What Happened Last Week and What It Means to You: June 22nd, 2022

Week Ending June 17th, 2022

Excuse the movie titles. It is the first time I have been to a theater since COVID and yes, Top Gun was awesome!!!

Buzz Light Year, I mean Inflation…To infinity and beyond. Both bad for business. Ask Disney. Inflation is now pricing the average family out of the parks. A one-day park hopper Tier 6 pass is $215 for kids 3-9 and $224 for ages 10 and up.

What does it mean – Inflation beyond anything we have seen in this country since the 1970’s if we do not get energy back under control and regain our energy independence. In the late 70’s, energy independence was the sole reason for creating the Department of Energy. It has done nothing but create more rules and regulations and has provided the federal government nearly 50 years of excuses to mess with American energy independence. Another example of, “I am from the government, and I am here to help.” Yikes. How’s that working for us?

Here is what really matters to most Americans:

  • The food index was up 1.2% month-over-month in May and up 10.1% year-over-year. A heck of a lot worse if you actually eat real meat and vegetables and fruit.
  • The energy index was up 3.9% month-over-month in May and up 34.6% year-over-year. Just wait until you start seeing your regulated electric bill start going up at record levels.

The Hangover…Personal spending is falling off after an amazing time online. Stimy-boats, stimy-flatscreens, stimy-phones, stimy-RV’s, stimy too much money?

What does it mean – An Amazon life for me. See the chart below – The yellow spikes are the stimulus checks. Our government handed out $ trillions on behalf of you, the taxpayer, to many of your fellow citizens who went online and ordered trillions of goods from Amazon, Walmart, etc. While it was great for many companies it accelerated the adoption of new fitness equipment, technology and leisure equipment like boats, RV’s, and outdoor equipment. Now the stimulus checks have come home to roost and real wages are falling. Free money from the government is slowing or gone unless you live in CA and are addicted to drugs. Our current administrations solution is to spend trillions more on handouts. How do you think that will turn out?

First comes record inflation…Then comes record interest rate hikes.

What does it mean – The highest increase in interest rates since 1994. After record increase in inflation the Fed was forced to meet the pain with more pain for consumers. Only issue is they are still behind the “8” ball and will need to continue to catch up if they can not get this under control. One solution would be for our current leaders to abandon their flawed ideology. The other is a hard landing and a recession. Both will be painful, but one will lead to less government and bureaucracy, which got us here in the first place. The question is, will the government save you or will you save yourself and by doing so help the ones you love? Understand cash flow. For many it will change rapidly.

Target…Targets CEO says, “We are in an environment many of us have never seen before”.

What does it mean – Study history. Mark Twain once reminded us that, “History never repeats itself, but it does often rhyme”. Due to inflation, Inventories are way up. We are seeing price destruction. People are walking into stores and looking at the prices and walking out. Target plans to aggressively sell off inventory to get it out the store. This is going to hit margins hard and this is great for large corporations but will destroy the mom and pop stores that can not afford to sell off inventory to compete with companies that are large enough to handle the losses.

Just another case of the government trying to help. Will someone please tell our elected and unelected bureaucrats to study history. We have been here, done it, and got the shirt. President Biden should know this; he was in congress when the Carter administration tried this in the 70’s.

The noise is loud…Economists and prognosticators are filling the airwaves with noise. Most of it useless.

What does it mean – Remember about 4 months ago nearly every prognosticator and market analyst was telling you we would see at most four .25% increases by the Fed? Remember about 18 months ago the Biden administration, the Fed, presidential economic advisor, Mark Zandi and Janet Yellen, all told us that inflation would be transitory or would fade as the Chinese virus fades? Not so true. Inflation does not fade, nor does it just show up. It is usually the result of bad fiscal and monetary policy.

Businesses can not survive with out the rule of law…Across the country the rising cost of living, lack of accountability, threats to our legal system and to judges families, doxing of people that you may not agree with.

What does it mean – All of the above is leading to chaos and the destruction of society.

Daymond Jon, the founder of FUBU and member of The Shark Tank and an entrepreneurial legend, sent this video out on LinkedIn. It says it all, Dad’s we can all do a bit more. Love is time. Dads, our countries future depends on your time.

Enjoy the video and hope you all had a great Father’s Day. https://www.youtube.com/watch?v=OdPaqt6RY_Q

Lets roll America,

Doug De Groote, CFP®, MBA, CTC Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure, and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

Disclaimer: This article is solely for informational and educational purposes only and contains information that is not appropriate for everyone. Nothing herein should be construed as the provision of personalized investment advice. This article does not provide legal, tax, or accounting advice. Before making decisions with legal, tax or accounting ramifications, please consult the appropriate professionals for advice that is specific to your situation. Your experience may vary according to your individual circumstances and there is no guarantee that the views and opinions expressed herein will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. This article should not be regarded as a complete analysis of the subjects discussed.

