War and Inflation Persist, Friendships Renew


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March 13, 2022
THE WAR CONTINUES: The war in Ukraine continued this past week, and seemingly will continue indefinitely. While we want it to end quickly, and the death, destruction and suffering to end, a satisfactory ending is hard to envision right now. So we pray for a miracle.
INFLATION CONTINUES: In February, the Consumer Price Index for All Urban Consumers increased another 0.8% after rising 0.6% in January. Over the last 12 months, prices have increased by 7.9%, the highest annual increase in forty years.. Prices for gasoline, shelter and food were the largest contributors to the price increases. We had all been expecting inflation to peak about now, or at least some time this spring, but the Russian invasion of Ukraine has thrown a lot more doubt and uncertainty as to when inflation might peak. The war has spurred an increase in the price of oil, wheat and precious metals. Inflation may take a bit longer to peak.
(Source: bls.gov/news.release/cpi.nr0.htm)
STOCK DECLINE CONTINUES: The war-induced down market continues. There was no better indication of the war’s influence on traders than on Friday when the market momentarily jumped on news that Russian President Vladimir Putin said in televised remarks that there had been positive developments during talks with Ukraine. After a few hours, when it became apparent that this was not true, markets went south once again. It seems that the market is ready for a recovery rally if the war ends. The war will continue to be the main driver next week, but the Fed will also influence markets as it meets next Tuesday and Wednesday to vote on whether to raise a key interest rate, and by how much.
EUROPE LIKELY TO RAISE INTEREST RATES THIS YEAR: The European Central Bank announced that it will cease buying bonds sooner than most had expected which sets the stage for the ECB to raise interest rates later this year. Inflation in the eurozone is approximately 6%.
HOMEOWNERS’ EQUITY HAS INCREASED DRAMATICALLY: As of the end of 2021, U.S. homeowners with mortgages saw their equity increase by 29.3% over the year. All told, homeowners’ collective wealth increased by $3.2 trillion, or an average of $55,300 per borrower. The amount of homeowners with negative equity (the mortgage balance is higher than the value of the home) decreased by 3% in the fourth quarter to 1.1 million homes, or 2.1% of all properties, the lowest percentage in over 12 years.
(Source: corelogic.com/press-releases/number-of-u-s-homeowners-in-negative-equity-dropped-to-lowest-level-in-over-12-years-corelogic-reports/)
GAS PRICES: When gas prices increase, consumers, a primary driver of U.S. economic growth, have less money to spend on other things. One year ago, the average price for a gallon of gas was $2.84 (regular). One month ago, it was $3.48. One week ago, it was $3.92. Now, it is $4.33. According to AAA, that is the highest recorded average price ever.
(Source: gasprices.aaa.com)
MORTGAGE RATES: Last week, mortgage rates in the U.S. for a 30-year fixed averaged up and over 4.25% for the first time in almost three years.
(Source: mortgagenewsdaily.com/markets/mortgage-rates-03102022)
INVESTING DURING GEOPOLITICAL TENSION: In 1939, a brutal dictator ordered his armed forces to attack a weaker country. Just after the attack of Poland was underway, a 26-year-old man from Tennessee borrowed $10,000 (equivalent of about $200,000 today) and told his broker to buy a piece of every company trading under a dollar, even if they were currently in bankruptcy. He ended up buying shares of 104 companies, one third of which were in bankruptcy. This young man, John Templeton, sold in 1944 and quadrupled his money.
CONTINUING TO WATCH THE DATA: The amount of people dying in the U.S. who are COVID positive continues to plunge, down another 24% last week. Global deaths are following the same trend, down 15% last week. (Bottom graph below). (Source: worldometers.info/coronavirus)
HOSPITALIZATIONS AND GLOBAL INFECTIONS: The amount of patients in U.S. hospitals who are COVID positive dropped another 29.6% last week. (see graph below). U.S. infections have gone from about 800,000 per day in mid-January to less than 40,000 currently, and continuing to fall. Worldwide, the plunge downward has paused mostly because South Korea, which had been one of the most successful countries at keeping COVID at bay, has now been hit with the omicron strain which seems unstoppable when it arrives. South Korea has gone from just thousands of new infections per day to over 300,000 per day in about a month. (Sources: covid.cdc.gov/covid-data-tracker AND worldometers.info/coronavirus/).
“RETURN ON LIFE:” Of course anyone who hires a service provider needs to, and should, focus on their return on investment. But, as financial planners, we are trying to get clients to focus on how their entire set of financial resources is enhancing their “return on life.” If you want to take our assessment, click here.
HAVE YOU NOTICED?: Below is a picture of my “ski buddies” and I enjoying a night out after being on the slopes all day (This was from the week before last when I was on my ski trip). We did the trip last year too, but it was much smaller, so some of the guys here I had not seen in two years. Over the weekend, my wife and I went out to eat with three other couples, two of whom we know quite well, but we had not seen in person in two years. Is this happening to you? If so, are you noticing how happy people are by these renewed friendships?
Have a great week!
Our mission is to help you see the objective, find the path, and navigate past the obstacles to a more prosperous future.
Douglas R. MacGray, J.D., C.F.P. ®
Stonecrop Wealth Advisors, LLC
225 Wilmington-West Chester Pike; Suite 200
Chadds Ford, PA 19317
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(610) 628 4545
“Some people are so poor; all they have is money.” Danielle Strickland

“Whoever loves money never has enough; whoever loves wealth is never satisfied with their income.” Ecclesiastes 5:10

INVESTING DURING GEOPOLITICAL TENSION: wsj.com/articles/the-secret-to-braving-a-wild-market-11647015689?mod=hp_lead_pos12
EUROPE LIKELY TO RAISE INTEREST RATES THIS YEAR: wsj.com/articles/ecb-plans-to-phase-out-stimulus-sooner-than-expected
(c) 2022 Douglas R. MacGray, 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 Barclays U.S. Aggregate: This is a measure of the U.S. bond markets.
Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

    Doug MacGray

  • DATE

    March 10, 2022


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