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Writer's pictureDoug MacGray
Dec 15, 20244 min read

Nettlesome Inflation and "Be Funny"?

December 15, 2024


NETTLESOME INFLATION: The consumer price index (CPI) rose 0.3% in November after rising 0.2% for the prior four months. A monthly rate of 0.3% is the highest in a year and a half. Over the last twelve months, the CPI rose by 2.7%. Last month that twelve month number was 2.6%, and the month before it was 2.4%. The "core" inflation number that the Fed watches, essentially CPI without energy and food, rose by 3.3%, which is the same as last month.


MIXED WEEK: Inflation numbers caused some jitters last week. The S&P 500 snapped a three-week winning streak. The decline was broad meaning there were more decliners than advancers in the S&P 500 all week. Tech stocks were the one bright spot. The NASDAQ Composite rose slightly (+0.3%).



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



THE FED: The Fed will conduct its last meeting of the year this coming week, and almost everyone I'm reading is predicting a 0.25% rate cut. I believe the Fed has enough data to justify a 0.25% cut or no action. We'll see what they do. The markets will react negatively if the Fed does not announce a rate cut.


GERMANY'S CENTRAL BANK: The German central bank drastically cut its 2025 growth forecast from 1.1% to 0.2%. The bank is worried about protectionism in 2025. Germany is a large exporter to the U.S.


BLACKROCK: Larry Fink is the founder and CEO of Blackrock. He was forced out of his first investment job at First Boston after losing $100m on a bad bet on interest rates in 1986. Thereafter he started Blackrock. The firm grew quickly after the dot.com bubble through organic growth and acquisitions. Blackrock is now the world's largest asset manager, controlling more than $10 trillion worth of assets. The big three, Blackrock, Vanguard and State Street own approximately one fifth of all shares of the S&P 500 companies. Blackrock pioneered the use of low-cost, passive investment strategies. Instead of getting specialized advice, many of its products simply track an index, and thus Blackrock outsources its management to an algorithm, not talented (and expensive) fund managers. Obviously, this gives Blackrock significant influence over the actions of these corporations. Blackrock has also created a fruitful relationship with the U.S. government. The Federal Reserve gave Blackrock responsibility for managing the corporate debt the Fed bought through Quantitative Easing. Black rock was also brought in to manage the assets of Bear Stearns and AIG when they were nationalize during the financial crisis.


ANTIMONY: Antimony is a chemical element, a lustrous grey metal found in nature. It is widely used in the manufacture of ammunition. It is also used in tanks, submarines, warships, communication systems nigh vision goggles and other military technology. The U.S. is a global leader in bullet manufacturing, but without antimony, this manufacturing would come to a stop. During World War II, Japan invaded China and stopped the supply of antimony to the US. Urgently, the U.S. discovered antimony at an old gold mine in Idaho. That mine produced antimony until 1997. Currently, the U.S. gets some of its antimony through lead-acid battery recycling, but 80% comes from imports mostly from China. China, Russia and Tajikistan currently control 78% of all antimony mining. China has begun to put the squeeze on antimony, and prices are now seven times higher than 2020. The U.S. is trying to find other sources and it is working on re-opening the Idaho mine.


COAL: Coal-fired electricity generation worldwide is set to increase by another 2% in 2024 after similar growth the year before. Coal power emissions will hit another record high this year. The biggest coal exporter is Indonesia, and it will export over 500 million tons this year, the most ever. Demand in India and China is driving much of the growing demand for coal power. Coal accounts for about 60% of China's power generation.


CHINA IS SHRINKING: In 2022, China's population began to shrink. China's fertility rate is at about one birth per woman, well below the 2.1 births per woman needed to maintain a stable population. At this rate, by 2035, 30% of China's population will be age 60 or older.


MAYBE I NEED NEW FRIENDS: I was at a meeting last week, and a speaker put a message up on the screen. He said, take a picture, and text it to someone who will give you honest feedback. The message was this:



I sent this to a friend of about 30 years, and his two word text response was, "Be funny".


THE MOST WONDERFUL TIME OF THE YEAR: Below is my granddaughter MacKenzie looking warily at Santa, and my first grandchild Judah being dapper and singing at his school Christmas concert.



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


"Sing like nobody can hear you, dance like nobody can see you, and love like you've never been hurt." Dick Van Dyke


“Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more than food, and the body more than clothes?" Matthew 6:25 (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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