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LABOR MARKET REMAINS QUITE STRONG: The U.S. economy added more jobs than most economists expected last month, a total of 261,000. The amount of jobs in the economy is now about 804,000 more than pre-pandemic. The unemployment rate is 3.7%. Monthly job growth in the U.S. has averaged 407,000 per month in 2022 after averaging 562,000 in 2021. Manufacturing added a healthy 32,000 jobs and has averaged 37,000 per month this year. Employment in leisure and hospitality rose by 35,000 but is still more than a million shy of pre-pandemic. We are now in this odd time where a strong labor market panics investors because it signals that the Fed will remain aggressive with rate hikes. Rate hikes will slow the economy, but if everyone is employed, presumably they will keep spending money. But if everything costs more, corporations will make less money. And so it goes.
(Source: bls.gov/news.release/empsit.nr0.htm) |
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| ADDING TO THE LABOR STATISTICS: Stonecrop Wealth Advisors is thrilled to welcome Dalton Greiner as the newest member of our team. With experience in administration and communications, Dalton brings a diverse skill set to the table. He joins Stonecrop with a track record of successfully managing complex projects and effectively communicating with clients and colleagues. In his previous positions, he demonstrated an ability to think creatively and problem-solve in high-pressure environments, making him a valuable asset to the Stonecrop team. On top of all that, as we got to know Dalton, we discovered a depth of character that we believe will benefit the entire team and those we serve. We are excited to have found such a talented addition and we look forward to the contributions Dalton will make in his role at Stonecrop Wealth Advisors. |
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| AVERAGE PAY GROWTH IS SLOWING A BIT: Average hourly earnings for U.S. workers rose 0.4% in October from the prior month. Earnings are now up 4.7% year over year, a slower pace of growth than in September. |
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| FED RAISES RATES AND ISN’T DONE: The Fed raised its key interest rate another 0.75% this week. That was hardly news. We all saw it coming. What the investing markets wanted to hear along with the rate hike were soothing words from the Fed saying they are ready to slow down after this most recent hike or even pause and see how these rate hikes play out. It did not happen that way. Fed Chair Jerome Powell said Wednesday that the Fed has a “ways to go” before it would consider pausing rate increases. He said it would be “very premature” to think about halting the rate hikes. Inflation pressures remain far too high. He did say, however, that “at some point it will become appropriate to slow the pace of increases. So that time is coming, and it may come as soon as the next meeting or the one after that. No decision has been made.” So we have uncertainty, and we know how much the markets hate uncertainty. We will continue to pore over economic data for signals of what the Fed might do in its December meeting. |
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| THE BANK OF ENGLAND FOLLOWS SUIT: The Bank of England raised its key interest rate by 0.75% on Thursday, its largest rate increase since the 1980s. Its rate is now 3.0%, the highest it has been since 2008. |
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| STOCKS FALTER ON DISAPPOINTMENT WITH FED COMMENTS: Fed Chair Jerome Powell doomed the markets to a negative week with his comments. Investors were beginning to allow themselves to believe that perhaps the Fed will clearly signal that it is time to pause or slow down the rate hikes. Because they did not hear that, stocks pulled back. Despite a late week rise, the week ended negative. Stocks are still up for the quarter. Since the end of the third quarter, or since September 30, the S&P 500 is up 5.3%. The Russell 2000 (small U.S. companies) is up 8.12%. |
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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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| PACE OF RENT INCREASES SLOWS: The price of housing needs to normalize to help bring inflation down as it is a key component in inflation data. According to the National Multifamily Housing Council, the physical apartment market is starting to normalize after six consecutive quarters of tightening. Most areas of the country are now reporting higher vacancy rates and lower rent growth compared to three months ago. According to Apartmentlist.com, “[t]hese past two months have marked a rapid cooldown in the market…Going forward it is likely that rents will continue falling…as we enter the winter slow season for the rental market.” So far in 2022, rents are up 5.9% compared to 18% in 2021. This is the kind of data the Fed needs to continue to see. |
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| LEGACY GIVING PRESENTATION: I was asked by St. Peters United Methodist Church in Ocean City New Jersey to speak for a few minutes on legacy giving. It is a beautiful church, and I greatly enjoyed the opportunity. If you want to see it, you can find it on Youtube here. I start at 31:00 and go for about ten minutes. |
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| OCEAN CITY NJ: My wife and I spent a day and night in Ocean City, New Jersey last weekend, and we were treated to beautiful weather as we strolled the boardwalk and otherwise enjoyed the environs. When we walked past one pizza shop, I was tempted to try to earn some free pies. |
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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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| “If more politicians in this country were thinking about the next generation instead of the next election, it might be better for the United States and the world.” Claude Pepper
“Do nothing out of selfish ambition or vain conceit. Rather, in humility value others above yourselves.” Philippians 2:3 |
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SOURCES:
AVERAGE PAY GROWTH IS SLOWING A BIT: wsj.com/articles/october-jobs-report-unemployment-rate-economy-growth
FED RAISES RATES AND ISN’T DONE: timesunion.com/news/article/Powell-likely-to-be-pressed-on-whether-Fed-will
THE BANK OF ENGLAND FOLLOWS SUIT: wsj.com/articles/bank-of-england-raises-key-interest-rate-by-0-75-point
STOCKS FALTER ON DISAPPOINTMENT WITH FED COMMENTS: YCharts.com AND wsj.com/articles/global-stocks-markets-dow-update-11-04-2022
PACE OF RENT INCREASES SLOWS: calculatedrisk.substack.com/p/year-over-year-pace-of-rent-increases |
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| (c) 2022 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 Barclays 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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