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| U.S. STOCKS BREAK LOSING STREAK: In an incredibly dark week of news, U.S. stocks roared back this week with the S&P 500, Dow Jones Industrial Average and the NASDAQ Composite all rising over 6%. The major mover seemed to simply be investor belief that the worst case scenario on which trading has been influenced might not happen. Consumer spending increased for the fourth straight month. A bunch of earnings reports from U.S. companies came in with rather encouraging numbers. The release of minutes from the most recent Federal Reserve meetings indicated where the Fed seems to be heading, and it is not worst-case-scenario (one half of one percent increases the next two meetings). With a little good news coupled with many investors jumping back in based on their belief that stocks have been battered too much, momentum kept moving upward most of the week. Stock funds had their largest inflow of funds in ten weeks. It is unlikely that the volatility is over, but seeing a bounce, even for just one week, is encouraging. |
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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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| WE ARE DRIVING LESS: Higher gas prices is impacting demand. Gasoline demand, measured on a four-week moving average, is currently the lowest it has been (aside from the 2020 anomaly) since 2013. Prices for gas are 51% higher than a year ago. We are just getting into peak driving season, so we will see if that trend holds. |
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PERSONAL INCOME INCREASED IN APRIL, SPENDING INCREASED EVEN MORE: Personal income for Americans increased by a very healthy 0.4% in April. Spending increased by 0.9%. The spending number was a small surprise to the upside. The spending number indicates two things. First, consumers still have excess savings. Second, because U.S. workers are not worried about losing their job in this strong job market, they’ll keep spending.
(Source: bea.gov/news/2022/personal-income-and-outlays-march-2022) |
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| TWO OTHER INDICATORS: To compare pre-and post-pandemic, we compare now to 2019. According to the TSA, air travel in 2022 is currently running about 10% less than 2019. Hotel Occupancy is down by only 3.5%. |
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| MEANWHILE IN EUROPE: The European Central Bank has indicated it will be raising rates as well. As you may recall, the ECB has been using negative interest rates. By September, it is expected they may finally get their rate to zero and increase them even further after that. |
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CONTINUING TO WATCH THE DATA: The number of people dying in the U.S. and in the world who are COVID positive continues to decrease. U.S. deaths dropped another 14%. World deaths moved down by 19%. (World data on bottom graph below).
(Source: worldometers.info/coronavirus) |
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| HOSPITALIZATIONS AND INFECTIONS: Hospitalizations and infections for COVID in the U.S. have been rising during the past several weeks after hitting bottoms. The rate of increase for hospitalizations is about half the rate of a week ago. After rising for several weeks, the number of reported infections decreased by 7% this past week. (Sources: covid.cdc.gov/covid-data-tracker AND worldometers.info/coronavirus/ AND coronavirus.jhu.edu/data/hospitalization-7-day-trend). |
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| UGANDA: As you receive this email, I will be in flight on my way back to the U.S. I spent the week in Kampala, Uganda. As many of you know, I have been doing volunteer work for an organization (Edify) that helps schools in impoverished areas in 12 countries. This week, I was there to visit some of the schools with which we work, as I have often done. Stonecrop Wealth Advisors has also helped this organization put in place its retirement plan for its U.S. workers. I was asked to speak to the entire worldwide staff on the importance of saving (the international staff has a separate plan). It was a challenge to present to an audience of both U.S. and international workers. U.S workers are accustomed to retirement plans and long-term investing. Many of the international staff are not. There are issues related to the dependability of financial institutions in many of these nations that makes people reticent to save money. Many of the African staff in particular were extremely grateful for the education. It was such a privilege to be able to do this and combine my volunteer life with my professional life. I remain amazed by the ability to be able to travel to a place like Uganda, keep completely up-to-date with all that is going on back home and be back in time for the following week. |
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| WE TAKE A LOT FOR GRANTED: What I saw in the schools was very encouraging. It warmed my heart to spend time with hard-working teachers and school owners and hopeful students. I want those students to have a bright future. But it is a challenge. One evening, I was having dinner with three local Ugandans. When I told them that in the U.S. there are currently 1.8 jobs for every person looking for a job, their eyes almost bugged out. They could not believe it. The constant refrain I heard when I talked with Ugandans is how hard it is to get a job. During COVID, the Ugandan government, like most others, shut down many businesses. They do not have our safety net. There was no COVID cash relief. They don’t have food stamps, welfare, or unemployment insurance. Few have savings. As the shutdown wore on, many people in the cities literally starved to death. In the country side, it is always growing season so people could find enough to subsist on, buy many urbanites died for want of food before COVID could infect them. |
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| I hope you have a great week! |
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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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| “Although the world is full of suffering, it is also full of the overcoming of it.” Helen Keller
“Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at harvest.” Proverbs 6:6-8 |
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SOURCES:
TWO OTHER INDICATORS: https://www.tsa.gov/coronavirus/passenger-throughput AND costar.com/article/1985506441/str-weekly-us-hotel-revenue-per-available-room-reaches-highest-level-since-july-2019
WE ARE DRIVING LESS: wsj.com/articles/gas-prices-are-surging-demand-is-slipping-ahead-of-memorial-day-weekend
MEANWHILE IN EUROPE: wsj.com/articles/ecb-signals-end-to-negative-interest-rates-by-september |
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| (c) 2022 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 Barclays U.S. Aggregate: This is a measure of the U.S. bond markets. |
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