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May 13, 2024
APRIL BAD, MAY GOOD: After a very strong start to the year, stocks swooned in April, only to revive again in May. The S&P 500 and the Russell 2000 (smaller U.S. company stocks) are both up over 4% so far this month. In April, persistent inflation was the negative theme. Since then, data showing a slowdown in hiring and growth in unemployment claims have calmed investors. Once again, investors seem to be fueled by the belief that the economy will slow at just the right pace to bring inflation under control and eventually lead to lower interest rates...the "Goldilocks" scenario.
LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.
INVESTORS ARE IN A BETTER MOOD, CONSUMERS ARE NOT: The University of Michigan conducts a monthly survey of U.S. consumers. Over the past few months, consumer sentiment has been about the same. But in the most recent survey results, consumer sentiment dropped to its lowest level in six months. The steep decline was broadly felt across consumers of all ages, educational backgrounds and income levels. Consumers are worried about inflation, unemployment and interest rates.
HOMES: Two thirds of U.S. homeowners have mortgages locked in at below 4%. With current rates much higher, these homeowners do not want to move. That is one reason why the number of existing homes for sale has been low. In fact, there are 37% fewer existing homes for sale now than in 2019. Currently, new home sales are rising and now make up 16% of home purchase transactions, the highest that percentage has been since before the housing crisis.
BANK OF ENGLAND KEEPS RATES IN CHECK: The Bank of England kept its interest rates unchanged at 5.25% this past week.
MALAYSIA CENTRAL BANK HOLDS INTEREST RATE STEADY: Are you noticing a theme? Malaysia's central bank held its benchmark rate steady at 3.0% last week.
STILL ABOVE SEVEN PERCENT: According to the Primary Mortgage Market Survey maintained by Freddie Mac, the average U.S., 30-year mortgage interest rate ended last week at 7.09%.
CREDIT CARD DEBT INCREASING: According to the U.S. Federal Reserve, total credit card debt in the U.S. rose by $50 billion in the fourth quarter of 2023 to a record total of $1.13 trillion. The average credit card balance per consumer is now over $6,000. The average interest rate on that debt is 22.75%.
VALIDATION: After college, I spent two years on the island of Koror in Palau, part of Micronesia. When asked, I tell people Palau is the most beautiful place on the planet. It is hard to get to, so I rarely meet others who validate my statement. This past week, one of my client's sent me a note saying his daughter, a marine biologist, was visiting Palau and said it was "amazingly beautiful." I am definitely biased, and so it was good to hear it from another source. Below are two pictures which she sent.
THE BADRULCHAU MONOLITHS: As you can see, one of the pictures she took was of the Badrulchau Monoliths, mysterious structures on the northern tip of the island of Babeldaob dating back perhaps as far as two thousand years ago. This is me at that same spot!
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
"Look at my men. Their courage hangs by a thread. If this is to be our end, then I would have them make such an end as to be worthy of remembrance." Theoden, Lord of The Rings, The Two Towers, delivered by Bernard Hill who passed away this week.
"Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own." Matthew 6:34 (NIV)
SOURCES:
APRIL BAD, MAY GOOD: https://www.wsj.com/finance/stocks/global-stocks-markets-dow-news-05-10-2024-44b54374?mod=stocks_news_article_pos4
INVESTORS ARE IN A BETTER MOOD, CONSUMERS ARE NOT: https://www.inc.com/ali-donaldson/inflation-takes-a-bite-out-of-consumer-sentiment-sinking-to-lowest-level-in-six-months.html
BANK OF ENGLAND KEEPS RATES IN CHECK: https://gritcap.io/p/boe-holds-rates-eyes-data
STILL ABOVE SEVEN PERCENT: YCharts.com
MALAYSIA CENTRAL BANK HOLDS INTEREST RATE STEADY: https://www.wsj.com/economy/central-banking/malaysia-central-bank-holds-rates-steady-as-widely-expected-60642a11?mod=economy_lead_pos4
CREDIT CARD DEBT INCREASING: https://www.forbes.com/advisor/credit-cards/average-credit-card-debt/ AND https://www.zerohedge.com/political/average-credit-card-debt-us-now-soaring-past-6500
(c) 2024 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.
Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.
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