| STOCK UP, BONDS DOWN: U.S. stocks rose for the second straight week. Investors seem to be calming down about the potential economic effects of the war in Ukraine. Investors are also reacting well to the Fed’s words and actions, giving markets confidence that inflation is being taken a tad more seriously. There are more indications that the Fed may use an occasional 0.5% incremental raise instead of 0.25% to clamp down on inflation. While this has helped the stock market, the bond market continues to suffer. The yield on the 10-year Treasury note jumped from 2.340% to 2.491%, significantly lowering the value of those and other bonds. The Bloomberg U.S. Aggregate Bond Index decreased by a whopping 1.82% for the week. |
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NEW UNEMPLOYMENT CLAIMS DECREASE TO A NEW LOW: In the week ending March 19, new claims for unemployment benefits in the U.S. fell to 187,000, 28,000 less than the week before, and the lowest level since 1969. The four-week moving average moved down to 211,750.
(Source: https://www.dol.gov/ui/data.pdf) |
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| U.S. AND CHINA’S POST-PANDEMIC TRAJECTORIES: The U.S. responded to the initial phase of the COVID pandemic through quarantines and provided generous transfer payments. The spread of COVID was not halted. However, by the beginning of 2022, the U.S. economy was booming. China was more successful in suppressing the spread of COVID (from the information we got from China) though the use of extreme lockdowns, but it did not help ordinary citizens weather the economic shock. China did subsidize exporters and provided other measures that helped large businesses. This led to a rapid recovery early in the pandemic driven largely by homebuilding and exporting. However, China is now going through another COVID surge (the extent of which we really don’t know), and it has quarantined itself from the rest of the world while entire cities continue to face the threat of lockdowns. In 2021, the Chinese economy was slowing down before omicron led to a new round of severe lockdowns. Chinese consumers slashed their spending during the initial months of the pandemic, but unlike the U.S. and elsewhere in the world, Chinese consumers never caught back up. For example, spending in the restaurant sector in China was 16% below pre-pandemic as of February 2022. To date, China has always made up for weak domestic consumer demand with a strong export market, which is continuing to sustain China’s economy. There is some indication that China’s export growth has peaked, but more time needs to pass to see if that is true. China has typically juiced its economy by “encouraging” its banks to lend freely to local governments and favored businesses. In this way they can control, to a degree, aggregate demand. Later this year, Xi Jinping will likely be given an unprecedented third term, but the Communist Party will usher in a bunch of new, younger officials into leadership. |
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| EUROPE SLOWING: Europe’s economy is opening from its COVID lockdowns and restrictions, but that is not enough to overcome the disruptions caused by the war in Ukraine. Higher energy costs are hitting Europe hard. The U.N. just revised its expected economic growth rate for Europe in 2022 to 1.7%, half of the prior prediction. |
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HOTELS STUMBLE BUT BOUNCING BACK: The graph below shows how U.S. hotel occupancy rates started the year a lot like the historic 20-year pre-pandemic average, then stumbled a bit (thank you omicron-scare) but is now catching back up. Last week, hotel occupancy was just 3.7% below the same week of 2019.
(Source: costar.com/article/1737849153/str-spring-break-demand-boosts-weekly-us-hotel-performance) |
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WHERE TO RETIRE: Wallethub.com recently completed a study comparing all fifty states for “retirement friendliness.” It used 47 key indicators based on affordability (40%), health-related factors (30%) and overall quality of life (30%). Alabama came in number one in affordability but scored quite low on quality of life and health care, and its aggregate ranking was 22. The top five aggregate scores were Florida, Virginia, Colorado, Delaware (Delaware?) and Minnesota. The lowest scores were New Jersey, Mississippi, New York, Kentucky and Oklahoma. The top five for affordability only were Alabama, Tennessee, South Carolina, Florida, and Nevada. Number one on “quality of life” was Massachusetts, but it was 45th on affordability.
(Source: wallethub.com/edu/best-and-worst-states-to-retire) |
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CONTINUING TO WATCH THE DATA: The number of people dying in the U.S. who are COVID positive continues to plunge, down another 30% last week. Global deaths were down 17% last week. (Bottom graph below).
(Source: worldometers.info/coronavirus) |
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| HOSPITALIZATIONS AND GLOBAL INFECTIONS: The number of patients in U.S. hospitals who are COVID positive dropped another 23% last week (see graph below). U.S. infections have gone from about 800,000 per day in mid-January to less than 28,000 currently and continuing to fall. Worldwide, South Korea’s infection rate seems to have peaked after a very sharp rise (that’s what omicron does) and the worldwide infection has started dropping again. (Sources: covid.cdc.gov/covid-data-tracker AND worldometers.info/coronavirus/). |
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“WELL DONE” LUIS: Five years ago, my good friend and fellow Delaware attorney Dave called me on a Monday morning. “I’m embarrassed to be calling you so last minute, but I’m having lunch with a guy today that I think you would really enjoy meeting.” Dave could not have been more right. I met Luis Sena that day. Luis said something that day at lunch, in response to a question of mine, that made me think, “huh….I guess he’s right.” My mind, my head, my logic accepted what he said. And then over the course of the next year or two, it migrated to my heart, and I have never been the same. I learned more about international development and the good, bad and ugly sides of philanthropy than I have learned in thirty years of reading books on the subject and studying it formally. He was a brilliant man. He was also one of the most humble and kind-hearted people I have ever met. And he was an engaging and fun friend as well (a dominating ping pong player!). I used to love introducing people to Luis because I could say with confidence, “An encounter with Luis will change your life.” That was never, ever an exaggeration; it was an understatement. He enlarged my life. He died suddenly last week after suffering a series of heart attacks. I feel so privileged to have come to know and love Luis.
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| Happier days with Luis (middle left) and other members of the Dominican Republic team for Edify in La Romana, D.R. |
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| I KNOW THAT GUY!: Even though I no longer practice, I am still an attorney in good standing in Delaware and a member of the Delaware Bar. As such, I get a monthly publication called The Journal of the Delaware State Bar Association. I always flip through it to see if there are any interesting articles or announcements. On page 27, I saw a big advertisement with my younger son Riley. Proud dad. |
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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
225 Wilmington-West Chester Pike; Suite 200
Chadds Ford, PA 19317
Direct | Cell | Fax
(610) 628 4545
dmacgray@stonecropadvisors.com |
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| “Love all, trust a few, do wrong to none.” William Shakespeare
“For the love of money is the root of all kinds of evil.” I Timothy 6:10 |
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SOURCES:
U.S. AND CHINA’S POST-PANDEMIC TRAJECTORIES: https://theovershoot.co/p/last-looks-at-the-pre-war-world-2
EUROPE SLOWING: wsj.com/articles/europes-economy-slows-as-russian-invasion-sends-costs-soaring-11648126271 |
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| (c) 2022 Douglas R. MacGray, 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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