What Happened Last Week and What It Means to You: August 10th, 2022

Week Ending August 5th, 2022

Senate works overtime…Yes, when you hear the senate is hard at work over the weekend, you should get scared. Really scared.

What does it mean – One thing!!! More spending, more regulation, more debt, higher taxes and fees, and an ever growing, bloated bureaucracy. You and I, the American taxpayers will have to foot the bill for all of this because we the people will not hold elected and unelected officials accountable. Wake Up!!

Fiscal policy matters… Ask Congresswoman Pelosi. Her and her husband benefited from $5 million investment in stock options prior to the $280 billion bill being voted on and passed by Congress.  

What does it mean – We pay very close attention to what DC and State governments are doing. I only wish we had the inside information they have. As the saying goes in Washington and state capitols around the country, “Rules for thee, but not for me.”

The Inflation Reduction Act passes…Even though every independent economist including the CBO told them that this bill will not reduce inflation.

What does it mean – The Senate went late into the night to pass a bill that does not do what the title says it is supposed to do. So, let’s just hit on a few of the points of what it will do:

 LeftCenterRight

  1. $369 billion to Green new energy. This should be called the Build Back Beijing Bill. This bill will significantly make us more reliant on China as they control 80% of rare earth minerals that are needed to switch our economy to more expensive, inefficient, and unreliable green energy. Not to mention their factories are powered by coal to make the very solar panels you are going to be “encouraged to buy”. And worst, this bill does nothing to prevent the money going straight to the CCP. Even Jack Dorsey of Twitter gets it and tweeted out, “End the CCP.” The reason is not quite related to this bill, but he is right. I can go on and on about all the green energy give aways and tax credits that will benefit only the rich. Yes, this bill is a handout to the rich because most of America can not afford the upfront costs or benefits of buying an electric car, putting solar on their home, or building green new buildings or retrofitting current corporate offices with green energy lighting, solar, cooling systems made in China.
  2. 15% minimum tax on book income. As a small business owner – I am about to lose my cool. These partisan hacks just don’t get it. They vilify the very people who create the jobs. This is a double tax on investment. When reporting book income, companies are prevented from deducting the cost of investments in equipment, structures, research and development and other projects that increase productivity. This would raise taxes on American companies by $313 billion—half of which would be borne by American manufacturers—and according to the CBO, kill 27,000 jobs. At a time of 40-year inflation, this tax would hit working class Americans even harder by worsening current supply chain problems and raising energy costs by disproportionately raising taxes on key industries such as coal, automobiles, and utilities.
  3. 87,000 new IRS agents. This is the biggest scam of all. The Democrats’ partisan reconciliation bill will provide the IRS with an additional $80 billion to hire up to 87,000 new IRS agents, more than doubling the size of the agency and giving the IRS more employees than the number of Pentagon, State Department, and FBI employees as well as Border Patrol agents combined. Our country has bigger problems that demand more immediate attention.  The border is wide open.  Fentanyl and other drugs flow across the border.  Child and sex trafficking destroys innocent people’s lives on a daily basis.  You name it, we are suffering from it. But rather than focus our efforts there, Democrats voted on party lines to ensure 87,000 new IRS agents can better monitor if you make a Venmo transaction above $600. Chuck Schumer and Nancy Pelosi should have taken a closer look at their home states before pushing this bill.  If they did, they would see that increases in big government dependency and high taxes destroy businesses and force great companies like Oracle and Tesla to leave California, not to mention the mass exodus of citizens fleeing both NY and CA as those states become more unaffordable every day. This group of thugs – ahem, esteemed leaders, I should say – are striving to reduce your economic freedom to make you more dependent on the government. Bad for business. Bad for the economy. Bad for you!
  4. Making Energy more expensive. This bill will also increase fees applicable to onshore oil and gas energy production by quintupling the minimum bid amount (page 634), raising the rental rate 1,000% by when a lease hits the eight year mark (page 635), adding a $5 per acre fee for expressing interest in leasing land for oil and gas development (page 636), and increase existing bonding requirements from $10,000-$25,000 per well to $150,000 per lease (page 640). The bill would also expand royalty requirements applicable to onshore and offshore production to cover methane produced, consumed or lost, instead of that which is produced and sold. (page 640).

Remember Klaus Schwab author of COVID-19: The Great Reset and Chairman of the World Economic Forum said, “You will own nothing and be happy.” This bill is well on its way to syphon what little the middle-class families own from their individual balance sheet.

U.S. Adds 528,000 jobs…Awesome number and way above what any economist projected.

What does it mean – If numbers are correct labor participation should be close to where it was pre pandemic. Unfortunately, the numbers are not that clear and there is still a difference of over 1.5% between the current labor participation rate and where we are today. Not all Americans are back to work.

