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January 29, 2024
U.S. ECONOMY STILL GROWING: The U.S. Commerce Department reported last week that the economy grew by a 3.3% annualized rate in the fourth quarter of 2023. This after growing at 4.9% in the third quarter. Consumer spending helped, growing at a 2.8% rate.
INFLATION COMING DOWN: The Personal Consumption Expenditures (PCE) index is a measure of inflation the Fed watches very closely, especially the one that excludes food and energy. That index rose 0.2% in December, and the annual number came in at only 2.9%, down from 3.2% in November. This index peaked at 5.4% in February 2022.
CONSUMER SPENDING STRONG IN DECEMBER: According to the U.S. Department of Commerce, consumer spending rose 0.7% in December. Consumers increased their spending on healthcare, insurance, vehicles, and jewelry.
TECH STOCK RALLY CONTINUES: Despite a pause on Friday, tech stocks once again led the overall U.S. stock indices higher. The overall investor attitude that inflation is coming down without sharp economic slowing has buoyed confidence in the tech sector and the potential growth they represent. Last week's data on inflation and consumer spending increased confidence in the "soft landing" thesis. Interestingly, while the S&P 500 is once again hitting new records, only one of the eleven sectors of the S&P 500 is at an all-time high, the tech sector. The other ten sectors are still trading at an average of about 15% below their all-time highs. This has not been a broad-based rally.
LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.
TECH LAYOFFS: The U.S. labor market remains strong, but not because of the tech sector. Those employers laid off about 100,000 employees in 2023, and the layoffs continue. Microsoft just bought Activision Blizzard and promptly announced a layoff of 1,900 of its employees. EBay, SAP, and Salesforce recently amounted layoffs as well.
CHINESE GOVERNMENT PROPPING UP ITS STOCK MARKET: Chinese officials are working on creating a $278 billion fund to buy shares of stocks of Chinese enterprises on the Hong Kong exchange. The Chinese government wants to stop the domestic market decline. Below is a graph of the three-year performance of the CSI 300 (similar index to the S&P 500). It is down over 46%. This action may help the Chinese stock market do better in the short-term, but it is not a long-term solution to what is causing stock valuations in China to decline.
BANKRUPTCY INCREASING: Total bankruptcy filings in the U.S. rose by nearly 17% in 2023. There were significant increases in both personal and business filings. After declining for about a decade, filings have now increased for four straight quarters.
HE DID GREAT!: Money being invested into Faith Based mutual funds has increased seven straight years. I put my personal portfolio in a faith-based model in 2018 so we could begin to test our thesis that there would be no significant difference in performance compared to a non-faith-based portfolio of similar allocation. Last week, Logan MacGray CFA, our Investment Director, led a seminar on Faith Based Investing. It was a well-attended event, and Logan did a great job explaining exactly what Faith Based investing is and how it works. There were some lively questions and answers. Logan is now working on a webinar that will be recorded and more widely available. Stay tuned.
By the way, he said he was nervous. He looks pretty chill to me.
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. ®
President
Stonecrop Wealth Advisors, LLC
Direct | Cell | Fax
(610) 628 4545
"We who lived in concentration camps can remember the men who walked through the huts comforting others, giving away their last piece of bread. They may have been few in number, but they offer sufficient proof that everything can be taken from a man but one thing: the last of the human freedoms -- to choose one's attitude in any given set of circumstances, to choose one's own way." Viktor Frankl
"Whatever your hand finds to do, do it with all your might." Ecclesiastes 9:10 (NIV)
SOURCES:
TECH LAYOFFS: gritcap.io AND https://www.wsj.com/economy/jobs/salesforce-laying-off-700-workers-in-latest-tech-industry-downsizing-6a082fa3
CHINESE GOVERNMENT PROPPING UP ITS STOCK MARKET: gritcap.io
INFLATION COMING DOWN: https://www.bea.gov/news/2024/personal-income-and-outlays-december-2023
U.S. ECONOMY STILL GROWING: https://www.bea.gov/news/2024/gross-domestic-product-fourth-quarter-and-year-2023-advance-estimate
BANKRUPTCY COMING BACK: https://www.uscourts.gov/news/2024/01/26/bankruptcy-filings-rise-168-percent
CONSUMER SPENDING STRONG IN DECEMBER: https://www.wsj.com/economy/central-banking/what-to-watch-in-fridays-spending-report-a-last-look-at-inflation-before-the-fed-meeting-353665d9
*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.