BUSINESS ACTIVITY IS PICKING UP?:  According to S&P Global, growth in business activity in the U.S. and Europe (including the UK) rose in April at its fastest pace in about a year.  Demand for services drove the growth, but both services and manufacturing activity increased.  This of course reduces fears of recession, but adds worries that the central banks will stay aggressive.

BUSNESS ACTIVITY IS SLOWING DOWN?:  According to the Philadelphia Federal Reserve, manufacturing activity in the Mid-Atlantic region dropped sharply in February.  Its manufacturing index came in at -31.3, down 8.1 from last month’s -23.2, the eighth negative reading in a row and its lowest since May 2020.  (A negative reading indicates contraction.)  

LEADING ECONOMIC INDICATORS ARE POINTING NEGATIVE:  The nonprofit Conference Board tracks ten economic indicators which are considered “leading” in that it is a data point which indicates what might happen in the future.  This index fell by 1.2% in March for the twelfth month in a row.  The index is down 4.5% over the prior six months, after being down 3.5% in the six months before that.  This should indicate to the Fed that its tightening is certainly working.

SLIGHTLY LOWER:  Stock prices wobbled all week, ending slightly lower.  The week saw very little volatility, a welcome change.  A major focus was the earnings reports from financial institutions including regional banks.  Overall, reports were showing stable banks, but challenging times ahead.  Meanwhile, the data we did get on the overall economy last week was mixed, which contributed to the wobbling back and forth.

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

UK INFLATION STILL COMING IN HOT:  Inflation in the United Kingdom is proving to be stubborn.  In March, the 12-month inflation number came in at 10.1%.  It seems that their labor market is beginning to cool, but wage growth is still going strong, higher than most expected.  The Bank of England will likely raise its key interest rates by another quarter of a percentage point when it next meets.

JOB MARKET SOFTENING?:  A total of 245,000 new jobless claims were filed last month, a 5,000 increase and an indication of modest softening of the labor market.  

COBALT RED:  I just finished reading a book called Cobalt Red by Sidharth Kara.  The subtitle tells you a lot about the book:  “How the Blood of The Congo Powers Our Lives.”  It is a fascinating and troubling book.  Cobalt is a necessary ingredient for many green technologies including rechargeable batteries found in smart phones and electric vehicles.  Currently, cobalt is usd in almost every lithium-ion rechargeable battery in the world.  About half of the known world’s reserves of cobalt are found in the Central African Copper Belt, and currently about 75% of global cobalt production is from The Congo, and controlled by Chinese firms.  Much of the cobalt is mined by individuals, including men, women and children, who work in dirty, polluted mining areas using primitive equipment.  They earn one to two dollars a day, or thereabouts, depending on the quality and quantity of the cobalt they mine.  With demand for cobalt increasing expontially, light needs to be shined on these practices, but so far much of this is shrouded in secrecy.  Many are getting rich, and we are benefiting (that vibrating phone on your pocket) off of this labor.  Much like the movie “Blood Diamond” helped shine a light on a dirty supply chain in a different industry, this book is beginning to do the same in the cobalt, rechargeable battery industry and hopefully improve the lives of people in a country most people don’t think about.

RESTARTING:  My daughter Molly and I were commiserating this week about the same thing.  We were both out there running again after a long layoff.  My layoff was caused by recovery from pneumonia.  My only goal was to just get out there and breath. (Goal accomplished.) My daughter’s recovery was from something a tad more traumatic to her body, giving birth to this little bundle of joy.  

Have a great week!

“It’s clear that the true problems of our nation are much deeper— . . . deeper even than inflation or recession. . . . I want to talk to you right now about a fundamental threat to American democracy. . . The threat is invisible in ordinary ways. It is a crisis of confidence. It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity of purpose for our nation.”  Jimmy Carter

“He who gives to the poor will lack nothing, but he who closes his eyes to them receives many curses.”  Proverbs 28:27 (NIV)

SOURCES:
COBALT RED:  Cobalt Red, Siddharth Kara, St. Martin’s Press, 2023 AND https://www.thefp.com/p/your-iphone-was-built-with-child
UK INFLATION STILL COMING IN HOT:  https://www.axios.com/2023/04/19/uk-inflation-still-hot
BUSINESS ACTIVITY IS PICKING UP?:  wsj.com/articles/europes-economy-grows-despite-banking-stress-98becb2a?mod=article_inline
BUSNESS ACTIVITY IS SLOWING DOWN?: advisorperspectives.com/dshort/updates/2023/04/20/philly-fed-manufacturing-index-lowest-level-since-may-2020 AND philadelphiafed.org/surveys-and-data/regional-economic-analysis/mbos-2023-04
LEADING ECONOMIC INDICATORS ARE POINTING NEGATIVE: conference-board.org/topics/us-leading-indicators AND msn.com/en-us/money/markets/the-us-economy-is-headed-toward-recession-that-s-what-the-leading-index-keeps-signaling/ar-AA1a6CXu
JOB MARKET SOFTENING?: gritcapital.substack.com
 

(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.