The household survey once again was materially divergent from the payroll report showing only 175,000 jobs added after showing flat or declines for prior four months. Something does not smell right. But then again DC is famous for changing definitions and $450 plungers.

Fed raises rates…Fed raises rates by .75%.

What does it mean – Since 1965, the Fed has never begun a hike cycle with inflation this high and avoided a recession. The Fed is behind the “8 ball.”

U.S. Export-Import Bank…Small businesses seeking to increase their overseas sales are supposed to be the primary beneficiaries of loan guarantees by the U.S. Export-Import Bank but this unelected bureaucracy is handing out billions to China and Russia…You say what? Yep.

What does it mean – According to the Epoch Times, “Small businesses, supposedly the intended beneficiary of the Export-Import Bank, received only $54.8 billion of the over $234 billion in total assistance since 2007, or about 23 percent” of the bank’s total funding, according to the report by Open The Books (OTB), a Chicago-based nonprofit that monitors government spending.

By filing more than 40,000 federal Freedom of Information Act requests and posting the checkbooks of 49 state governments, OTB has posted to the internet more than $6 trillion in public spending. The nonprofit’s goal is to “post every dime in real-time.”

The largest beneficiary of Ex-Im lending is Boeing Co., the largest U.S. aircraft manufacturer and one of the world’s most successful designers and builders of commercial airliners. One has to ask, what do they need these loans for?

This is another perfect example of how Big Government favors and supports Big Business. The very government agency that is supposed to help small businesses are actually adding the very companies that would love to eliminate future competition, develop new technology and create new jobs. This is not healthy, nor should government be involved.

Economist see GDP continuing to decline…Forecasts continue to fall for 20220 and 2023.

What does it mean – As inflation continues to eat into every Americans pocketbook, our elected officials decided to raise taxes on its citizens, spend billions on the “green New Deal”, subsidize drug companies, yet refuse to pave the way for energy companies to produce more oil and increase the ability for refineries to refine more oil. In the meantime, Germany just restarted a coal plant to meet its energy needs and fight the high cost of energy. Even President Obama warned against raising taxes during a recession.

Without efficient and predictable energy our economy and the global economy will continue to suffer. This will only help to redistribute wealth through higher inflation and energy costs.

Coal prices at all time high…So much for the Paris and Glasgow agreements.

What does it mean – Demand for coal is skyrocketing as Europe throws out the climate accords to secure efficient and predictable energy sources to power their economy. They are hoping the switch back to coal will help ward off more difficult times for their citizens and their economy.

Let’s roll America!! We have to fix what DC is breaking.

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: August 4th, 2022

Week Ending July 28nd, 2022

Definitions matter… First, they (Government Leaders) did not like the definition of vaccine, so they changed it. Now they (Government leaders) do not like the definition of recession, so they are changing it to fit their needs.

What does it mean – Noah Webster, one of our founding fathers and a man who was obsessed with culture and language and who is credited with creating the dictionary is rolling over in his grave.

One’s reality or feelings does not constitute facts. If the truth hurts, deal with it. You cannot change it. Change what you are doing but moving the goal post or changing the meaning will not change reality or the facts. It only weakens your argument and destroys one’s credibility. The world sees the hypocrisy and the failures of “Big Government.” Remember the fable, “The emperor has no clothes.” Call it what you want. This is the definition of a recession.

On a positive note, we are still seeing many companies beat earnings and we are still seeing job creation although, both slowing. The reality is our economy is slowing significantly and struggling to maintain any reasonable growth. The quarter over quarter decline in GDP is a result of the stimulus checks and Big Government on CRACK!!! We are struggling with a massive hangover. Our economy will either get better due to pro-growth and limited government policies going forward or this decline will turn into one major bender due to more out of control government spending like the misnamed “Inflation Reduction Act”. It is anything but that and is just more government spending and control.

Living paycheck to paycheck…61% of American wage earners are living paycheck to paycheck up from 55% one year ago according to a study by LendingClub Corporation.

What does it mean – Socialism and the progressive agenda has the middle class right where it wants it. The average American is quite literally between the millstones of taxation and inflation. Socialism inevitably always erodes the middle class. Even Aristotle recognized that the middle class is vital to the stability and durability of any good society, noting that a large middle class makes it harder to separate the people into competing factions. If we do nothing to reverse course and current policies will continue to divide us and create more dependency on the government.

Credit card balances jumped $46 billion…In the second quarter of the year credit card balances are up over 13%.

What does it mean – This is the largest increase in over 20 years according to the data released by the Federal Reserve Bank of New York. According to the Federal Reserve, this year’s increase was “driven by the highest rate of inflation in 40 years.”

