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| INFLATION EASES: The headline inflation number, the Consumer Price Index for All Urban Consumers (CPI) rose 0.2% in June after increasing 0.1% in May. Over the course of the last twelve months, the CPI has risen 3.0%. This is down from the peak rate of 9.1% in June of 2022. The two areas that suffered the most inflation were shelter and auto insurance. Prices for dining out rose 0.4% but prices for groceries remained unchanged.
Meanwhile, a day after the CPI was announced, the PPI, or Producer Price Index, was released showing a 2.6% rise year over year, another encouraging number. |
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| STOCKS RISE AS FEARS DECREASE: Traders got back to work after the shortened Independence Day week and started buying. After some positive inflation news arrived, markets rose decisively. Most are still expecting the Fed to raise rates by a quarter of a percent at their next meeting, but to stop there. We are now seeing lots of stories using the term “soft landing,” meaning there is a growing belief that the Fed has not induced the conditions for a recession, but that the overheated economic activity causing inflation has been slowed just enough to get inflation under control. Several weeks ago, trading data pointed toward an investing class that expected an imminent recession. That has turned around dramatically. |
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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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| LABOR MARKET STRENGTH CONTINUES: New filings for unemployment benefits fell last week to 237,000. The four-week moving average decreased by over 6,000, but is about 12% higher than a year ago. This is still a strong enough job market to give the Fed the ammunition it needs to justify another rate hike. |
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| THE STOCK RALLY IS BROADENING: If you looked at the stock market about a month ago, it was clear that the year’s stock market rally was largely limited to the largest companies in the S&P 500. While the S&P 500 kept rising, indices of small and mid-cap funds were flat. As you can see below, small and mid-cap stocks (the blue and orange lines below), were just about zero on May 31 while the S&P 500 was already up almost 10%. Since then, all three indices have moved in a similar direction, suggesting that the rally in the stock market is broadening. |
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| HEALTHY HOTELS: Hotel occupancy for 2023 remains healthy, coming in at about the same amount as the median for 2000 to 2022. Occupancy for last week came in at about 62% with average revenue per available room at $96.36. |
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| NO SURPRISE, COST OF SERVICING GOVERNMENT DEBT RISING: The cost of servicing the U.S. government debt increased to $652 billion in the first nine months of the fiscal year, a 25% increase. |
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| I AM CONFIDENT THAT GENERATION Z WILL LEARN THEY ARE WRONG ABOUT THIS ONE: As most of you know, I am not a member of Generation Z. So at the risk of sounding like a curmudgeon, Generation Z is wrong about one of their beliefs. In a recent survey of Americans, 69% of Generation Z respondents said that money can, in fact, buy happiness. In the survey, only Baby Boomers and Gen Xers said love was more important than wealth. Ahh, the wisdom of age and experience. “I don’t care too much for money, money can’t buy me love.” Lennon-McCartney |
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| I WISH I HAD A PICTURE: I was out to eat at a favorite local dining spot with my wife, my son Logan, and his three children, including Silas, the 1.5 year old. Silas was using a spoon to eat a small container of vanilla ice cream for dessert. He loved it. When he was done, he clearly wanted more. A table with three young kids, along with several adults, gets pretty cluttered by the end of a meal, and a full container of sour cream from the nachos we had earlier was still on the table. Silas, thinking he found another container of vanilla ice cream, stuck his spoon and got a big scoop of the white stuff. By the time I saw what he was doing, it was too late to stop him, but not too late to watch the expression on his face, and the sour cream oozing back out of his mouth. It was one of the funniest things I have seen in a long time. |
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| I DO HAVE A PICTURE: It was a hot weekend. A good option was swimming if you had access to a pool. My son Logan was so anxious to swim, that a passing rain storm wasn’t going to influence him to get out. |
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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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“No man should escape our universities without knowing how little he knows.” J. Robert Oppenheimer
“Be completely humble and gentle; be patient, bearing with one another in love.” Ephesians 4:2 (NIV)
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SOURCES:
INFLATION EASES: https://www.bls.gov/news.release/cpi.nr0.htm AND https://www.wsj.com/livecoverage/stock-market-today-dow-jones-07-13-2023/card/producer-inflation-fades-OiuXyH0Vrl52TcSLAhDq AND https://www.msn.com/en-us/money/markets/producer-price-index-edges-up-less-than-expected-in-june/ar-AA1dOFys
THE STOCK RALLY IS BROADENING: ycharts.com
I AM CONFIDENT THAT GENERATION Z WILL LEARN THEY ARE WRONG ABOUT THIS ONE: https://nypost.com/2022/05/18/gen-z-thinks-money-can-buy-happiness-survey-finds/ AND https://www.rubyhome.com/blog/what-is-considered-rich/
LABOR MARKET STRENGTH CONTINUES: https://www.dol.gov/ui/data.pdf
NO SURPRISE, COST OF SERVICING GOVERNMENT DEBT RISING: https://gritcapital.substack.com/p/im-not-fking-leaving-bob-iger-probably
HEALTHY HOTELS: https://str.com/press-release/str-us-hotel-results-week-ending-8-july
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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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