GLOBAL MANUFACTURING INCREASES:  Aided by a re-opening China, global manufacturing output, as measured by factory surveys of S&P Global, came in stronger than expected for February.  It was the first rise in global manufacturing output in seven months.  

SERVICES SECTOR OF U.S. ECONOMY STILL IN GROWTH MODE:  The Institute for Supply Management® keeps an index called the ISM® Services Index.  If that index measures above 50.0, it means growth.  Below that number means the sector is contracting.  Last month, the index was 55.1%, down from 55.2% the prior month.  This is the second consecutive month of growth as measured by that index.  This index has measured a growing services sector in 32 of the last 33 months with only December of last year showing contraction (49.2%).  Similarly, the S&P Global U.S. Services PMI Index rose to 50.6 in February from 46.8 in January, its highest reading since June.

STOCKS REBOUND:  On the one hand we have a Fed aggressively trying to slow inflation by slowing the economy “just enough.”  On the other hand, we have a U.S. and apparently a global economy (see above) that doesn’t seem to want to slow down.  This dynamic of an economy that doesn’t want to slow down (into a recession) and a Fed that wants it to slow down until inflation gets below 3% is creating a bit of a roller coaster of market responses.  This week, the bulls prevailed.

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

THE JOBS RECESSION JUST WON’T ARRIVE:  Despite the aggressive actions of the Fed, the U.S. labor market remains quite strong.  One data point we follow is the weekly amount of Americans who file new unemployment claims.  Last week, that figure dropped to 190,000.  This was a decrease of 2,000 from the prior week, and the four-week moving average is 193,000.  These are numbers that indicate a very strong labor market.

MORTGAGE RATES BACK ABOVE 7%:  According to Freddie Mac, the average 30-year mortgage is now at 6.65%.  But Freddie Mac’s survey is a weekly average, and rates have been rising, so that by Friday, this rate once again rose above 7% to just about 7.1%.

HOUSING PRICES DECREASING:  After a steep rise in prices, home prices in the U.S. are declining somewhat off their peak.  For the seventh straight month the National Home Price Index reported by Freddie Mac declined putting home prices 2.7% below their June 2022 peak.  Prices are still higher (by 2.4%) than they were a year ago.  Below is the graph showing the history of the value of our home.  It largely fits the pattern of the overall market.

STONECROP WEALTH ADVISORS CORPORATE VIRTUES:  Stonecrop Wealth Advisors has adopted the following five corporate virtues:

• Servanthood,
• Curiosity,
• Calmness,
• Courage, and
• Humor.

The final virtue is humor, by which we mean a combination of ‘humility’ and ‘wit.’  The words ‘humility’ and ‘humor’ have the same derivation from the Latin word ‘humus’ which means ground or earth.  To be humble is to remember that we are of the earth.  Humor helps us remain humble.  We don’t take ourselves too seriously.  It takes us out of ourselves and lets us see the peculiarities and pretense of being human.  It reminds us we are of the earth, contingent and vulnerable. “Wit” is the ability to see the humor in a situation and use words in an intelligent and amusing way.  It is smart, subtle, and clever without being rude, unkind, or malicious.

BUSY WEEK:  I plan my travel schedule well in advance, and my annual ski trip with the guys, a nearly 20-year tradition now, is generally scheduled roughly a year in advance.  It just so happened that my daughter gave birth to her beautiful little girl MacKenzie in California right before my ski trip.  As a result, this week was spent going to Big Sky, Montana for an awesome four days of skiing followed by a trip to southern California to spend the weekend meeting the granddaughter.  The skiing was one of the two best conditions for skiing I have ever encountered (and thanks to ski-buddy Tom for helping me pick up my skis and polls when I had my “yard sale” fall at the top of one of the trails).  But it did not compare to the joy holding MacKenzie for the first time.  

Have a great week!

“Humor is, in fact, a prelude to faith; and laughter is the beginning of prayer.”  Reinhold Neibuhr. 

“In humility value others above yourselves.”  Philippians 2:3

SOURCES:
GLOBAL MANUFACTURING INCREASES: wsj.com/articles/the-world-economy-is-doing-wellthis-is-bad-news-for-central-bankers-8beeb7c?mod=economy_lead_story&mod=article_inline
SERVICES SECTOR OF U.S. ECONOMY STILL IN GROWTH MODE: wsj.com/articles/global-stocks-markets-dow-update-03-03-2023-3fa3f3be?mod=markets_lead_pos1; AND ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/services/february/
MORTGAGE RATES BACK ABOVE 7%: mortgagenewsdaily.com/markets/mortgage-rates-03022023
THE JOBS RECESSION JUST WON’T ARRIVE: dol.gov/ui/data.pdf
HOUSING PRICES DECREASING: freddiemac.com/research/indices/house-price-index

(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.