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Lower Interest, Mixed Markets, China Leads in Electricity, and The Passing of a Giant

  • Writer: Doug MacGray
    Doug MacGray
  • 6 days ago
  • 6 min read

December 14, 2025


FED LOWERS RATES AGAIN: The Fed lowered its key interest rate by another quarter of a percentage point last week, the third cut this year (all since September). This was largely expected. Two voting members voted against a cut, and one voted for a half percent cut. The Fed mentioned the softening labor market as justification. Fed Chair Powell strongly hinted that it will now be in no rush for future cuts, and it will watch future economic data closely.


MIXED MARKETS: Tech stocks struggled this week. The week started poorly when Oracle reported its third-quarter results. Its earnings beat estimates, but it reported disappointing sales. Later in the week, a report surfaced stating that Oracle had delayed by a year the delivery of some data centers it is developing for OpenAI (ChatGPT maker) due to material and labor shortages. Oracle's stock fell by over 13% on the week. Broadcom stock fell over 8.5% after it reported strong revenue but warned of shrinking profit margins due to a greater share of its revenue coming from lower-margin AI chips. Investors, worrying about its future profitability, sold. As a result, the tech-heavy NASDAQ Composite Index was down 1.62%, and the S&P 500, which has a heavy cap weighting to the tech sector, was down 0.61%. International stocks were up again, and small company stocks, as measured by the Russell 2000 index, were up 1.19%. The AI trade has been based on optimistic assumptions about future earnings and profitability of those companies, so any indication that earnings and profits will not be quite good will cause pullbacks like this. The Fed's rate cut did have the effect of rallying the small-cap stocks, which benefit from easier access to loan capital. The bottom line is that a lot of investors pulled money from large tech companies and moved it into U.S. small-cap stocks.


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


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GAS PRICES DECREASING: According to GasBuddy.com, prices for a gallon of gasoline fell 5.0 cents last week to $2.90. The national average is down 17.6 cents from a month prior and 7.3 cents lower than a year ago. Diesel fuel also fell by 5.1 cents per gallon last week and now stands at $3.67 per gallon.


SHELTER INFLATION LIKELY TO DECREASE, SAYS GOLDMAN SACHS: There has been rapid growth in the supply of multifamily housing units. The labor market has cooled. Immigration has slowed down. As a result of these factors, Goldman Sachs is predicting that the current 3.4% inflation rate (down from 3.7% in September and 8.3% in April 2023) for shelter costs will decrease to 2.1% by December 2026.


SALT: Under the 2017 Tax Cuts and Jobs Act, deductions for state and local tax (SALT) were capped at $10,000 for married couples. As of this tax year, 2025, that deduction has been increased to $40,000. It will increase by 1% every year through 2029, and go back to $10,000 in 2030. If you live in a state with high total tax burdens (state income tax, local income tax, and property tax), this could benefit you. Residents of New York, California, New Jersey, Massachusetts, and Connecticut could see the biggest tax break from this new limit. Note, if your income is above $500,000 (married couples), the SALT deduction begins to phase out, and if your modified, adjusted gross income is above $600,000, your SALT deduction reverts back to $10,000. Talk to your tax advisor if you have any concerns about navigating this new law.


DID CHINA SEE THE AI POWER SURGE COMING?: According to a forecast by Morgan Stanley, U.S. data centers, those places needed to run the growing AI demand, will fall about 44 gigawatts short on their energy needs. That is the equivalent amount of electricity needed to power New York City. Companies are now beseeching Washington to cut red tape and/or provide financial support to modernize the U.S. power grid. China now has the largest power grid. Between 2010 and 2024, its electric power capacity increased by more than the rest of the world. In 2023, China produced twice as much electricity as the U.S. Chinese data centers are paying significantly less for electricity than their U.S. counterparts, as much as 50% less. Moreover, China plans to increase its spending on electricity projects by 45% in the next five years. China has 34 nuclear reactors under construction and nearly 200 planned or proposed.


A LONGWOOD CHRISTMAS: It never disappoints.


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THE PASSING OF A GIANT: Last weekend, I got some bad, but not surprising, news in a text message. Tiger Dawson, the CEO of Edify, passed away due to the cancer he had been fighting for some time. As many of you know, my wife and I have been engaged with the nonprofit Edify for approximately a decade, so this loss hurts. I love their business model. Even though I lead a for-profit, I have often looked to Edify for inspiration in leading Stonecrop because of the inspired leadership it got from Tiger. He passed at the age of 64. Until this sickness, it seemed like he had many more years of energy left. Tiger has been in the nonprofit world his whole life, and about 16 years ago, he was talking with his wife about potentially leaving his job, and he said, "I think my exit strategy is when I hear an idea that's so compelling it can truly change nations, I will pursue it." That idea was Edify for which he has held leadership roles since, until last week. I have been with Tiger in four different countries and seen his leadership firsthand. When I began my own company (Stonecrop in 2020), I knew, due to the government shutdowns, that I would have to lead a virtual company for a while. Tiger allowed me to pick his brain because he had led a worldwide (they are in 16 countries) organization incredibly well, and I wanted to learn from him. Tiger was a person firmly committed to the mission of Edify, firmly committed to loving his wife and family, and yet one of the more playful and humble people I have ever met. He never took himself too seriously, but he always took the conversation he was in at that moment very seriously. I'll continue to look at Tiger and the way he lived, loved, and led as inspiration. Well done, Tiger.


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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.


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Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545




"There are moments, most unexpectedly, when something inside me tries to assure me that I don't really mind so much, not so very much, after all. Love is not the whole of a man's life. I was happy before I ever met H. I've plenty of what are called 'resources.' People get over these things. Come, I shan't do so badly. One is ashamed to listen to this voice, but it seems for a little to be making out a good case. Then comes a sudden jab of red-hot memory and all this 'commonsense' vanishes like an ant in the mouth of a furnace." C.S. Lewis, A Grief Observed


"Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each man should give what he has decided in his heart to give, not reluctantly or under compulsion." II Corinthians 9:6-7


SOURCES:

SHELTER INFLATION LIKELY TO DECREASE SAYS GOLDMAN SACHS: https://www.calculatedriskblog.com/2025/12/goldman-on-shelter-inflation.html

(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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