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  • Writer's pictureDoug MacGray

Central Banks in Spotlight, Less Babies, and Watching Basketball While Consulting

March 25, 2024


THE FED DOESN'T ACT, AND INVESTORS LOVE IT:  Last week, the Fed held meetings and did not take any action on interest rates. But a narrow majority reaffirmed intentions to cut rates three times this year. Because of growing recent pessimism about these cuts, news of this reaffirmation cheered the markets which rallied on the news. Most are expecting the first rate cut to occur in June. Fed Chairman Powell said that the latest inflation data "haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road toward 2%."


HOPES OF FUTURE RATE CUTS FUEL MARKET SURGE:  U.S. stocks had a great week cheered by hopes that high borrowing costs will begin to wane soon. The S&P 500 hit a new high on Wednesday, and then again on Thursday before pausing on Friday.



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



BANK OF ENGLAND HOLDS RATES STEADY:  The Bank of England is following the example of the U.S. Fed by keeping rates steady at 5.25%. It also hinted at cuts on the horizon. Inflation in the UK decreased to 3.4% in February, its lowest rate since September 2021. In the fourth quarter of 2023, the UK fell into a technical recession (two consecutive quarters of negative growth). 


SWISS NATIONAL BANK LOWERS RATES:  The Swiss National Bank lowered its main policy rate by 0.25% last week to 1.5%. Inflation in Switzerland has been below 2% for a few months. This is the first central bank in the developed world to lower rates in this cycle.  


SUCCESSFUL TECH IPO:  Reddit's initial public offering occurred last week. After debuting at $34 per share, prices peaked 70% higher than the initial price. This IPO comes after (or perhaps still amid) a dry period for such offerings. Rising interest rates and inflation have made going public a more difficult task. Reddit believes AI will be a big revenue generator for them. As with most tech companies, you must take that on faith for now. We'll see how Reddit (ticker RDDT) fares going forward.


HOME SALES ROSE IN FEBRUARY:  Sales of existing homes in February were 9.5% higher than the month before.  Over the last twelve months, sales are down 3.3%. The inventory of existing homes for sale is up 10.3% from a year ago.



CALIFORNIA HAS A LOT OF RICH PEOPLE.  Using 2021 data, three states register about 8% of their citizens with adjusted gross income of $1 million or higher. Those states are New York, Texas, and Florida. In California, this percentage is 17.9%. No other state registered as high as 4%. In Pennsylvania the percentage is 3.2%.


"IT'S THE END OF THE WORLD AS WE KNOW IT":  According to a new study published in The Lancet, the total fertility rate worldwide is now 2.23, not far above the 2.1 children per woman needed to maintain population growth. In 1950, this figure was 4.84. The researchers behind the study predict this rate will decrease to 1.83 by 2050 and 1.59 by 2100. This would mean that by around 2050 the world population would decrease for the first time since the Black Death in the 1300s. The graph below shows the trend in fertility rates.




BETRAYED BY THE DOMINICAN REPUBLIC!: I do virtual meetings from both my West Chester office and my home office in Delaware. Logan and I virtually met with clients on Friday afternoon. When I sit in this position, there is a television on the wall beyond my left computer monitor. Of course, it is usually on a financial channel if I am at my home office. But on Friday, it was on March Madness while I was watching  the Northwestern vs. Florida Atlantic game (I picked Northwestern in my bracket). When it came time for the client meeting, I muted the sound, and focused on the clients (honest, I wasn't watching the game!). But Logan, who was at his office in the virtual meeting told me afterward that he could see a reflection of the basketball game in the flag of the Dominican Republic. Busted! Next to my bookcases, I have flags of the two places where I have spent the most time doing missions work. I never thought my homage to those two countries would betray me.



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


"Work is not primarily a thing one does to live, but the thing one lives to do."  Dorothy Sayers


"Moreover, when God gives any man wealth and possessions, and enables him to enjoy them, to accept his lot and be happy in his work--this is a gift of God.  He seldom reflects on the days of his life, because God keeps him occupied with gladness of heart."  Ecclesiastes 5:19-20 (NIV)


SOURCES:

CALIFORNIA HAS A LOT OF RICH PEOPLE. https://gritcap.io/p/ultimate-meme-stock


(c) 2024 A.D., Stonecrop Wealth Advisors, LLC, All Rights Reserved


*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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