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| STRONG LABOR MARKET PERSISTS: In May, the U.S. economy added another 339,000 net new jobs. Employers added jobs in leisure, hospitality and construction while manufacturing jobs remained flat. Average hourly earnings rose 4.3% from a year ago. Meanwhile, the monthly job openings report came out for April, and it showed that job openings in the U.S. rose from 9.7 million to 10.1 million, way above estimates. The jump reversed a 3-month streak of declines. We are now back up to 1.8 job openings for every job seeker, which is not what the Fed wants to see. In months past, when the job market showed strength, the markets fell due to fears of the Fed using the data to justify its next rate hike. This week the strong labor news caused markets to rise decisively (see below). |
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| STOCKS END THE WEEK WITH A ROAR: The May jobs report and the passage of the debt ceiling deal by the U.S. Senate encouraged investors. Markets climbed on Friday. Earlier in the week, the debt ceiling deal between the President and House leadership pushed markets up a bit so the final trading day of the week added to the positive feelings. |
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| LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices. |
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| INVESTORS ASSUMING A RECESSION?: Is the U.S. economy going into a recession? Investors seem to believe so. As you can see from the graph below, from the beginning of the year until the end of May, the S&P 500, an index of the largest 500 publicly traded companies in the U.S., was up 9.65%. Look at the corresponding returns of U.S. midcap and small cap indexes. Through the same time period, these stocks were flat. When investors are worried, they tend to pull out of riskier stocks, i.e., stocks of smaller companies, and pile their money into safer large company stocks. Investors have been bracing for a recession. On Friday stocks across the board, small, medium and large, soared. |
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| LONG BEAR MARKET: As of Friday, the S&P 500 had been in bear-market territory for 244 trading days, the longest run since the one that ended on May 15, 1948. That bear market lasted 484 trading days. Historically, the average bear market has lasted 142 trading days. |
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| TRUCK SALES NOT INDICATING A RECESSION: In April of 2019, U.S. heavy truck sales hit an all time high. Then, of course, sales tanked in 2020. Last month, heavy truck sales were at 558 thousand, up from 548 thousand in April, and up 20% from May 2022. Heavy truck sales generally decline decisively prior to a recession. |
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A JUNE RATE HIKE PAUSE?: Last week, two Fed officials, Fed governor Philip Jefferson and Philadelphia Fed President Patrick Harker, indicated that the Fed was likely to keep rates unchanged at its upcoming mid-June meeting. Both made it clear that a pause in June does not mean rates have necessarily peaked. Rather, they stated that they will be taking a wait-and-see approach to analyze the economic effects of previous tightening.
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| U.S. EXPORTING RECORD AMOUNTS OF OIL: The U.S. exported, on average, 11.27 million barrels a day of crude oil and refined petroleum products in March. That is the most ever. |
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| SWEET MACKENZIE: Deb and I took a quick trip to the left coast to visit my daughter, son-in-law, and of course this little gem, my granddaughter MacKenzie. She’s a cutie. The nice thing about a west coast trip is that my body clock gets me up really early, I can get work done, attend our 10:00am staff meeting (at 7:00am here) make some calls, and then focus on the family. |
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Our mission is to help you see the objective, find the path, and navigate past the obstacles to a more prosperous future.
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Douglas R. MacGray, J.D., C.F.P. ®
President
Stonecrop Wealth Advisors, LLC
Direct | Cell | Fax
(610) 628 4545
dmacgray@stonecropadvisors.com |
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“There is a price to pay for speaking the truth. There is a bigger price for living a lie.” Cornel West,
“Sow your seed in the morning, and at evening let your hands not be idle, for you do not know which will succeed, whether this or that, or whether both will do equally well.” Ecclesiastes 11:6
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SOURCES:
STRONG LABOR MARKET PERSISTS: https://www.bls.gov/news.release/empsit.nr0.htm AND https://gritcapital.substack.com/p/job-openings-at-highest-in-3-months
TRUCK SALES NOT INDICATING A RECESSION: calculatedriskblog.com/2023/06/heavy-truck-sales-up-sharply-year-over.html
LONG BEAR MARKET: https://www.marketwatch.com/story/s-p-500-nears-bear-market-exit-will-big-techs-rally-finally-spread-to-the-broader-stock-market-f4f92b9d?mod=home-page
A JUNE RATE HIKE PAUSE?: https://gritcapital.substack.com/p/job-openings-at-highest-in-3-months
U.S. DRILLING RECORD AMOUNTS OF OIL: https://gritcapital.substack.com/p/job-openings-at-highest-in-3-months |
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| (c) 2023 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved |
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*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. |
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Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.
SDG
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