What Happened Last Week and What It Means to You: June 7th, 2022

Week Ending June 3rd, 2022

Economy Created 390,000 new jobs…Better than expected but the growth rate continues to slow.

What does it mean – Unemployment is up from 3.5% to 3.6%. Yet there are still over 10 million fewer Americans working today than pre-shutdown.

If you want a job, you can get one…Job Opening and Labor Turnover Survey showed there were 11.4 million job vacancies in the U.S. at the end of April.

What does it mean – Government policy is getting in the way of the free markets. Employment is available but employers are forced to compete with the government and the multitude of government programs that were originally designed to help people but are now being used to sustain government dependency. This is unsustainable. Margaret Thatcher said it best, “The problem with socialism, is you eventually run out of other people’s money.”

Small business payrolls shrink…Businesses with fewer than 50 employees lost 91,000 workers last month according to ADP.

What does it mean – Midsize and large companies are benefitting from better access to capital and tougher barriers to entry for small companies due to regulations and the overall difficult economic environment.

American families will face rising electricity bills…While many have felt the pinch of inflation at the store or fueling up their car, your electricity bill is on its way up.

What does it mean – According to the Federal Energy Regulatory Commission the wholesale electric markets for the summer have future prices trading between 77% and 233% higher than last year. While many states are regulated and will not be able to pass on the complete increase right away, this means that we will see rates continue to go up for some time if we do not solve our energy crisis. Drill baby drill!

Below is a great graph showing the increase in gas prices, wind, and solar. Check out nuclear, coal, and hydro (I imagine CA citizens wish they had those dams the government ordered destroyed back. Not only would they have more water but maybe more hydroelectric energy). California is now finding out the hard way that leadership and policies matter.

A look at new home sales month-over-month/year-over-year by region…Northeast (-5.9%/+17.1%); Midwest (-15.1%/-25.5%); South (-19.8%/-36.6%); and West (-13.8%/-12.4%).

What does it mean – The latest report underlines the affordability pressure that has quickly emerged with the spike in mortgage rates. Sales are slowing as fewer buyers can afford the rising rates and cost of living.

Is the Fed finally listening…Recent reports are starting to show signs that the Fed is slowing the growth rate of money. We will see once reports are released by the Fed.

What does this mean – If true, the fed may be realizing that they have been on the wrong side of inflation and economic science and are finally dealing with reality. Since the insanity of the mandatory shutdown, the money supply is up over 39% according to the federal reserve. Rising interest rates will not cure inflation but will slow down demand and hurt the middle and lower class. Volker realized this in the early 80s and Nobel Laureate Milton Friedman, one of my economic heroes, harped on this throughout the 70s and his entire career. He was right then, and history will likely prove him right yet again.  Mark Twain once said, “History never repeats itself, but it does often rhyme.”

Lets roll America,

Doug De Groote, CFP®, MBA, CTC Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure, and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

Disclaimer: This article is solely for informational and educational purposes only and contains information that is not appropriate for everyone. Nothing herein should be construed as the provision of personalized investment advice. This article does not provide legal, tax, or accounting advice. Before making decisions with legal, tax or accounting ramifications, please consult the appropriate professionals for advice that is specific to your situation. Your experience may vary according to your individual circumstances and there is no guarantee that the views and opinions expressed herein will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. This article should not be regarded as a complete analysis of the subjects discussed.

What Happened Last Week and What It Means to You: May 27th, 2022

Week Ending May 27th, 2022

New Zealand hands out money to fight inflation…Did the leaders of New Zealand ever wonder what caused inflation?

What does it mean – When career politicians and government bureaucrats who so desperately want to keep power and yet have never run anything in their life but their mouths are in control of the treasury’s printing press, you can expect greater government spending, the urge to print more money, and more government programs all resulting in higher inflation and more expensive government.

Gas prices soar…National average hits $4.62 per gallon and over $6 per gallon in California for the first time in its history. That is up $.44 per gallon over the last month and up over 50% over the last year, well before the Russian invasion of Ukraine.

What does it mean – According to AAA, 18 states are already over $5.00 per gallon and many more on the rise. Expect transportation costs to continue to climb. This administration is set on devaluing and diminishing your income through higher gas prices which will translate into higher food and necessities. Totally fixable. 

Biden has no intention to relieve oil production…On Monday President Biden doubled down on his decision to freeze new federal oil and gas drilling leases to tackle climate change.

