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  • Writer's pictureDoug MacGray

Nvidia, Foodflation, Federal Debt, and False Identification

February 26, 2024

NVIDIA LEADS THE WAY:  On Wednesday evening, Nvidia released its earnings report. Its quarterly sales and forecast of future sales were higher than expected, and its shares rose by 17% on Thursday and Friday, leading a general market surge. That created the sixth winning week out of the eight weeks of this year. The S&P closed out at a new record on Friday. 2024's stock surge is being mostly led by corporate earnings, which is more sustainable than speculation in interest rates, which largely led 2023's rising stock market. Nvidia is in the chip making business, and tech companies are rapidly expanding due to AI, and they need lots and lots of chips. The Stoxx Europe 600 and Japan's Nikkei are also trading at record highs.

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

DON'T LOOK FOR DECREASING FED RATES SOON:  There has been lots of speculation that the Fed is going to lower rates soon, and there are a lot of sound reasons for believing it. But comments from the Fed have consistently tried to convey caution. Last week, meetings from the Fed's most recent meetings were released, and they emphasized the need for more concrete evidence that inflation is going to continue to head towards its 2% target. Until then, rates stay where they are, it seems.

FOOD INFLATION:  According to the U.S. Agriculture Department, the average American spends 11.4% of their disposable income on food. That is the highest percentage since 1991. Other than transportation costs, since 2019, food costs have gone up the most at about 25%.  

EXISTING HOME INVENTORY REMAINS LOW:  In January, the inventory of existing homes increased from 0.99 million (December) to 1.01 million. Inventory usually decreases to seasonal lows in December and January and picks up steam through the summer. Despite the interest rates, demand remains higher than supply, but it is moving up. In all of January, inventory was up 7.9% from a year ago, but down 40% compared to January of 2019.

LOW UNEMPLOYMENT CLAIMS:  The pre-shutdown, post shutdown labor market looks remarkably similar right now. Initial unemployment claims last week decreased to 201,000, keeping the four-week moving average low at about 215,000.

REPRISE:  We had great demand and turnout to Logan MacGray's seminar on Faith Based Investing a few weeks ago, and many people told us to do it at night when they could come. So, we have decided to do it again! Sign up if you want to come this coming Wednesday, February 28, at 7:00PM at align.Space (2 W. Market Street, West Chester, PA  19382).

WE ARE DRIVING MORE:  In 2023, the cumulative miles of automobile travel on streets and roads in the U.S. increased by 2.1% from the year prior. The total estimated mileage was 3.27 billion vehicle miles of travel.

U.S. OIL PRODUCTION:  According to Goldman Sachs research, the U.S. now produces more oil than Saudi Arabia and Russia combined.

CHINESE HOME PRICES DECREASING:  The price for a new home in China fell 1.24% in January compared to a year prior. Prices for existing home sales fell by 4.4%.

FEDERAL DEBT:  Below is a chart showing the ratio of U.S. Federal Debt to the GDP of the U.S. Economy. As you can see, it has come down from the post-shutdown high, but it has a way to go. A new driver preventing further decreases is the amount of revenue (or borrowing) it takes to pay the higher borrowing costs. All those 5% Treasury bonds that investors have been purchasing have to be paid back.

A SAD DAY:  Someone from my hometown of Holliston, Massachusetts took this picture last week. This is the venerable Andrews School being demolished. I went to first grade here. Here is where Miss Hall (later Mrs. Haines, as she got married half way through the year) taught me how to read. I walked every day from my home on Winthrop Street the one half mile to Andrews School. I have lots of vivid memories.

FOR THE RECORD, THIS IS NOT ME:  I have a friend who saw this picture on Boating Magazine's cover. Due to the resemblance to yours truly, he circulated it and asked why I was not wearing a wedding ring and asking who the woman was. This is not me! We tall, shaved-headed guys all look alike.

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. ®


Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545

"If A equals success, then the formula is A equals X plus Y and Z, with X being work, Y play, and Z keeping your mouth shut." Albert Einstein

"Even a fool is thought wise if he keeps silent, and discerning if he holds his tongue." Proverbs 17:28



(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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