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War, Mixed Economic Signals, and Bad Concrete

  • Writer: Doug MacGray
    Doug MacGray
  • 5 days ago
  • 4 min read

June 22, 2025


STOCK PRICES HOLD:  Investors were watching the Middle East all week as the market, during a holiday-shortened week, did not break in any particular direction.  Oil prices, on the other hand, have jumped about 11% since the outbreak of the Israel/Iran hostilities.



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



RETAIL SALES TAKES A STEP BACK: Retail sales in May were 0.9% lower than the month before, the largest monthly decline in about two years. Auto sales decreased due largely to a spike in auto sales in prior months because buyers were trying to beat the tariffs.


THE FED HOLDS: The Fed met again last week, and it held rates steady. The Fed stated that it has lowered its expectations for U.S. economic growth for the rest of the year. It lowered its projected annual, inflation-adjusted growth projection from 1.7% to 1.4% for 2025. The Fed believes unemployment will rise from 4.2% to 4.5%, and remain there through all of 2026. It increased its inflation expectation to 3.0% by the end of the year and 2.4% for 2026 (an increase from their prior projection of 2.2%). The Fed stated that it continues to anticipate two rate cuts this year, but the timing remains a mystery.


AIR TRAVEL HOLDS STEADY: Air travel for 2025, using a seven-day average of daily total traveler throughput from the TSA, is essentially unchanged from one year ago. The red line below is 2025.



HOUSING INDUSTRY HEALTH:  The amount of new homes that were started (housing starts) in May was 1.256 million.  This was 4.6% below May of last year.  Before a home is started, a building permit is applied for.  The amount of new home permits authorized in May was 1.393 million.  This was 1.0% less than May of 2024.



INDUSTRIAL PRODUCTION: Total industrial production in the U.S. fell 0.2% in May after increasing 0.1% in April. Manufacturing (one component of industrial production) increased by 0.1% due largely to a 4.9% rise in the index for motor vehicles and parts.


WHAT IS THE BETA OF YOUR PORTFOLIO?: Beta is an investment term. It measures the volatility of a particular investment compared with the broader market. If, for example, the beta of a particular stock compared to the broader market (using the S&P 500 as the measurement of the broader market) is 1.5, that means the stock is much more volatile than the S&P 500. At 1.5, that means for every 1% the S&P has been up, this stock has moved up 1.5%. But it also works on the downside, meaning if the S&P 500 is down 1%, your stock has been down 1.5% on average. An investment can have a more conservative beta of under one. I learned early in this business that, as an investment advisor, I need to know 1) how I define the broader market (do I use the S&P 500 or some other index?), and the beta of my client portfolios. We use a very broad, weighted benchmark. Then we measure the beta of every client portfolio. If the beta is not what we want, we adjust. Do you know the beta measurement of your portfolio? If you are not using Stonecrop, can your investment advisor tell you what your beta is?


BUILT TO LAST?: A few years ago, my wife and I visited Rome, and I snapped this picture (below on the right) of the Pantheon. The Pantheon was built in the second century and it held together with concrete. The picture on the left is my new chimney. Our house was built in the late 1970s, and the original chimney was held together with concrete. Why is one still standing almost two thousand years later, and my chimney had to be replaced after less than fifty years? Our chimney was falling apart, and we put off doing something about it for about ten years. Now we are proud owners of a new chimney.



ANOTHER HEAVY WEEK:  This week ended with the U.S. becoming directly engaged in the hostilities with Iran.  As we continue our day-to-day lives, doing our work, loving our families, and pursuing our normal activities, this conflict hangs over our heads like a dark cloud as we think of young pilots and other service personnel engaged in dangerous activities.  We can debate the merits of these military engagements, but there is no question that those following orders and putting their lives on the line are special people, and we want them all to remain safe.  On the broader picture, we want the hostilities to come to a quick conclusion, and the post-conflict world to be better, safer, and more peaceful.

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




"There's no honorable way to kill, no gentle way to destroy. There is nothing good in war. Except its ending." Abraham Lincoln


"Blessed are the peacemakers, for they will be called children of God." Matthew 5:9


SOURCES:

WHAT IS THE BETA OF YOUR PORTFOLIO?: https://www.investopedia.com/terms/b/beta.asp


(c) 2025 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved


Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.


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.

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