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Writer's pictureDoug MacGray
Oct 65 min read

More Jobs, Open Ports, AI Energy and JoJo

October 6, 2024


EMPLOYMENT PICKS UP IN SEPTEMBER:  According to the U.S. Bureau of Labor Statistics, the U.S. economy added 254,000 jobs in September, a strong result. This is the biggest monthly increase since March and higher than the 12-month average of 203,000. The September report also indicated that it was revising the prior two months up by 72,000 jobs. These revisions have been large of late, but this time they were at least upward revisions. The unemployment rate decreased from 4.2% to 4.1%. Of late, the amount of people working part-time for economic reasons has been on a troubling upward trend. This came down a bit in September from 4.83 million to 4.2 million. This is still higher than the pre-COVID shutdown era.  In addition, average hourly earnings increased 0.4%. Annually wage growth is up 4.0%. 



U.S. PORTS RE-OPEN:  We had been getting some questions as to how the dockworkers strike might affect the markets. Our overall thought was that in an election year, this strike will not last long, but every day that is lasts, it will hurt. It ended quickly enough (after three days) that it will mostly be a non-issue in the investing markets. With an agreement in place, shipping lines will bear larger costs. Will they be able to pass those on to their customers, which are big retailers, manufacturers and farmers? If so, will that just end up causing higher prices that we all absorb. If so, is the economy strong enough for us all to be able to pay a little more for that Amazon, Costco or Walmart purchase? For now at least, we have one less thing to worry about.


STOCKS RECOVER LABOR MARKET NEWS:  By and large, the surprisingly strong September jobs report (see above) was well-received by investors. However, it now complicates the Fed's next decision. Did they cut too much too fast? Are they going to pause in November? Will they cut 0.25% instead of 0.50%? Markets moved in a direction that indicates that the Fed will likely make two smaller (0.25%) cuts by year-end instead of the more decisive action of half-point cuts. Ultimately, the labor market report and the end of the dockworkers' strike (after three days) buoyed markets to a positive week after a negative beginning. Geopolitical tensions, the presidential election, and the overhang of the suffering in the wake of hurricane Helene weighed on investors' minds, and will continue to do so for a while.



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



INFLATION:  Watch for the September Consumer Price Index announcement this coming Thursday.


U.S. HEAVY TRUCK SALES SOLID, BUT DECREASING:  Heavy truck sales in September were 477,000, down from 501,000 in August and down 4.7% from September of last year. Despite the decrease these remain healthy levels of sales. Heavy truck sales generally decline sharply prior to a recession.



U.S. DIRTIEST CITIES:  Lawnstarter surveys U.S. cities based on air pollution levels, water quality, waste management and resident dissatisfaction levels among other metrics. In 2024, the winner for dirtiest city in the U.S. was San Bernadino, California. The rest of the top ten were Detroit, Reading PA, Newark NJ, Ontario CA, Phoenix, Trenton, Las Vegas, Houston TX, and Baytown TX.


CONTINUING TO KEEP AN EYE ON CHINA:  China is suffering from some deflation. Housing prices have declined approximately 5% in the past year. Domestic consumption is falling. Youth unemployment is above 20%. According to Bloomberg News, active dissent in China was up 18% in the second quarter of 2024.


ARTIFICIAL INTELLIGENCE AND ENERGY:  Two weeks ago, we reported on Microsoft's decision to enter into an agreement with Constellation Energy to restart a Three Mile Island nuclear reactor for its exclusive use. AI requires lots of energy. Where is all of this energy going to come from? Obviously, some will come from nuclear, but nuclear reactors can't come online quickly. It looks like much of the immediate need for additional electricity may come from natural gas. Malaysia is the fifth largest exporter of natural gas. Oracle recently announced it plans to spend $6.5 billion to build cloud services in Malaysia to support AI development. Qatar is the second largest exporter of natural gas. Recently, a Google Cloud partner and AI digital engineering company signed an agreement to establish a global technology hub in Qatar to meet surging AI demand. Amazon's cloud division announced this year that it is spending billions launching data centers in Saudi Arabia. Data centers needed for AI growth seem to be going where the natural gas is. The largest worldwide exporter of natural gas is the United States.


A LESSON FROM JOJO:  Last week, my wife and I had dinner at a restaurant with four of our grandchildren, ages 7, almost 6, 2.5 and Josefine ("JoJo"), 9 months. Their dad Logan, and our son, came with us also, but their mom, our daughter-in-law Danielle, was away on business. With the exception of JoJo, they all did great. JoJo just could not settle down.  Logan tried, and my wife tried. Finally I looked at Logan and said, "I've eaten a lot of my dinner, and I get to go home and have a quiet night's sleep, so give me a turn with JoJo." I took her out to the entry way of the restaurant. To get her to calm down, I started pointing at things in the room, saying things like, "look at that!." It worked. They had a tree all decked out with autumn themed ornaments including orange lights. Those got her attention. She wanted to touch a lot of them. Finally, when she got bored of that, I started looking around the room trying to find anything else of interest. This room has an old stone wall with a variety of different stones. I started pointing out all the different colors. Then I noticed the dark black rocks. If you looked closely, you could see that they were speckled with shiny, sparkling little specks. They were beautiful, and I told JoJo that. I then realized that I had been in that restaurant many times, and never noticed these beautiful rocks. Why? Because I am not paying attention. JoJo forced me to pay attention to where I was. I did not have my phone out. I was not looking at one of the televisions in the vicinity. JoJo was forcing me to focus on finding the best things right in front of me, and I saw something I may never have discovered. Then another question popped into my head: "What else am I missing?" Thanks JoJo. I'm going to try to be more observant.



ITS BEGINNING TO LOOK A LOT LIKE ... FALL:  I ran up to the North Shore of Massachusetts this week for a board of trustees meeting at my alma mater. It is not quite peak foliage season there yet, but its getting close.



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


"Well I got down on my knees and said 'hey!' 'I just can't go on livin' this way!"  Guess I have to learn to live my life one day at a time."  Joe Walsh, from the single "One Day at a Time"


"Good will come to him who is generous and lends freely, who conducts his affairs with justice."  Psalm 112:5 (NIV)


SOURCES:


(c) 2024 A.D., 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.

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