Real disposable personal income was down 3.2% year-over-year…Wages and salaries were up 0.5% month-over-month.

What does it mean – Inflation is eating into increases in salaries and wages. Consumers are saving less and forced to spend more to keep up with inflation.

Across the nation new home sales declined 8.1% month-over-month in June…Here is what it looked like across the country. New home sales month-over-month/year-over-year by region: Northeast (-5.3%/-37.9%); Midwest (+42.3%/-22.1%); South (-2.0%/-8.7%); and West (-36.7%/-32.9%).

What does it mean – While demand is still relatively strong on a historical average, volume is falling quickly as median sales price increased 7.4% yr./yr. to $402,400 and interest rates continue to climb as the Fed fights inflation.

Manufacturing is going to get more expensive…As if it was not hard enough to compete internationally due to government regulation and out of control spending. The Inflation Reduction Act will make it even tougher if both houses pass and the President sign this bill into law.

What does it mean – A minimum corporate tax of 15%. There is nothing minimum about this bill or the tax. The Whitehouse now admits it will do little to reduce inflation, but somehow will solve climate change and force corporations to pay a minimum tax of 15% to solve for the three boogie men called “Climate Change, equity and equality.” Yet, 61% of your fellow Americans are living paycheck to paycheck just trying to pay the rent, rising energy prices and food bills.

This bill will also make manufacturing here in the US more difficult and less competitive. Ask yourself, “why is Tesla, APPL, MSFT, ORCL, and every major corporation moving from CA.” Simple, CA taxed them out of the state and forced them to seek competitive advantages outside of CA. Money is like water, it goes to the area of least resistance.

China is freaking out…China is no longer the cheap place to make stuff.

What does it mean – If you are lucky enough to not be a Uyghur in China, you are now making more working in a factory in China than in Vietnam, Singapore, Philippines and other low-cost areas. 

The Chinese Made Virus may have been China’s undoing. Companies realized that depending on China for their supply chain was a disaster for them and their businesses. Corporations are fleeing China and leaving behind a government that blackmails them for technology.

The Chinese government heavily subsidized real estate over the years and now makes up over 25% of its GDP. Factory output is shrinking, and China has a large group of educated college graduates who can not find work. At the same time, they have arrested or made their billionaire class disappear or go silent. They are not creating jobs organically and focused on globalization. This is a recipe for disaster.

As the old Chinese Curse says, “May you live in interesting times.” Folks, America was made for this. Tough times forge tough men and a free society and capitalism solves the world’s problems.

Let’s 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: July 28th, 2022

Week Ending July 22nd, 2022

Weaker economic conditions elevated investor fears…Last week we saw a rally in the treasury market.

What does it mean – Investors are fearful as signs of a recession are starting to confirm we may already be there and coupled with rising inflation the Fed may push us over the edge as they continue to try to fight inflation with higher rates? Some are now expecting a full 1-point increase on July 27th.

Initial jobless claims increase above 250,000…for the week ending July 16, jobless claims increased by 7,000 to 251,000.

What does it mean – This is the first time we have gone over 250,000 since mid-November 2021.The job market continues to be quite tight even as we see our economy continue to stumble from self-inflicted wounds.

Oil off its recent highs…Due to elevated recession fears, oil prices have backed off since peaking in June.

What does it mean – Regardless of what you hear from the state-run media, the government has done nothing to bring prices down. National gas prices are down roughly $.40 in the month of July. Gas prices have more than doubled since the end of 2020.

Real disposable personal income…Down 3.3% year-over-year marking the sixth straight decline.

What does it mean – Inflation is not transitory, and the pain may accelerate as the Fed continues to step in with higher interest rates as they continue to fight out of the very corner they put themselves in to.

Existing home sales across regions…Northeast (unchanged); Midwest (-1.6%); South (-6.2%); and West (-11.1%).

What does it mean – Total sales in June were down 14.2% from a year ago. With rising interest rates and continued inflation, there are fewer potential buyers. The housing market will continue to struggle.

Supply Chain is about to get messy out west…California passes new law prohibiting independent truckers in the state.

What does that mean – There are over 70,000 independent truckers in CA that are protesting by shutting down the ports and protesting against big government overreach. These truckers are business owners and yet, our state is doing the bidding for big business and unions. This will drive up costs of everything you purchase, ship, or consume.

In the meantime, if these truckers want to work, they can expect their costs to go up by nearly $20,000 per year according to the Independent Trucking Association. This is inflationary and will only add to the pain all of us feel at the stores. Cost of goods will go up as shipping costs will increase by roughly $1.4 billion dollars a year. You must ask yourself, “what else can the CA governor and Sacramento due to make it harder on our small business owners and citizens?”