What does it mean – Fuel prices are going higher and just wait until global demand spikes once China fully re-opens. Yet President Biden himself said that “when it comes to the gas prices, we’re going through an incredible transition” callously praising high fuel prices. 

Our President and this administration are very happy to continue to shut down production, freeze leases, drilling permits, and any new pipelines here in America while begging OPEC and our enemies to drill more. Meanwhile, nations like Russia and Venezuela, and enemies of the free world enrich themselves in the process. This is a global wealth transfer that is funding the very people who hate our freedom, not to mention doing so with far less environmental regulation and thus turning the climate change argument on its head. You should demand your congressman and senator to vote to end this immediately. 

Some good news…The U.S. $ is on par with the Euro and is also strong against the Yuan.

What does it mean – Good news for the consumer. This will make imports a bit cheaper. Not so good for domestic production.

Fed Banks of Richmond, Philly, and NY…In May all three fed banks showed major decline in factory output activity.

What does it mean – New orders and shipments all are down significantly from the prior month.

New home sales drop 16.6% in April…Housing is key to economic growth.

What does it mean – Expect the housing market to continue to slow and prices to start coming down as interest rates go up, and all that “free” money continues to create inflation.

Nationwide home listings increased by 9%…More people are rushing to sell in order to beat a downturn in the housing market.

What does it mean – Sales under contract declined by 3.9% last month and down over 9% from a year ago. This is the slowest we have seen it in over a decade (remember 2009-2011). We are now seeing more sellers in certain parts of the country as they flee poorly run states for vibrant growing states. HMMMMM?

Department of Labor releases data highlighting every state’s employment numbers…Not so good for States that favored the shutdown of schools, businesses, and increased government spending.

What does it mean – The numbers are glaring. 100% of states run by Governors and legislatures that protected individual liberty, limited government, and left decision-making to individuals and private businesses have more than recovered. Meanwhile, all other states run by “big government” bureaucrats and Governors that favor more control and less personal liberty are only back to 87% of pre-pandemic numbers. You can guess which states are run by which types of governments.

States like FL, TN, AZ, UT, KS, SD, TX, and others prospered and are now far ahead of where they were before the pandemic. Ask yourself, not where you want to live, but under what type of leadership and do you want for your state?

Inflation is not going away anytime soon…Inflation rose 9.57% since April.

What does it mean – You must be getting tired of hearing it from me. But here goes – Policy matters!! Until we change the policy, we will continue down this path.

Predictor-in-Chief Ronald Reagan was not just right but may be the best fortune-teller of all time. Just read a few of his predictions. Truly amazing. Reagan knew that too much government spending and printing of money leads to too much money chasing too few goods. Manufacturers and businesses will not produce more if they are dependent on the government for the supply of buyers. This is why a command-and-control economy like Russia, China, Cuba, and every other Marxist country continues to fail over and over again.

Here is Reagan on Johny Carson. It is worth the watch and it is almost as if he is speaking about today’s issues. https://www.youtube.com/watch?v=KBB78P4aids

Lets roll America,

Doug De Groote, CFP®, MBA, CTC

Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

Disclaimer: This article is solely for informational and educational purposes only and contains information that is not appropriate for everyone. Nothing herein should be construed as the provision of personalized investment advice. This article does not provide legal, tax, or accounting advice. Before making decisions with legal, tax or accounting ramifications, please consult the appropriate professionals for advice that is specific to your situation. Your experience may vary according to your individual circumstances and there is no guarantee that the views and opinions expressed herein will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. This article should not be regarded as a complete analysis of the subjects discussed.

What Happened Last Week and What It Means to You: May 12th, 2022

Week Ending May 6th, 2022

Fed raises rates by .50%…Markets take wild ride.

What does it mean – While the Fed believes they can thread the needle, history has proven they are less capable when they bow to politicians. Volker proved this in the 80’s. The Fed has painted itself into a corner. Powell was more dovish than the market expected. He talks a good game, but the actions needed to shrink monetary supply and to decelerate liquidity at a rate that will actually slow and eventually reverse inflation. Based on last week’s speech from Powell, expect the fed to slow play this as they seem to less confident in a drastic move to curb inflation. Also expect more inflation, more rate hikes, and an increase in volatility. Bottom line, no fiscal policy and a Fed that is political equals more uncertainty.

U.S. Economy added 428,000 jobs in AprilYet labor participation declines from 62.4% to 62.2%

What does it mean – We have a lot to do and cannot afford to be bogged down.

While the economy contracted by 1.4% during the first quarter of 2022. There is still a bit over 10 million less people working today than before the ill-advised shutdown due to COVID. According to ABC News, in CA 1/3 of all the restaurants are permanently closed and nearly 1.2 million people in the CA restaurant industry had to find a new job or are still out of work. Nationwide the number is close to 500,000 restaurants closed according to Spectrum News One. According to Fortune Magazine, over 22% of all food trucks are gone – out of business and most likely will never come back as employment has shifted and going to the office is less desirable. Somehow employees are starting to call the shots. 

