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Writer's pictureDoug MacGray
Jan 155 min read

Stocks and Prices are Up, and Joan of Arc

Updated: Feb 13

January 15, 2024


CPI BOUNCES BACK UP A BIT:  Inflation, as measured by the Consumer Price Index (CPI) was up 0.3% in December, and up 3.4% over the past twelve months. This is an increase from November's annual number which stood at 3.1%. The so-called "core" inflation index, which strips out food and energy, was up 0.3%, and up 3.9% for the year. The Fed looks at core inflation as the more sustainable and telling data point, and thus influences its policy. Core inflation moved down from 4.0% to 3.9%, continuing a very gradual downward trend. Regardless, inflationary pressures are not gone. Big contributors to the rise were housing costs, motor vehicle insurance and medical costs.


STOCKS MOVE BACK UP:  After declining in the first week of the year, stocks ended this past week up. Investors seem to be looking hard at valuations (some stocks appear expensive, and some on the cheap side) and the overall health of the economy which seems uncertain to okay. After the initial exuberance following the Fed signaling that it was finished raising rates, markets seem like they may wobble a bit while waiting for some decisive signs as to where the economy (U.S. and global) and markets are going. Airline stocks suffered all week with uncertainties in energy prices, supply chains and geopolitical risks.  



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



FREIGHT TRAINS ARE BUSY:  The total amount of train carloads originated in 2023 was 0.7% higher than both 2021 and 2022, and the most since 2019. The number of carloads in December was 7.3% higher than December of 2022.





ELECTRICITY PRICES GOING UP:  In much of the country, electric companies are government-approved monopolies that have exclusive rights to sell electricity in certain territories. As such, being monopolies, they must go to the government to get approval or rate increases. When these companies seek increases, they have to justify the higher prices by citing additional expenses. If the rate increase is approved, your electricity bill goes up. In 2022, over 80 rate increase requests were filed, the highest in 40 years. By September of 2023, 63 rate increase requests had been filed across 28 states. 2021 and 2022 saw the largest annual increases in electric rates on record. 2023 is set to beat them all. The rate increase requests filed by September of 2023 reached $24 billion, $7 billion more than all of 2022. These rate increase requests eventually show up on consumer bills. The average U.S. consumer saw a 15% rise, from $117 per month to $135 per month, from 2020 to 2022.  


ECONOMIC GROWTH:  It looks like the growth the U.S. economy in 2023 will come in somewhere around 2.4%. Assuming that is the case, let's take a look at annual gross domestic product growth in recent years:

  • 2023          2.4%

  • 2022          1.9%

  • 2021          5.8%

  • 2020          -2.2%

  • 2019          2.5%

  • 2018          3.0%

  • 2017          2.5%

  • 2016          1.8%

  • 2015          2.9%

  • 2014          2.5%

  • 2013          2.1%

  • 2012          2.3%

  • 2011          1.6%

  • 2010          2.7%


WE ARE DEPENDENT ON CHINA:  The U.S. Energy Act of 2020 defines a critical mineral as, "As non-fuel mineral or mineral material essential to the economic or national security of the U.S., whose supply chains are vulnerable to disruption." Currently there are 50 such critical minerals on the list. Yttrium is one. This is a soft, silvery metal used in alloys to make microwave filters for radars and as a catalyst in making certain kinds of plastic. China supplies 94%. Rare earth minerals are used for smart phones, hard disks, LEDs and clean energy and defense industries. These are 74% supplied by China. The list goes on.  65% of bismuth, used in metallurgy, comes from China. 63% of antimony (batteries), 57% of arsenic (semiconductors), 54% of germanium (chips, fiber optics, and 53% of gallium (chips, fiber optics) all come from China. We need to diversify that supply chain.


MONEY AND HAPPINESS:  Empower recently conducted a survey. 71% of Americans agreed with the statement that "having more money would solve most of my problems." I would be in the 29%. 59% of Americans say money can buy happiness. How much salary does an American need to be happy? The answer averaged out to $284,167. Men's average answer was $381,000 and women's average was $183,000. Millennials put the number at $525,000! Fortunately for Stonecrop, 73% agreed that "a solid financial plan would bring me happiness."  


COME TO OUR OFFICE BUILDING FOR BREAKFAST AND A PRESENTATION ON FAITH-BASED INVESTING



Do you know the practical implications of owning an index fund? Did you know that you actually own a portion of each of those businesses? What does that mean? Are any of those companies engaged in activities that contradict your values?


Join Logan, Wednesday, January 24th, from 8:00 to 9:30AM at align.Space (2 W Market St., West Chester, PA, 19382), as he discusses business ownership, personal values, and how to set up a portfolio in which your personal investment money is more closely aligned with your values and not against them.



SO WHAT ARE YOU READING?:  I just finished reading Joan of Arc by Mark Twain. I had no idea this book existed until it was mentioned and recommended to me by a friend. Twain did years and years of research for this book which he claimed was his best. It is fascinating how he took his style of writing to create a historical fiction book that is both entertaining and informative. I love reading about history, and this was a treat.



Have a great week!


Our mission is to help you 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


"Life is a storm, my young friend. You will bask in the sunlight one moment, be shattered on the rocks the next. What makes you a man is what you do when that storm comes."  Alexandre Dumas


"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


SOURCES:


*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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