A DECEIVING QUARTER:  If on January 1, I had predicted that U.S. and international stocks indices would be up 7% or better, would you have believed me?  If you did believe me, would you think that a 7%-or-better return would feel this way?  Do you trust the stock market we had in the first quarter?  Does anyone feel like it will continue?  Many investors believe in this stock market and keep buying into it.   Drivers are solid financial fundamentals in the overall economy, tech stocks re-establishing themselves as market leaders and a Fed that is nearing the top of its interest rate hikes.  But the cloud of an impending recession continues to loom along with persistent inflation, geopolitical risks, the effects of a retracting money supply and the gradual effects of a higher interest rate environment.

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

CONSUMER SPENDING STILL HEALTHY, AND INFLATION STILL DECREASING SLOWLY:  In February, American consumers increased their spending by 0.2% from the prior month.  This after a 2.0% increase in January.  The combined two month period is being viewed as strong even though February was not a big jump.  The Personal Consumption Expenditure index, which is closely watched by the Fed, rose by 5.0% over the last twelve months, still elevated, but down from 5.3% from the month before.  Investors saw this as good news as stock prices immediately climbed on the announcement.

BUSINESS OWNERS HAVE LESS CONFIDENCE, BUT THEY ARE REMAINING ACTIVE:  A survey of U.S. business owners by S&P Global indicates that confidence is at a three-month low.  Business owners are worrying about inflation, financial market uncertainty and higher borrowing costs.  But the same survey, conducted from March 10-23, indicated the fastest uptick in business activity in almost a year.  So, despite overall worries about business climate, business owners are roaring ahead.

HOW MUCH ARE PEOPLE SAVING?:   According to the Federal Reserve, Americans between the ages of 65 to 74 have an average net worth of $1,217,700.  People 75 or older have an average net worth of $977,600. 

PENDING HOME SALES UP:  Pending home sales in the U.S. went way down last year when interest rates climbed dramatically.  Last month, pending home sales measured 21.1% lower than a year ago.  But, February was the third straight month that pending home sales have been higher than the month before having risen by 0.8% from the prior month.

CLEAN ENERGY HAS A SUPPLY CHAIN PROBLEM:  Supply chain issues have been at the forefront of our attention in the past couple of years.  Supply chain issues are an issue that will need to be worked out in the green energy sector.  Currently, 0% of wind energy components come from North America.  84% of blades come from China, 53% of the towers, and 73% of the nacelles (gears and generators) come from China.  96% of the wafers needed for solar energy and 85% of the cells come from China.  75% of the batteries needed for electric vehicles come from China.  China has a lot of leverage over Europe and North America as it turns green unless the supply chain is dramatically rearranged.  Click on this link for a very telling graph.

INSPIRATION:  A fringe benefit of this job is the inspiration I get from working with inspiring clients.  Last week I wrote about a group of international criminals who got nabbed for bilking money from U.S. seniors.  This week, I was sitting with clients, one of whom told me that an ambition which we are going to help her achieve is starting a nonprofit whose purpose it will be to protect the elderly from that type of crime!  This is a great example of generosity of time and money, as it will take both.  I wish her well.

QUITE THE STRUGGLE:  I mentioned that I ran a half marathon in last week’s newsletter.  What I didn’t mention is that I was suffering from a bad cold.  I had a bit of fever and a cough and I thought I was beginning to feel a tad better, but it took a toll.  We confirmed that it was not COVID, although the last time I officially had that dreaded virus is was a lot easier than this cold.  Anyway, I finished, but now that the official pictures have come through, you can see how hard it was.  Now, as I write this, I am getting ready to run an actual marathon on Sunday.  Here are pictures from last week’s half in Newark, DE.

THIS WEEK’S RUN:  On Sunday of this weekend, I am running (or trying to) the Brighton Marathon in Brighton, England!  I am drafting this email with jet lag.  We had a driver take us to the bed and breakfast that I chose online about six months ago.  I picked it because it is near the marathon finish line and close to the shoreline.  I was in Brighton when I was 24-years-old, a long time ago, so I don’t really know the ins and outs of this seaside town.  As we are pulling in, the driver said, “Your bed and breakfast is in the heart of the LGBTQ section of town.”  I didn’t know that.  Even though we are not any of those initials, we had a wonderful time with a very friendly staff and nice accommodations.  

Have a great week!

“Building something that matters is a marathon, not a sprint.”  Dragos Bratasanu, Ph.D.

“Everyone who competes in the games goes into strict training.”  I Corinthians 9:25 (NIV)

SOURCES:
HOW MUCH ARE PEOPLE SAVING?:   wsj.com/articles/retirement-charts-social-security-savings-health-efa1962b
CLEAN ENERGY HAS A SUPPLY CHAIN PROBLEM: https://www.visualcapitalist.com/where-are-clean-energy-technologies-manufactured/
CONSUMER SPENDING STILL HEALTHY, AND INFLATION STILL DECREASING SLOWLY: bea.gov/news/2023/personal-income-and-outlays-february-2023 AND wsj.com/articles/consumer-spending-personal-income-inflation-february-2023-526279fe?mod=economy_lead_story
BUSINESS OWNERS HAVE LESS CONFIDENCE, BUT THEY ARE REMAINING ACTIVE: https://www.wsj.com/articles/banking-strains-inflation-threaten-global-economic-rebound-949709c?mod=article_inline
 PENDING HOME SALES UP: nar.realtor/newsroom/pending-home-sales-grew-for-third-straight-month-up-0-8-in-february

(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.