Ongoing Inflation, Interest Rates and Unicorns


(Keeping you up-to-date since 2006)
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April 17, 2022
MORE TAX ACTIVITY THAN USUAL: We are often asked if we get extra busy during tax time. Usually we don’t. There is more activity to be sure, but nothing remotely close to what our friends in the CPA firms are going through. This year has been busier than normal, however. It was a year with unusually high amounts of economic activity, buying second homes, changing jobs, employers getting purchased, business owners selling, etc. A lot of previously delayed transactions and transitions (marriages, retirements, trips) occurred in 2021. Transactions and transitions cause money to move, and when that happens, taxes tend to occur, especially when stocks are at historic highs, as they were last year. I hope you are getting through tax season relatively unscathed.
MORE INFLATION THAN USUAL: The Consumer Price Index rose 1.2% in March and is now 8.5% higher than a year ago. Gas, shelter and food were the biggest drivers of inflation last month with gas rising 18.3%. This is the largest 12 month increase since December 1981. At least the prices for used cars and trucks have peaked with prices decreasing by 3.8% last month. Inflation at restaurants slowed sharply.
ONGOING INFLATION?: When inflation started, no one seemed surprised. Economies were roaring back as COVID was ebbing. Surprisingly robust demand met supply chains that were not ready to get fully online. Central banks were loosening and governments were spending and distributing relief money, fueling further demand. As inflation seemed to be getting ready to peak, two new factors emerged:

  • Commodity shortages were exacerbated by Russia’s invasion of Ukraine, and
  • China’s government began locking down in major productive areas.

Meanwhile, the U.S. economy continues to normalize, keeping demand up. While gasoline and grocery prices shot up, especially price rises in other areas are slowing such as restaurants, housing, and autos, both used and new. The largest driver of inflation last month, gasoline, is down so far in April. It has taken geopolitical shocks to keep inflation climbing. Let’s hope the shocks ease, new ones cease, and prices begin to settle. The healing of inflation will not be a quick or linear process..

A SHORT WEEK ENDS NEGATIVE: After two weeks of ups, the U.S. stock markets have now had two weeks of downs. Investors are concerned about inflation slowing the economy and thus hurting earnings, a major driver of stock prices. First quarter corporate earnings reports are just beginning to roll in. After roaring growth, we are now likely going to see earnings reports that show slowing growth and corporate cautionary guidance as to how inflation and higher interest rates are going to challenge further growth. Meanwhile, economic data is not all gloomy. U.S. consumer sentiment rose in April as did retail and restaurant spending and industrial production.
U.S. RETAIL SALES UP AGAIN: In March, U.S. retail sales increased by another 0.5%. From one year ago, retail sales are up 6.9%.
U.S. INDUSTRIAL PRODUCTION UP: In March, U.S. industrial production rose 0.9%, up 5.5% from one year ago. Manufacturing, one component of industrial production, was up 0.9% for the month.
MORTGAGE RATES IN THE U.S.: According to, the rate for a 30-year fixed rate mortgage is currently averaging 5.15%. 15-year mortgages are up to 4.45%. Will they go higher? Most forecasts for the Fed Funds rate have them topping out at 3.25%, but how does that impact mortgage rates? According to Bill McBride at the CalculatedRisk Newsletter, “the 30-year fixed mortgage will likely peak at between 5.0% and 5.7%…we might see rates as high as the low 6% range.”
(Sources: AND
CONTINUING TO WATCH THE DATA: The number of people dying in the U.S. and in the world who are COVID positive continues to plunge. U.S. deaths dropped another 32%! World deaths were down by 19%. (World data on bottom graph below).
HOSPITALIZATIONS: The number of patients in U.S. hospitals who are COVID positive dropped from record low levels the prior week by another 6%. At the height of the crisis, in both January 2021 and from October 2021 to January 2022 when we transitioned from Delta to Omicron, the number of ICU beds occupied by people who were COVID positive numbered in the mid to high twenties of thousands (topping out at about 29,000). This number in the entire country is now at 2,023 and dropping every week according to data at Johns Hopkins University website. Pennsylvania has 70 in the entire state, and falling. New Jersey has about half of that. (Sources: AND AND
YOUR GRATEFULNESS REMINDER: I just wrote a good-sized check to the IRS. I could dwell on that or any number of daily challenges that a business owner, financial advisor, husband, dad, son, brother, grandfather, uncle, friend, citizen faces. But, as I keep trying to remind myself, and as I will remind you, being grateful is one of the greatest traits you can cultivate. According to Psychology Today, people who are grateful:

  • Feel less pain,
  • Feel less stress,
  • Experience healthier relationships,
  • Have strong immune systems,
  • Do better academically,
  • Do better professionally,
  • Are less likely to have mental health problems like depression, and
  • Have increased mental resilience.

That’s a pretty compelling list!

HOW WAS I TO KNOW?: This past week, I was sitting next to my three-year-old grand daughter Lydia in a restaurant. My wife had been visiting with the grandkids that day, and she was telling all of us how they had gone down to the basement to watch a movie, and they could not find the remote control for the television. I turned to Lydia and said, “Oh, I bet Julian (their cat) ate the remote.” Lydia, with a roll of her eyes and that look of certainty you can only have at three, said, “Big Papi. Cat’s can’t eat remotes.” Then, waiting a moment as if to create more emphasis with a dramatic pause, she stated, “The unicorn ate the remote.”
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
Direct | Cell | Fax
(610) 628 4545
“Easter is very important to me. It’s a second chance.” Reba McEntire

“Hope is being able to see that there is light despite all the darkness.” Desmond Tutu

“The sleep of a laborer is sweet, whether they eat little or much, but as for the rich, their abundance permits them no sleep.” Ecclesiastes 5:12

TAX RETURN PICTURE: Photo by Markus Winkler on Unsplash
(c) 2022 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 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

    April 17, 2022


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