Is Immigration and the help of your tax dollars driving inflation?…California is the tip of the iceberg.

What does it mean – The real question is, “is your government a charity?” Rent for housing and hotels are going to continue to go up in California and areas where the Federal Government is shipping immigrants from all over the world. Yes, we are the largest importer of labor and welfare cases in the world. In CA alone, 100’s of families from Afghanistan, Ukraine, parts of Africa, Asia, and Latin America are in hotels or apartments paid for by the American tax payer. If you are planning a trip to the “city” this summer, you will be paying more because there is a high likelihood that your government is housing refugees and illegal immigrants at your cost, driving up hotel prices and rents in many cities.

If you are looking to rent an apartment in Los Angeles, Orange County, and many other cities across the country, land lords are now requiring 3 to 6 months rent up front and rates have gone up over 11% since the Biden administration started to pay for housing for immigrants who are here without any ability to pay. I ask the question: What will this do to your property value in these neighborhoods? What will it do to the fabric of these communities when the government can no longer afford to house refugees and illegal aliens and simply leaves the taxpayers holding the bill? This is exactly what France, Germany, Holland, England, Belgium and others did. I can tell you what happened to those communities, but instead will encourage you to do the research. Our government is not a distributor of charity. You are!!!

I strongly suggest you read the speech by Davey Crocket titled, “Not Yours To Give”. Here is the link – https://fee.org/resources/not-your-to-give/

Real GDP decreases by 1.4%…Interest rates rising, money supply still overheated, and inflation is not transitory.

What does it mean – Inflation is not transitory, and it could exacerbate concerns about the U.S. economy being at risk of slipping into recession or stagflation.

Real disposable personal income down 19.9%…Down 19.9% year-over-year, marking it the fourth straight decline.

What does it mean – real disposable personal income declined 0.4% in March, which helps explain why the personal savings rate, as a percentage of disposable personal income, dipped to 6.2% from 6.8%. In other words, consumers were spending out of savings presumably to maintain their standard of living in the face of higher costs.

Existing home sales decreased 2.7% month-over-month in March…All-cash sales comprised 28% of transactions in March, up from 25% in February and from 23% in March 2021.

What does it mean – Cash buyers are rushing to states with lower taxes, fiscal responsibility, and less crime. Money is leaving states like CA, NY, NJ, IL and other poorly run states.

Lets roll America,

Doug De Groote, CFP®, MBA, CTC Managing Director

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State of California. The information contained in this message is confidential, protected from disclosure, and may be legally privileged. If the reader of this message is not the intended recipient or an employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, distribution, copying, or any action taken or action omitted in reliance on it, is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by replying to this message and destroy the material in its entirety, whether in electronic or hard copy format.

Disclaimer: This article is solely for informational and educational purposes only and contains information that is not appropriate for everyone. Nothing herein should be construed as the provision of personalized investment advice. This article does not provide legal, tax, or accounting advice. Before making decisions with legal, tax or accounting ramifications, please consult the appropriate professionals for advice that is specific to your situation. Your experience may vary according to your individual circumstances and there is no guarantee that the views and opinions expressed herein will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. This article should not be regarded as a complete analysis of the subjects discussed.

De Groote Financial Group April 14, 2022

Week Ending April 8th, 2022 Highest since…A phrase we should all get accustomed to. What does it mean – We are about to see the highest rate of inflation since the 1970s and the last report and the report before that and so on and so on. Yes, 2022 has a theme and it is […]

De Groote Financial Group April 8, 2022

Week Ending April 1st, 2022 Globalist Klaus Schwab stated this week that a single world government is needed to solve global problems such as climate change, inequality, and of course, Covid. He leaves out the fact that a larger government inherently leads to less freedom, less creativity, less ownership, and more control of your life. […]

De Groote Financial Group December 14, 2021

Week Ending December 10th, 2021

James Madison warned us… “If Congress can employ money indefinitely to the general welfare, and are the sole and supreme judges of the general welfare, they may take the care of religion into their own hands; they may appoint teachers in every state, county, and parish, and pay them out of their public treasury; they may take into their own hands the education of children, establishing in like manner schools throughout the Union; they may assume the provision for the poor; they may undertake the regulation of all roads other than post-roads; in short, everything, from the highest object of state legislation down to the most minute object of police, would be thrown under the power of Congress; for every object I have mentioned would admit of the application of money, and might be called, if Congress pleased, provisions for the general welfare.”