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Writer's pictureDoug MacGray
Sep 294 min read

Stocks Rise Especially in China, Money Market Funds, Devastation, and Montreux

September 29, 2024


INFLATION NUMBERS CONTINUE TO INDICATE COOLING:  The U.S. Bureau of Economic Analysis reported that personal income increased by 0.2% in August. At the same time, prices, according to its Personal Consumption Expenditures index (PCE) rose by 0.1%, rising 2.2% for the prior 12 months. This is down from 2.5% in July.  


STOCKS GAIN:  For the sixth time in the last seven weeks, stocks were up last week. Investors have been more focused on Fed policy and not rattled by the presidential election, yet. The economy's growth is slowing, but investors believe, based on their market behavior, that it will continue to advance at a decent rate, i.e., not a recession. One of the reasons for the optimism is the clear indication by the Fed that it will continue to cut rates into next year. Another is that corporate earnings have, so far, kept growing at a rate that backs the optimism to some extent. Election driven volatility tends to subside quickly after election day. Ultimately economics drive markets, and for elections to have long term effects, the new government has to effect the economy, positively or negatively. That takes longer.



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



MONEY MARKET FUNDS:  With higher interest rates, money has flocked to money market funds. A decent return that is stable has been an attractive investment. In fact, such funds held $6.76 trillion as of last week, a record. An additional $126 billion poured into such funds after the Federal Reserve announced its interest rate cut. Much of this money has come from traditional bank accounts. Are interest rates still high enough to keep this money in such funds, or will they move to the stock market? Historically, money market funds have grown for about 9 months after the Fed begins to lower rates, and then they begin to decline. In the 1990s, when Alan Greenspan's Fed began to lower rates, money market funds did not decline until yields on such funds got to about 3%.


A DISCOUNT RETAILER IS A MARKET LEADER:  Costco had moderated a bit as investors try to decipher reports that its profits are rising while its revenue has not risen as much as expected. Costco's stock is up over 60% in the last year, and almost 35% year to date. In the last month it is down 2.56%.  


CHINA GETTING MORE DECISIVE:  Last week, China cut interest rates, announced loans to companies to buy back their stock, and promised more "fiscal" moves in the near future. Investors loved it. Chinese stocks jumped double digits last week. It remains to be seen if these moves create sustainable growth for an economy beset by challenges.


HURRICANE DEVASTATION:  Hurricane Helene, and the rain that came with it, has caused devastation. We are only beginning to learn about the devastation. There are many devastated communities. As you may recall, I went to Lake Lure and Chimney Rock, North Carolina a bit over a month ago for a wedding. I loved the Chimney Rock community, the row of stores along a beautiful river. We ate and drank there, shopped, and hiked around. It is gone. The entire community appears to have been wiped out. Again, it is hard to get information at the moment, but apparently that beautiful little river swelled so high that the road, and the community were wiped out. The town of Chimney Rock appears to be mostly gone. It is heartbreaking. It is a reminder that when these events occur, the statistics can feel distant, but the suffering is real. The real people with whom we interacted are now picking up the pieces, if there are any to pick up. God bless them as they figure out what is next, and work on recovering from total loss.


WHERE WAS I LAST WEEK?:  There are two couples with whom my wife and I have been vacationing with for many years. It started small, with weekends in Annapolis or the Poconos, or the like. We eventually upped it to a week. This was our twentieth year together, and the six of us wanted to do something special. About six months ago, we had dinner, and we were all supposed to bring an idea or two. My idea was Montreux, Switzerland, and that idea won. So, we spent last week on the shores of Lake Geneva (remind you of an iconic classic rock song?). I spent about 36 hours there when I was 24 (long story) and remembered it fondly. Being able to spend a week there was an incredible blessing. It is a beautiful part of the world. We took day trips to see Lauterbrunen, Kleine Scheidegg, Chamonix (France), Gstaad, Vevex, Lavaux, Lausanne, and Gruyere.



LAUTERBRUNEN:  The picturesque town of Lauterbrunen is one of the places we visited. I was thrilled to visit as I also went there at the age of 19 during a college semester abroad. Below on the left is a picture I took last week, and on the right is a picture I took when I was 19. As a bonus, I added another picture from the same time and place. Gotta love the shorts.



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


"True republicanism is the sovereignty of the people.  There are natural and imprescriptible rights which an entire nation has no right to violate."  Marquis de Lafayette (200 Year Anniversary of his 1824 Farewell Tour where he came back to the country he loved and served to ecstatic welcome)


"Never tire of doing what is good."  II Thessalonians 3:13 (NIV)


SOURCES:

INFLATION NUMBERS CONTINUE TO INDICATE COOLING: https://www.bea.gov/news/2024/personal-income-and-outlays-august-2024

A RETAILER IS A MARKET LEADER: YCharts.com


(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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