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February 16, 2025
INFLATON PICKS UP: The Consumer Price Index rose by 0.5% in January. The one-year CPI number rose to 3.0% from 2.9%. The "core" CPI (without food or energy) rose 0.4%. The one-year number rose from 3.2% to 3.3%. Core inflation has now increased each month since September, but has stayed very close to 3.3% for the past eight months. This likely delays any Fed plan for lowering interest rates to the second half of the year.
PRODUCER PRICES: The Producer Price Index tracks prices at the wholesale level. This index is looked at as a leading indicator as to what may happen to consumer prices in the near future. The January PPI rose 0.4% after rising 0.5% in December. Over the last twelve months, the PPI is up 3.5%.
STOCKS BOUNCE BACK: After two weeks of declines, the S&P 500 rose last week. Earnings growth for the largest seven companies (the "Magnificent Seven") is still strong, but the acceleration rate is slowing. But the other 493 companies in the S&P 500 are seeing earnings growth accelerate. News that the administration may be holding off on some tariffs buoyed stocks later in the week. Despite disappointing inflation numbers, stocks enjoyed a positive week.
LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.
AVERAGE MORTGAGE RATE RISING: There are still lots of people with low rate mortgages, but a greater percentage of American homeowners are paying higher rates. Currently 17.2% of homeowners have a 6% or higher rate, the highest such proportion since 2016. In the third quarter of 2023, 12.3% of homeowners were paying 6% or higher. This current interest rate environment continues to prompt many homeowners to stay put, drying up housing supply.
U.S. INDUSTRIAL PRODUCTION CONTINUES TO DRIFT: U.S. industrial production (a combined measure of mining, utilities, and manufacturing) increased 0.5% in January. The increase was largely caused by a 7.2% increase in utilities due to cold temperatures. Manufacturing decreased slightly and mining decreased by 1.2%. Industrial production has drifted with no real trend for the past couple of years.
RETAIL SALES DECREASE IN JANUARY: U.S. retail sales in January decreased 0.9% from the prior month, but were 4.2% higher than January of a year ago. A snap of cold weather may have had something to do with it. Retail sales rose 0.7% the month prior, so there is no trend at this point.
CHINESE NOT MARRYING: In 2024, 6.1 million couples got married in China. This is a 20.5% drop from the previous year and a record low. This despite broad government efforts to encourage young people to marry and have children. Marriages have been declining since 2013. Divorces also increased by 28,000 to nearly 2.6 million. China's overall population has been shrinking for three consecutive years. The working population (ages 16-59) declined by 6.83 million last year.
SURPRISE!!: My wife and I traveled, by car, to the north shore of Massachusetts for meetings I had on Thursday and Friday. After a long drive in challenging weather, we arrived to our room after 11:00 p.m. It was one of those small hotels that sends you a text with a code, so you can go right to your room. We couldn't wait to get to our room and get some sleep. It had not occurred to us that it is Valentines Day weekend. The hotel didn't forget. This is what we walked into. I'm afraid we might have been given a room where someone actually ordered this, and the poor guy who expected it didn't get his decorations. Anyway, in my fatigue I was not quick-witted enough to claim credit.
HAPPY BIRTHDAY MOM!: After my meetings, we drove an hour to participate in the celebration of my mom's 90th birthday! She has seen an endured a lot. She made some comments to the entire family that assembled, and the general theme was gratefulness.
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 have never met a man so ignorant that I couldn't learn something from him." Galileo Galilei
"For the love of money is a root of all kinds of evil." I Timothy 6:10 (NIV)
SOURCES:
AVERAGE MORTGAGE RATE RISING: https://www.zerohedge.com/markets/17-percent-us-homeowner-mortgages-are-6-percent-interest-or-higher-report
CHINESE NOT MARRYING: https://www.cnn.com/2025/02/10/china/china-marriage-registrations-record-low-2024-intl-hnk/index.html
U.S. INDUSTRIAL PRODUCTION CONTINUES TO DRIFT: https://www.federalreserve.gov/releases/g17/Current/default.htm
RETAIL SALES DECREASE IN JANUARY: https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-02-14-2025/card/retail-sales-fell-0-9-in-january-NYZwtOjI6DMS1QQ6DaMl?mod=Searchresults_pos1&page=1
INFLATON PICKS UP: https://www.bls.gov/news.release/cpi.nr0.htm AND https://www.forbes.com/sites/simonmoore/2025/02/12/january-cpi-inflation-accelerates--potentially-delaying-any-rate-cuts/
(c) 2025 Anno Domini, 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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