Needed: More Houses and Babies


(Keeping you up-to-date since 2006)
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February 13, 2022
U.S. INFLATION CONTINUES TO RISE: U.S. inflation, as measured by the Consumer Price Index for All Urban Consumers, increased by 0.6% in January. The annual number for inflation now stands at 7.5%, up from 7.0% last month. This is the largest 12-month increase since 1982. Fuel oil rose by 9.5% and is up 46.5% over 12 months. Electricity rose by 4.2% and is up over 10% over 12 months. Used cars and trucks rose another 1.5% and are up over 40% over 12 months.
STOCKS PULL BACK DUE TO FEARS ABOUT UKRAINE AND INFLATION: U.S. stocks continued their volatile ride in 2022. At the close on Wednesday, the S&P 500 was up nearly 2% for the week. On Thursday the Labor Department announced January’s negative news on inflation (see above). On Friday, the White House urged Americans to leave Ukraine as soon as possible. That ominous message did not land well on Wall Street.
U.S. POPULATION TRENDS: Japan has been going through a long term problem of an aging population and a declining birth rate. This slowed the rise of its economy. China is facing a similar pattern as we speak. What is happening in the U.S.? 2020 saw a big drop in births, down to just over 3.61 million for the year. It looks like 2021 will come in at about 3.64 million, about a 0.7% increase from the historically low level of 2020. In 2021, U.S. deaths look like they will be 3.42 million, up from 3.38 million in 2020. In the third quarter of 2021, the amount of legal immigrants popped back up to what has been the normal range of a bit over 100,000. During the five previous quarters, those numbers were much lower. A lot of other potentially relevant numbers are hard to come by such as emigration out of the U.S. and people in the U.S. without legal visas or citizenship. But it appears that our population is growing, but barely. Bill McBride, well known blogger at estimates that U.S. population grew by 0.2% last year.
HOUSING INVENTORY CONTINUES TO DECREASE: A year ago, there were 355,000 homes available for sale. Two years ago, there were 722,000. This past week, the reported number was 256,000, down from 272,000 a week ago. There are 26% less homes available now than a year ago.
HOUSEHOLD DEBT RISES: In the fourth quarter of 2021, total household debt increased by $333 billion, or 2.2%, to $15.6 trillion. In total, 2021 saw $1 trillion in additional household debt. 77% of the additional debt in the fourth quarter was from higher mortgage debt. $52 billion was added to credit card debt in the fourth quarter, the largest quarterly increase in the 22 years this data has been kept. Credit card balances are lower than they were at the end of 2019, however.
ARE YOU A FIDUCIARY?: We are getting this question a lot these days from people who are considering working with us. I sat with a couple last week. He had a long list of questions on a pad of paper. I love that. They were doing their homework before they met with a financial advisor. The first question, “Are you a fiduciary?” Our answer is, of course, “yes” we are a fiduciary. But what does that mean and is it significant?

Investopedia defines fiduciary as follows:

“A fiduciary is a person or organization that acts on behalf of another person or persons, putting their clients’ interests ahead of their own, with a duty to preserve good faith and trust. Being a fiduciary thus requires being bound both legally and ethically to act in the other’s best interests.”

Lawyers are required to act in a fiduciary capacity to their clients. An appointed guardian is legally required to act as a fiduciary to his/her ward. An executor of an estate is legally required to act as a fiduciary toward the legatees. Are investment professionals required to act as fiduciaries to his/her clients? The answer is “maybe.” In the case of Stonecrop Wealth Advisors, the answer is “yes.”

If an investment advisor is a Registered Investment Advisor (RIA), then it acts as a fiduciary to its clients. Stonecrop Wealth Advisors is a Registered Investment Advisor (RIA). We set ourselves up to be an RIA on purpose. RIAs are regulated either by the SEC (or the states if they are smaller) under the Investment Advisors act of 1940 which has specific definitions of what a fiduciary means, including a duty of loyalty and care and ultimately that the RIA must put its client’s interest ahead of its own interests.

If your advisor is a broker-dealer, who is often compensated by commissions, they generally must fulfill a “suitability” obligation. What they sell you must be suitable as defined by the Financial Industry Regulatory Authority (FINRA). According to Investopedia, “Instead of having to place their interests below that of the client, the suitability standard only details that the broker-dealer has to reasonably believe that any recommendations made are suitable for the client, in terms of the client’s financial needs, objectives, and unique circumstances. A key distinction in terms of loyalty is also important: A broker’s primary duty is to their employer, the broker-dealer for whom they work, not to their clients.” (Emphasis added)

An advisor can be a “hybrid” in which case it can deal with its clients in either way. Again, we purposely did not seek to have this hybrid status due to the potential conflicts and confusion such a status can have, even though it may mean less opportunities for revenue in a particular client situation.

So, I love this question. Are you a fiduciary? Emphatically “yes.”

CONTINUING TO WATCH THE DATA: I look forward to the day that this section will no longer be part of this newsletter. Until then, we continue to follow the data for the purpose of keeping up with the story that continues to affect markets and the economy. This week, daily deaths in the U.S. for people with a Covid infection decreased 11%. Global deaths appear to have peaked (bottom graph below). (Source:
HOSPITALIZATIONS AND GLOBAL INFECTIONS: The number of people in U.S. hospitals who are COVID positive plummeted again this week decreasing by 21.5% (see graph below). U.S. reported infections continue to decrease as fast as they increased (second graph below). Global infections (third graph below) are doing the same thing. I could show you graph after graph from other countries showing the same pattern, including our neighbors in Mexico and Canada which both have falling cases and deaths. (Sources: AND
BOX OF STUFF: I recently updated my “box of stuff.” This is an exercise we should all be doing for our loved ones. If you do not know what I am talking about, I did a webinar on this recently. We have decided to make it available to anyone who wants to watch. You can find it here.
THEY LISTEN: My wife and I had our two grandchildren Judah and Lydia this weekend. We took them out to a local restaurant near us. It is a sports themed restaurant, but it also plays music in the background. Of course, when music plays that Deb and I recognize we may hum along or even sing along under our breath. After we finished, we strapped them into their seats, and as we were driving home, we hear 3-year-old Lydia in the back singing, “bomp bomp bomp, another one bites the dust.”
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
225 Wilmington-West Chester Pike; Suite 200
Chadds Ford, PA 19317
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(610) 628 4545
“No one is useless in this world who lightens the burden of it for anyone else.” Charles Dickens

“Lazy hands make for poverty, but diligent hands bring wealth.” Proverbs 10:4

(c) 2022 Douglas R. MacGray, 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 Barclays 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.

    Doug MacGray

  • DATE

    February 13, 2022


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