Mixed Data, Choppy Prices, and an Undisclosed Location

July 19, 2026

CONSUMER PRICES DECREASE IN JUNE: The Consumer Price Index (CPI) decreased by 0.4% in June. This was not surprising as gas prices decreased by 10%. Over the past twelve months, prices are up 3.5% (down from 4.2% last month). The "core" CPI which excludes energy remained unchanged, and the twelve month number is now 2.6%. Compared to a year ago, the CPI is higher (2.7% a year ago). The 2.6% core CPI is lower (2.9% a year ago). The Fed closely monitors the core number which makes it less likely that the Fed will raise rates during their September meeting. Another good data point for consumers is that their pay, measured by real (inflation-adjusted) average hourly earnings, increased by 0.8% in June.

CHOPPY WEEK: There were several catalysts, good and bad, that moved markets this week.. The inflation report (see above) boosted markets on Tuesday. Financial stocks had a boost mid-week when BlackRock posted strong quarterly earnings and became the first investment firm to manage more than $15 trillion. Their stock gained 6.6% on Wednesday pushing other financial stocks higher, but that sector eked out only a 1% gain by the end of the week. Renewed fighting in Iran and the increased oil prices that followed pushed stocks lower. Tech stocks came under pressure late in the week, and particularly chip stocks, as competition from China came into the spotlight after news of a breakthrough in an artificial intelligence model. At the end of this choppy week, indices were mostly down.

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

INDUSTRIAL PRODUCTION ROSE SLIGHTLY IN JUNE: Industrial production (utilities, mining, and manufacturing) rose by 0.1% in June. Mining rose by 0.4%. Mining us up at an annualized rate of 12.1% over the past three months indicating that U.S. energy companies are ramping up output as supply disruptions continue in the Middle East. Utilities have been on an upward trend since 2023 (after two decades of stagnation) as power hungry data centers increase energy demand. Manufacturing growth in June was slightly higher than break even.

PROJECTED EARNINGS OF LARGE US COMPANIES STRONG: The projected earnings rate of U.S. companies (based on their quarterly earnings reports and guidance) over the next twelve months is 26%! If you exclude the energy sector, it is still 22%. The ten year average has been 9%.

HOUSING STARTS JUMP, BUT WAIT: New housing starts increased by a whopping 19.0% in June. The gain was due to a massive increase in multi-unit construction which fell dramatically in May. Single family housing starts decreased by 0.2% in June. Single family housing starts are down 3.2% for the past year. A leading indicator, new housing permits, declined 3.0% in June, which included a 2.4% drop in single family new housing permits. With affordability remaining a problem, builders are reluctant.

CHINESE ECONOMY STRUGGLING: In March of this year, the Chinese Communist Party (CCP) set a gross domestic product (GDP) growth target range of 4.5% to 5%, its lowest target since the 1990s. On Wednesday, China announced that its GDP grew by 4.3% over the last twelve months. Many analysts are wary of that number and believe China's growth rate is closer to zero. Retail sales are up 1% over the past year. Fixed-asset investment is down 5.7%. Real estate investment is down 18%. Demand for energy from the consumer seems to be decreasing. Imports of oil in July were the lowest in about ten years. Domestic refinery output is down. When an economy is growing, demand for energy increases. China is facing two major problems. After years of boosting from the government, the formerly booming real estate market has been falling, and has still not yet hit bottom. When consumers see their home equity continue to decrease, it slows their confidence in spending. In addition, the population is decreasing. An added problem is that the world seems less receptive to Chinese products, and China is dependent on exporting.

CONSUMER SENTIMENT BOUNCES BACK: According to the University of Michigan's consumer sentiment surveys, the consumer has not been happy for a while with the index hitting a 46-year low a couple of months ago. June saw a bit of a bounce, and in July, the Consumer Sentiment survey jumped from 49.5 to 54.4, getting back to where it was in February. Easing prices at the gas pumps helps.

FROM AN UNDISCLOSED LOCATION: I am currently on a trip where we are staying in the same place, and I am working some, and playing some (my wife is just playing...no working for her). I'll have more on this next week.

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

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"There's good in everybody. Boost. Don't knock." Warren G. Harding*

"Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own." Matthew 6:34 (NIV)

*In commemoration of the 250th anniversary of the United States, I am finding a quote from a president each week, in order. This is the 29th week, and Warren G. Harding was our 29th president.

SOURCES:

CONSUMER PRICES DECREASE IN JUNE:https://www.ftportfolios.com/retail/blogs/economics/index.aspx AND https://www.wsj.com/economy/cpi-inflation-report-june-2026-afb89992?mod=Searchresults&pos=2&page=1

CHOPPY WEEK: https://www.wsj.com/economy/cpi-inflation-report-june-2026-afb89992?mod=Searchresults&pos=2&page=1

INDUSTRIAL PRODUCTION ROSE SLIGHTLY IN JUNE: https://www.ftportfolios.com/Commentary/EconomicResearch/2026/7/17/industrial-production-increased-0.1percent-in-june

HOUSING STARTS JUMP, BUT WAIT: https://www.ftportfolios.com/Commentary/EconomicResearch/2026/7/17/housing-starts-rose-19.0percent-in-june

CHINESE ECONOMY STRUGGLING: https://www.wsj.com/opinion/chinas-economy-is-in-worse-shape-than-you-think-95792af7?mod=Searchresults&pos=12&page=1

CONSUMER SENTIMENT BOUNCES BACK: https://www.zerohedge.com/markets/umich-sentiment-extends-bounce-record-46-year-lows-gas-prices-ease

PROJECTED EARNINGS OF LARGE US COMPANIES STRONG: https://myweeklystock.substack.com/p/weekly-market-recap-jul-13-17-choppy?publication_id=697043&post_id=207202571&isFreemail=true&r=s86er&triedRedirect=true

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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.