data released by S&P Global this past week points to sharper second quarter slowdowns than expected in Europe, Japan, and Australia. Business growth is slowing in the U.S. too, but not as sharply. According to the U.S. composite Purchasing Managers Index, the U.S. is still showing healthy growth, but down to 53 from 54.3 in the prior month (any score above 50 indicates positive growth). The eurozone’s score, by contrast, hit 50.3 in June, down from 52.8 the prior month.

WINNING STREAK ENDS: Prior to a holiday-shortened week, the S&P 500 had been on a five-week winning streak and the NASDAQ Composite had increased for eight straight weeks. They both sputtered this past week. After rising considerably in the past weeks, markets were due for a pause. During the week, new data was released showing that global economic growth is slowing, and Federal Reserve Chair Jerome Powell testified before the Senate that the Fed’s inflation-fighting campaign is not likely over. That was enough for investors to pull back a bit. Bank stocks were under pressure this week and fell after weeks of gains. This was due largely to rumors that the Fed is going to require higher capital requirements for lenders, and that additional regulations may be forthcoming.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

DEBT REFINANCING IN JANUARY: In January, $260 billion of corporate debt will come due. That debt is likely carrying much lower interest obligations than is currently available. So any of that debt that has to roll into new debt will be at a higher cost. This may put some companies in distress, or slow their growth prospects because available cash will have to go into paying down debt and not into growth.

EMPLOYMENT STATISTICS SHOW RESLIENT LABOR MARKET: There have been more layoffs lately. Last week, 264,000 initial claims for unemployment were filed, unchanged from the previous week. This is the highest level since late 2021. However, continuing claims for unemployment dropped from 1.77 million to 1.76 million indicating that when people are getting laid off, they are finding another job.

NEW CARS GETTING WORSE: According to J.D. Power, the number of problems per 100 new vehicles purchased in the U.S. increased by 12 to an average of 192. Last year, the number grew by 18. A lot of the problems are occurring in some of the advanced features such as driver-assistance and wireless charging pads. Of the ten worst automobiles rated by J.D. Power, seven are electric vehicles (EVs), with Tesla ranking second worst in vehicle quality.

AN UNWELCOME GUEST: I went to get something out of my shed over the weekend, and I heard some movement. I knew I was going to have to carefully remove things until I found whatever made the movement, and eventually in a corner I found this lovely little fellow. With a very long pole I was able to get him out of the shed and toss him over my fence and into the creek. He’ll probably come back. It seems to be a relatively harmless water snake (between 3-4 feet). Nevertheless, I’m not a big fan.

Have a great week!

Our mission is to help you see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®
Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax
(610) 628 4545

“The mind is not a vessel to be filled but a fire to be lit.” Plutarch

“…and they store up wealth for their children.” Psalm 17:14 (NIV)

NEW CARS GETTING WORSE: https://gritcapital.substack.com/p/jpmorgan-says-household-excess-savings?publication_id=90117&post_id=130284318&isFreemail=false
EMPLOYMENT STATISTICS SHOWING RESLIENT LABOR MARKET: https://www.dol.gov/ui/data.pdf AND https://gritcapital.substack.com/p/jpmorgan-says-household-excess-savings?publication_id=90117&post_id=130284318&isFreemail=false
WINNING STREAK ENDS: https://www.advisorhub.com/bank-stocks-eye-worst-week-since-may-as-regulatory-waves-loom/
RATE HIKES: https://gritcapital.substack.com/p/there-have-never-been-fewer-us-homes?publication_id=90117&post_id=130044746&isFreemail=false AND https://www.reuters.com/markets/big-central-banks-are-still-hiking-rates-eye-end-2023-06-22/
DEBT REFINANCING IN JANUARY: https://gritcapital.substack.com/p/us-equities-see-biggest-inflow-since?publication_id=90117&post_id=129536113&isFreemail=false
GLOBAL GROWTH SLOWING: https://www.wsj.com/articles/central-bank-action-finally-cooling-global-economy-data-indicate-c6da0776?mod=article_inline

(c) 2023 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.
*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.
*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.

Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.




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    Doug MacGray

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    June 26, 2023


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