HAPPY MOTHER’S DAY to all moms out there!  You are incredibly important to your children no matter their stage in life.  I am grateful for my mom (who I got to see this weekend!), my wife who is a great mom to my kids, and to my daughter-in-law and my daughter who have become wonderful moms to my grandchildren.  Keep up the good work moms!

INFLATION EASES A BIT, BUT STILL HIGH:  The U.S. Consumer Price Index rose 0.4% in April.  Over the last 12 months, inflation has risen by 4.9%, down slightly from last month’s 5%.  The biggest driver of the 0.4% increase was housing costs.  Given all that is going on in the housing market, most expect those prices to cool off in the months ahead.  This may be enough for the Fed to pause, especially in light of continuing concerns about the health of regional banks.

STOCKS WANDER:  For the second straight week, stocks moved around with no clear direction, ending slightly down.  The health of regional banks continued to weigh on markets.  The new bank that is taking the forefront of concern is PacWest, a Beverly Hills-based bank.  Its shares fell over 20% after it announced that deposits fell in the week that ended May 5.

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

MEANWHILE IN ARGENTINA:  Argentina’s annual inflation rate jumped to 109% in April.  It rose 8.4% (not annualized) in April alone.  Unfortunately, Argentina is not suffering the worst inflation in Latin America.  Venezuela owns that distinction.  

…AND IN CHINA:  In April, China’s consumer prices registered a 0.1% rise from a year earlier, a decrease from the 0.7% year-over-year number from the month before.  China is experiencing elevated youth unemployment, an uncertain housing market and weakening corporate profits.  This all weighs on consumer confidence and spending.

IT IS ALWAYS DIFFERENT THIS TIME:  A basic tenet of Modern Portfolio Theory is a focus on the long-term.  Many look at current events, and the near future, and try to micro-navigate through the economic and market turbulence by getting in and out of the market or parts of the market, i.e., “timing the market.”  Be careful of that impulse.  We can never say that things are “just like” a similar period in the past.  Things are always “different this time.”  But we can certainly point to historic trends and similarities to the past, especially long-term trends.  We can’t control everything, even our portfolios.  We certainly cannot control the markets or all the variables that influence them.  We can control how much we save, spend and give from our cash flow, and our assets.  I say this because I know that many of you who are reading this are anxious about the markets and whether staying invested is the right thing.  Many of you are looking at all that is going on and getting discouraged and worried.  You are trying to predict what will happen in the next six months.  We simply do not know.  If you are worried about the next six months, consider investors in the late 1990s.  We were on the verge of a decade that would include two of the worst stock market outcomes in U.S. history.  If you invested money in the S&P 500 on August 30, 2000, and did nothing, and then looked at your returns nearly ten years later, on March 9, 2009, you would have been down 47%, or an average annual rate of negative 7.26%.  Is this what you are worried about?  Now, if we simply made this a full ten years by going to August 30, 2010, the average annual return improves to negative 1.72%.  If we take it to 2015, the average annual return is 3.9%.  If we go twenty years, it increased to 6.4%.  

Currently, the S&P 500 is down 17.88% from its most recent high in January of 2022.  Every investor has different, specific factors that weigh on their appropriate asset allocation.  The S&P 500, or stock in large, U.S. companies, is only one sector of an appropriately diversified portfolio.  You should be very comfortable that your asset allocation meets your short and long-term needs for asset preservation and growth.  But don’t let anxiety about short-term swings or current news cause you disrupt your sound, long-term strategy.

NEW UNEMPLOYMENT CLAIMS LOOK LIKE THEY ARE RISING:  The Fed has been waiting for the labor market to soften up a bit.  Based on the amount of new, weekly unemployment claims, the Fed may be getting its wish, but its too early to tell.  Last week, the amount of initial unemployment claims in the U.S. was 264,000.  The four-week moving for that data point is now 245,250, the highest that number has been since November 2021.

JUST ONE:  Not long ago, I was on the boards of four different non-profit organizations.  I came to the conclusion that this was too much, and I had to limit myself to one.  I fulfilled the goal by resigning from three different boards, and staying on only one.  As that one board membership was coming to a conclusion, I was approached by my undergraduate alma mater, Gordon College, to join their board.  I was voted in, and this past week attended my first meetings.  These are always labors of love, but performing this function for an institution that had a lot to do with my early formation as a human being will be rewarding.  Go Fighting Scots!

During these meetings, I was wandering through a building that did not exist when I attended Gordon, and there was a portrait of the one professor, Dr. Alton Bynum, who took the most interest in me as a person during my four years there.  It warmed my heart to see that they honored him in this fashion, and it brought back many memories and emotions of that time in my life.

…And they gave me swag!

Have a great week!

“You see these people behind me?  They are rushing to work and not paying attention to anythng.  Sometimes, we get so caught up in our daily lives that we forget to take the time out to enjoy the beauty in life.  It’s like we’re zombies.  Look up and take your headphones out.  Say Hi to someone you see and maybe give a hug to someone who looks like they’re hurting.  Help someone out.  You have to live every day like it’s your last.  

“What people don’t know about me is that I had depression a couple of years back.  I never told anyone about it.  I had to fight my way out of depression.  The person who was holding me back from my happiness was ME.

“Every day is precious, so let’s treat it like that.  Tomorrow isn’t guaranteed, so live today!”  Keanu Reeves

“Moreover, when God gives someone wealth and possessions, and the ability to enjoy them, to accept their lot and be happy in their toil–this is a gift of God.”  Ecclesiastes 5:19

SOURCES:
NEW UNEMPLOYMENT CLAIMS LOOK LIKE THEY ARE RISING: https://www.dol.gov/ui/data.pdf
MEANWHILE IN ARGENTINA: https://www.msn.com/en-us/money/companies/argentina-inflation-smashes-past-every-forecast-to-hit-109/ar-AA1b7a1N AND https://www.zerohedge.com/political/food-inflation-still-soaring-latin-america
INFLATION EASES A BIT, BUT STILL HIGH: https://www.bls.gov/news.release/cpi.nr0.htm AND https://www.wsj.com/articles/us-inflation-april-2023-consumer-price-index-48f0eac5
…AND IN CHINA: https://www.wsj.com/articles/chinese-consumer-inflation-slows-to-lowest-level-in-two-years-f7220aad

(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.