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  • Writer's pictureDoug MacGray

Soaring Stocks, Shohei, and Bad Santa

December 17, 2023

THE FED HOLDS STEADY AND SAYS ALL THE RIGHT THINGS: For a change, the Fed not only did what Wall Street wanted, held rates steady, they also said all the things Wall Street wanted to hear. Chairman Powell publicly stated that the Fed is concerned about keeping rates high for too long. He acknowledged that the topic of rate cuts came up at the meeting. The Fed released projections showing three rate cuts for next year. That doesn't mean it will happen, but Wall Street rejoiced.

CONSUMER PRICE INDEX: The Consumer Price Index rose by just 0.1% in November. Over the last twelve months, this figure is now up 3.1%, an encouraging number. That is down from 3.2% last month. Core CPI, which excludes food and energy, rose 0.3%, and was up 4.0% over twelve months. The Fed watches the second more closely. Both still need to come down, but the Fed seems to believe that is what is happening.

SEVEN WEEKS IN A ROW: Stocks soared this week, and the S&P 500 registered its seventh consecutive week of gains. That is the longest such streak in six years. Once again, the most influential factor was the Fed and its action (or nonaction) on interest rates and its public comments indicating possible rate cuts for next year. People are believing in the "soft landing."

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

RETAIL SPENDING INCREASES AGAIN: Retail sales in the U.S. in November increased by 0.3% from the prior month, and were 4.1% higher than one year ago.

U.S. INDUSTRIAL PRODUCTION INCREASES: In November, U.S. industrial production increased by 0.2% from the month before. Manufacturing, one of the three components of industrial production, increased by 0.3%. Total industrial production in November was 0.4% below one year ago.

EUROPE...NOT SO GOOD: In the eurozone, economic activity contracted in November for the seventh straight month. That is according to the HCOB Flash Eurozone Composite PMI Output Index, a measurement of activity in the manufacturing and services sectors of the economy.

SLUMPING U.S. REAL ESTATE MARKET: Sales of existing homes in the U.S. fell in October by 4.1%, hitting its lowest level in 13 years. Home-buying affordability is currently near its lowest level in decades.

SHORT TERM FINANCIAL GOALS: Here are two reasons why you should consider adding some short-term financial goals to your 2024 financial planning.

A SMART way to move forward.

Unless you win the lottery or lead your start-up to a huge sale, you probably won't wake up one morning and buy a house. For most , the path to long-term financial goals is paved with countless short-term steps that build off each other and generate forward momentum.

The SMART framework -- Specific, Measurable, Achievable, Relevant, and Time-bound -- can help you break down big goals into smaller goals that you can track, measure, manage, and hit on a regular basis.

For example, before you can buy a house, you'll need the money for a down payment. Let's pretend you fall into the medial of the National Realtor's Association data for September 2023, and you'll need just under $32,000. If you want to buy a house in the next two years, you might set a SMART goal of depositing $1,300 every month into a dedicated savings account. $1,300 is a Specific and Measurable figure. You can review and adjust your monthly budget it make it more Achievable. It's Relevant because you want to move! And it's Time-bound to both short-term monthly savings goals and your long-term goal of buying a house.

Build better financial habits.

Again, setting aside a major windfall, there are no magic tricks that will help you achieve long-term financial goals. But paying yourself first with automatic contributions to your retirement, investment, and savings accounts, living within your means, and keeping debt low are financial planning fundamentals that can help you get where you want to go more efficiently.

Setting short-term goals can put these principles in action and create positive money habits. Perhaps you're turning 50 this year and your short-term financial goal is to make catch-up contributions to your IRA. You might start by reviewing your monthly budget and identifying excess spending you can cut back on, such as eating out less or cancelling a couple streaming subscriptions you never use. Add those savings to your automatic monthly contributions and you'll be topping off your IRA in no time, which will give you a sense of short-term accomplishment as you work towards your long-term financial security.

SHREWD MOVE SHOHEI: Star baseball player Shohei Ohtani made news last week when he decided to sign up as a free agent to play for the Los Angeles Dodgers. The contract has him tied to the Dodgers for ten years (he is 29) and get paid a total of $700 million. Bear in mind that he will be playing in California with one of the highest top state income tax rates (14.4%) in the U.S. The contract commits the Dodgers to pay Ohtani $700 million. However, he will be paid a mere $2 million per year while playing for those ten years, and then he will get $68 million per year for ten years from 2034 to 2043. If he moves out of California after he stops playing, he stands to save about $9 million per year in California income taxes. He might move to an income-tax-free state like Florida or even move back to Japan. In either case, his income deferral looks like a shrewd move.

BAD SANTA: My wife and I, and another couple, went to see a Christmas "Festival of Lights." We were in a slow-moving line behind a van. All of a sudden, the van door opens, and out jumps Santa (or someone in a Santa suit). He runs to the side of the road and takes a bio break. It was a strange image. I didn't think it was appropriate to take a picture and share, so you'll have to settle for my story.

It's the most wonderful time of the year.

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

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(610) 628 4545

"A mistake is valuable if you do four things with it: recognize it, admit it, learn from it, forget it." John Wooden

"If anyone has material possessions and sees a brother or sister in need but has no pity on them, how can the love of God be in that person? Dear children, let us not love with words or speech but with actions and in truth." I John 3:17-18 (NIV)



(c) 2023 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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