_edited.png)
December 22, 2024
PLAYING THE ROLE OF EBENEZER SCROOGE...: The Fed met last week and announced a decrease in its benchmark rate by one quarter of one percent, as had been expected by most. But to make sure the announcement was not a positive one heading into Christmas week, Chairman Powell had to go ahead and tell us that next year the Fed will lower rates less than earlier expectations. Said Powell, "The slower pace of cuts next year reflects both higher inflation readings we had this year and the expectation readings will be higher." The Fed's is now projecting inflation of 2.5% for 2025, not the 2.1% it had earlier predicted. Stock prices plunged after the announcement.
FED'S PREFERRED INFLATION INDEX: The Fed's preferred inflation index is the Personal Consumption Expenditures Index (PCE), and of course, they prefer to strip out energy and food and look at the "core" PCE Index. The PCE index came out on Friday (in time to give markets a late-in-the-week boost), and it showed a 04% increase. The twelve-month number increased from 2.3% to 2.4%. However, the core PCE price index rose only 0.1%, and the twelve-month number was unchanged at 2.8%.
MARKETS DIDN'T RECOVER FROM FED'S MID-WEEK ANNOUNCEMENT: Investors hated the Fed's announcement mid-week. Thankfully, the market rallied on Friday limiting the damage. The rally on Friday was sparked by the announcement that the Fed's preferred measure of inflation, the so-called PCE Price Index, rose 0.1% in November, lower than expected. So, it was another week where the Fed had an outsized influence on the movement of the stock markets. Overseas stocks decreased more largely reacting to President-Elect Trump's announcement that he will impose tariffs in the European Union does not buy more U.S. oil and natural gas.
LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.
U.S. LEADING ECONOMIC INDICATORS SURPRISE TO THE UPSIDE: The Conference Board maintains an index of leading economic indicators. By following such indicators, it should give us an indication of what the economy will do in the future. Last week the Conference Board announced that in November the index increased by 0.3% to 99.7. This index declined by 0.4% in October, and has now declined by 1.6% over the past six months after a 1.9% decline in the six months before that. November was the first increase since February of 2022. The key increases were in building permits, improvement in average hours worked in manufacturing, and fewer initial unemployment claims. The Conference Board projects that 2024's growth will come in at 2.7% but will slow to 2.0% in 2025.
IF YOU ARE OF A CERTAIN AGE, YOU CAN SOCK AWAY MORE TAX-ADVANTAGED MONEY: In the year 2025, there will be a new rule for 401(k) and 403(b) plans. As you know, you are limited as to how much you can put in a 401(k) or 403(b) plan, and that limit for 2025 is $23,500. For people who are 50 and older, there is a catch-up rule that increases that limit by $7,000 to $30,500. The new rule going into effect in 2025 adds a “super” catch-up provision for workers who are aged 60-63. For workers of that age, the catch-up contribution will now be $11,250, meaning the maximum contribution increases to $34,750. To be eligible, you must be 60, 61, 62, or 63 by the end of the year. If you are 63, but turn 64 before the year ends, you are not eligible. If you are 59, but will turn 60 before the year ends, you are eligible. Your plan sponsor (your 401(k) plan) must allow for this as it is optional for them.
IT'S WORSE IN CANADA: Thirty-five percent of 18-34-year-olds in Canada live at home with their parents.
AUTO SALES: In November, U.S. light vehicle auto sales were up 1.2% from the month before, and up 4.9% from a year ago.
EQUAL TIME: At Thanksgiving, my side of the family gathered, and I included a picture of the MacGray clan taken during that gathering. For Christmas, my wife's side of the family, the Bonner clan, got together, and a picture was taken. I think I'd be in trouble if I did not include the picture in this week's edition of MacGray Matter (with age comes wisdom).
And yes, I realize that I somehow got my head framed perfectly in this one.
I HOPE YOU FIND JOY THIS WEEK: For some of you, this will be easy, and for others it will be more challenging. But I hope and pray that all of you receiving this email experience some real joy this week.
"Scrooge was better than his word. He did it all, and infinitely more; and to Tiny Tim, who did NOT die, he was a second father. He became a good friend, as good a master, and as good a man, as the good old city knew, or any other good old city, town, or borough, in the good old world....and it was always said of him, that he knew how to keep Christmas well, if any man alive possessed the knowledge. May that be truly said of us, and all of us! And so, as Tiny Tim observed, God Bless Us, Every One!"
Charles Dickens, A Christmas Carol
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
"I should be sorry if I only entertained them. I wish to make them better." George Frideric Handel
"It is more blessed to give than to receive." Acts 20:35 (NIV)
SOURCES:
IT'S WORSE IN CANADA: https://www.thefp.com/p/justin-trudeau-canada-government-may-collapse-pierre-poilievre?utm_source=substack&utm_medium=email
PLAYING THE ROLE OF EBENEZER SCROOGE...: https://www.federalreserve.gov/newsevents/pressreleases/monetary20241107a.htm AND https://www.yahoo.com/news/fed-drops-key-rate-projects-130024320.html
U.S. LEADING ECONOMIC INDICATORS SURPRISE TO THE UPSIDE: https://seekingalpha.com/pr/19952802-conference-board-leading-economic-index-lei-for-us-increased-in-november#hasComeFromMpArticle=false AND https://seekingalpha.com/news/4388160-us-leading-indicator-index-surprises-to-upside-in-november
IF YOU ARE OF A CERTAIN AGE, YOU CAN SOCK AWAY MORE TAX-ADVANTAGED MONEY: https://www.msn.com/en-us/money/other/a-new-super-funding-limit-for-some-401-k-savers-goes-into-effect-in-2025-here-s-how-to-take-advantage/ar-AA1w2yE4 AND https://www.kiplinger.com/taxes/super-catch-up-contribution-for-age-60-63
MARKETS CAN'T QUITE RECOVER FROM FED'S ANNOUNCEMENT: https://www.wsj.com/finance/stocks/stocks-rally-on-hopes-for-more-rate-cuts-fdefe364?mod=stocks_news_article_pos2
FED'S PREFERRED INFLATION INDEX: https://www.bea.gov/news/2024/personal-income-and-outlays-november-2024
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.
Commenti