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Nontransitory Inflation and a Handy Bro

Writer: Doug MacGray
Doug MacGray
2 days ago
5 min read

October 18, 2026


NONTRANSITORY INFLATION: If we have discovered anything in the last decade, when a one-time event causes inflation, even if that event is temporary or limited in time or scope, the inflation is never "transitory." It filters through the economy, causing broad effects that linger and persist. The government shutdowns and the government money that followed caused what was then called (by the Fed, no less) 'transitory.' It wasn't. That inflation surge had not quite run its course when the oil/gas/diesel spike caused by the Iran war occurred. Last month, consumer prices rose 0.6%. The annual number rose to 3.7%. None of this is a surprise, but the numbers were still enough to cause the equity markets to pull back mid-week. The so-called "core" inflation number came in at 2.6%, an increase from the prior month. Fuel costs rose 5.2% in September and are up 20.4% from a year ago. Airline fares are up 22.4% year-over-year. Internet services and prescription drug prices decreased (-1.3% and -1.2% respectively). We have now gone 66 straight months with inflation coming in higher than the Fed's target rate of 2.0%.


MORE BAD THAN GOOD: The market saw more bad than good this week as continued worries about the cost of borrowing, and its potential effects on tech company corporate profits, weighed on markets. The tech sector pulled the indices negative. The tech sector of the S&P 500 was down 7.7%. Four of the other eleven sectors of the S&P 500 (consumer defensive, energy, health care, and materials) were up 3.0% or more. In the tech sector, CoreWeave fell 25% as investors worried whether the cloud-computing company will be able to pay down its debt. South Korea's Kospi index (heavily weighted toward chip and technology stocks) is down more than 37% from its summer peak. Nvidia fell nearly 7% for the week. Tech stocks remain overly influential, and this week, that influence was negative.


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



SALES OF EXISTING HOMES: In September, sales of existing homes increased by 1.5% from the prior month. But as you can see from the graph below, that just kept such sales in the same low range they have been in for the last three years. The rising mortgage rates will contribute to this malaise. The inventory of available homes is increasing, which should provide some relief (more supply should moderate prices). The average price for an existing home has only gone up 1.3% in the past year, significantly less than the pace of inflation.


AI HELPING CHINA: The AI industry is growing fast, and the beneficiaries are found in many places. One of them is China. Exports from China rose 36.3% in September compared to a year earlier. In August, that reading was 25.0%. The reason is strong global demand for AI-related and green tech products. Semiconductors and computing equipment led the export growth. Electric vehicles from China also helped. Despite all the headlines, exports to the U.S. are up 40% from a year ago. China continues to struggle with low domestic demand and a prolonged property market downturn.


LOW JOBLESS CLAIMS: For the fifth straight week, the number of Americans filing initial unemployment claims was less than 200,000 (199,000). That is the first time that has happened since the year of the Apollo 11 moon shot. New hires have not been a strong number lately. It is a low fire/low hire environment.


DELAWARE LEADERSHIP PRAYER BREAKFAST: The Delaware Leadership prayer breakfast has been running for about forty years, and I have been involved for close to half of those years as part of the steering committee. This year, my friend Bob Doll was the speaker. Below is a picture of Bob (toward the right) along with most of Delaware's prominent politicians. I'm the tall bald guy behind Senator Coons.


THANKS BRO!: My older brother Colin retired after a long and successful career in the manufacturing industry. He has an MBA and a bachelor's in electrical engineering. With his wife going on a Mediterranean cruise with her girlfriends, Colin decided to spend two weeks at our house. His purpose: to help all three of my homeowner children (and his brother) do some handyman projects. He fixed a deck, installed an epoxy floor in a garage, put up a chair rail, installed a couple of toilets, hung a television, helped finish a sun room, and much more. He decided to bless my family with his handyman capabilities. The bonus for him was that he got to spend time with his nephews, nieces, and his grandnieces and nephews. He is way more handy than me. (I'm still younger and better-looking, so there's that.)


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




"Leadership means bringing people together in pursuit of a common cause, developing a plan to achieve it, and staying with it until the goal is achieved." Bill Clinton*


"A slack hand causes poverty, but the hand of the diligent makes rich." Proverbs 10:4 (ESV)


*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 42nd week, and Bill Clinton was our 42nd president.


SOURCES:

LOW JOBLESS CLAIMS: https://www.zerohedge.com/markets/initial-jobless-claims-hover-57-year-lows © 2026 Anno Domini, 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 is 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.


The information contained herein has been compiled from third-party sources (see above) and is believed to be reliable; however, its accuracy is not guaranteed. This newsletter is not an offer or a solicitation to buy or sell securities, and you should not construe it as investment, tax, or legal advice, or a specific investment recommendation. Any opinion included in this newsletter is our judgment as of the date of this report and is subject to change without notice.


If you want any additional information regarding Stonecrop Wealth Advisors, including management fees and expenses, you can contact us directly or review our Form ADV Part 2, which can be found here (www.adviserinfo.sec.gov), or which we will be happy to provide to you upon request. Only God knows the future, and so while past performance can be helpful information, it is not a guarantee of future performance, which could be completely different.


SDG

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