top of page

Calming Inflation, Nervous Investors, Rotating Stocks, and the Irish

Writer: Doug MacGrayDoug MacGray
Mar 165 min read

March 16, 2025


FEBRUARY INFLATION NUMBERS: According to the U.S. Bureau of Economic Analysis, the Consumer Price Index rose by 0.2% in February. The year-over-year number decreased from 3.0% to 2.8%. So called "core" inflation (removing energy and food costs because of their volatility) rose by 3.1% over the past twelve months, the lowest this rate has been in nearly four years. Shelter costs were up 4.2% year over year, down from 4.4% a month ago. After rising 0.61% in January, due in no small part to the jump in prices of eggs, producer prices ("PPI") decreased in February by 0.01%. The PPI is often a leading indicator for the CPI. These are all positive numbers for the economy and better than had been generally expected.


ROUGH WEEK ENDS WELL: On Monday, fears of a trade war and recession sent the U.S. stock markets spiraling downward. After a tech rally mid-week, stocks moved down again on Thursday as news of trade tensions continued. On Friday, bargain hunters pounced, and markets bounced upward limiting the damage for the week. Positive inflation data (see above) and Congress' avoidance of a government shutdown was not enough to avoid another negative week for U.S. equities.



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



A ROTATION: Below, the purpose line represents value stocks in the S&P 500, and the orange line growth stocks in the S&P 500. The blue line represents the performance of the so-called "Magnificent Seven" stocks. This shows the performance of those sectors during the past month. Much of what is going on with the markets is a rotation, people selling the stocks that have outperformed over the past couple of years (U.S. growth stock, largely tech stocks, and largely the Magnificent Seven), and buying safer value stocks, not an uncommon occurrence when uncertainty prevails. The blue line represents the performance of the Magnificent Seven.



RECESSION?: There is always a recession on the horizon. The only questions are when, how long, and how severe. You can always find an economist predicting the next recession to begin imminently, as has been the case for the last couple of years. Currently, JPMorgan Chase economists predict a 40% chance of a recession this year. Goldman Sachs says the probability is 20%.


HOUSEHOLD DEBT: In the fourth quarter of 2024, U.S. household debt increased by $93 billion, a 0.5% increase from the prior quarter. Total household debt reached $18.04 trillion. Mortgage balances increased by $11 billion to reach $12.61 trillion, accounting for approximately 70% of overall household debt. 3.6% of this debt is in some state of delinquency, a slight increase from the prior quarter. Much of the uptick is in student loan debt as student loan forbearance came to an end. Credit card debt that is more than 90 days delinquent rose to 11.4%, the highest since late 2011.


MOST POLLUTED CAPITAL CITIES IN THE WORLD: Based on measurements of PM2.5 (which is a measurement of fine particulate material in the air), the following are the eight most polluted capital cities on the globe:

  1. N'Djamena, Chad (91.8)

  2. New Dehli, India (91.6)

  3. Dhaka, Bangladesh (78.0)

  4. Kinshasa, Democratic Republic Congo (58.2)

  5. Islamabad, Pakistan (52.4)

  6. Dushanbe, Tajikistan (46.3)

  7. Hanoi, Vietnam (45.4)

  8. Kathmandu, Nepal.(45.1)


I have only been to one (Kathmandu), and I have no plans on visiting any of the others soon.

CONSUMER SENTIMENT DECREASES: The University of Michigan's consumer sentiment index fell from 64.7 to 57.9, the lowest it has been since November 2022. In the survey, consumers said they expect inflation to rise at an annual rate of 3.9% over the next five to ten years, with costs rising 4.9% over the next year.


IS MEDICARE CONFUSING?: Stonecrop Wealth Advisors will be conducting a Medicare 101 webinar on March 27. We have invited Medicare expert Philip Morgan to be with us on this free webinar designed to help you navigate your options with confidence.


📅 Thursday, March 27, 2025

⏰ 7:00 PM - 8:00 PM ET


We’ll discuss:

✅ The four components of Medicare (Parts A, B, C, and D)

✅ Coverage, costs, and enrollment details for each part

✅ How to avoid costly Medicare penalties

✅ The key differences between Medicare Advantage and Medigap plans


Whether you're approaching Medicare eligibility or assisting a loved one, this session will provide clarity and actionable insights. Reserve Your Spot Now.


THE EUROPEAN CENTRAL BANK CUTS RATES AGAIN: The European Central Bank (ECB) cut interest rates again. This was the sixth cut in the last nine months. In Europe, the inflation rate is closing in on the 2% target. The ECB lowered the rate it pays on bank deposits by one quarter of one percent to 2.5%.


O'GARA!: My grandfather, Frederick McGray and his brother Charles, moved from Nova Scotia to Boston in 1907. Their ancestor, Captain John Gray, arrived from Scotland to Marblehead, Massachusetts in the 1600s. His name got changed over time to MaGray, and then McGray, and there remains a large clan of McGrays in Nova Scotia to this day. But when my grandfather moved to Boston, so concerned was he that he would be mistaken for Irish (heaven forbid!), that he and his brother inserted the "a" into the name to make sure everyone knew he was of Scottish descent. My father was not a fan of the Irish, and I grew up not really understanding the antipathy. Eventually, but only after my father passed away, I discovered that my mom, the woman my father married, was part Irish. I don't think my dad wanted us to know. Anyway, her great grandfather, William O'Gara emigrated from County Sligo in Ireland in 1863 and settled in Boston. I recently found his 1911 obituary in the Boston Globe. Suan suthain síoraí dó.



A few years ago, in honor of that heritage, I made sure to visit Tommy O'Gara's pub in Dublin.



Happy St. Patrick's Day. Slainte!


Have a great week!


Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.



Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545




"There are no strangers here; only friends you haven't met yet." William Butler Yeats


"Sow your seed in the morning, and at evening let not your hands be idle, for you do not know which will succeed, whether this or that, or whether both will do equally well." Ecclesiastes 11:6 (NIV)


SOURCES:

A ROTATION: YCharts.com


(c) 2025 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved


Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.


SDG

*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.

 
 
 

Comments

bottom of page