Strategic Petroleum Reserve at lowest level since 1985…And this administration sells our oil to China.

What does this mean – Folks, you can’t make this stuff up. In a partisan vote, every Democrat in congress voted on Wednesday July 20th to continue to supply China with oil form our Strategic Petroleum Reserve. On that same day, it was released that nearly 1 billion barrels have been sold to an American subsidiary of Sinopec, a Chinese company in which Hunter Biden is heavily invested in and has worked with.

Our government is choosing China over our citizens and treating you like subjects. We are redistributing our wealth and treasure to a country that violates everything a moral society believes in and stands for. You should be asking yourself, “why are we supplying China with everything they need but denying the American citizen the benefits of their tax dollars?”

Our citizens struggle with gas near $5.00 gallon on a national average and just across the border in Mexico it is roughly $1.00 cheaper than in the U.S. All of this is happening at the same time Congress votes to supply China with precious resources that belong to you, the American Citizen.

Follow the money. The current administration insists that the world will implode if we do not solve the climate crisis and rid ourselves of fossil fuels. Unfortunately, without oil, gas, and coal to fuel the factories that build and produce windmills, solar panels, electric cars, and transport these newly minted experts on climate would be unable to fly all over the world in their private jets. The Green New Deal is a pipe dream and has truly become a trojan horse for more government regulation and expense.

Reliable and cheap energy is the foundation for a thriving economy. One day technology may be ready to help ween us off of traditional energy, but it is nowhere close to being able to run the factories that actually build the electric cars, wind mills and solar panels.

If this administration really cared about the U.S. Citizen, they would release the drillers and reverse the closure of refineries in the U.S. We are about to be down 9 refineries by year end.

Winston Churchill famously said, “I am an optimist, it does not seem to much use being anything else.”

Let’s 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: July 6th, 2022

Week Ending July 1st, 2022

Who’s business is it?… Since the beginning of COVID, the shutting down of our economy by government mandates at multiple levels gave in to big government and big business and we gave up a bit of our freedom for the perception of safety. Fortunately, even big business is now speaking out.

What does it mean – Business leaders are starting to push back and reclaiming their businesses from the grips of unelected bureaucrats and elected officials with not a clue how the economy really works.

For example, many in the oil industry are mocking President Biden’s tweets on oil and gas. They are asking the intern or whoever approved the recent tweets to enroll in a basic economics class. Jeff Bezos openly disagreeing with the White House on inflation. Elon Musk has been at the front, leading the way and pointing out the hypocrisy in DC and lack of fundamental understanding of how business and the economy really works. Again, our President and most of his staff have never run a business or worked in the private sector. Sure, his team is from the Ivy league and sure, Harvard and Yale are great schools, but at some point, theory gets punched in the face and hard work and facts matter.  

When the going gets tough, the answer is not Washington or some bloated government program. It is freedom. We just celebrated the greatest gift to the world. The United States of America. Prior to the U.S. most generations thought they would live just like their parents before them. Destined for serfdom and subjects of a government ruled by mans laws.

Our Constitution ensures your freedom through three equal branches of government. Not through a King or through a majority vote, which across the world often leads to tyranny by the majority. But ours is special. How many countries have a Bill of Rights? How many Countries have a constitution protecting those rights and limiting the government’s power? How many countries have enshrined in their founding documents that the government will serve at the pleasure of its citizens and if violated the citizens can change it? How many countries are endowed by their creator and its citizens protected by natural law?

What we need are more Americans thinking things through on our own, with less rules, less mandates, less regulations, less bureaucracy getting in between you and the freedom to own your own destiny. Happy Birthday America. Take the moment to listen to 100-year-old veteran Carl Dekel. Listen to his pride, recognize his wisdom and passion for our country, and the fear he has for our future. Freedom is tough and even harder to keep. https://www.youtube.com/watch?v=wcnQJd_XRQQ 

Initial unemployment…Four week moving average is beginning to slow.

What does it mean – Disturbing news for the job markets. Initial claims increased by 7,250 and continuing claims increased by 5,500. What is concerning is the improving trend we have seen for the last few months has stalled out. Job market may be tightening.

Net exports continue to slide From the graph above you can clearly see the massive fall off.

What does it mean – It is a culmination of many issues. 1) Bad fiscal policy and slowly letting up on China. 2) As the Fed raises interest rates, our dollar become stronger, and our goods become more expensive. This is seen above and in the fact that imports were up 18.9% vs. 18.3%.

Existing home sales decrease 3.4% month-over-month… Total sales are down 8.6% from one year ago.

What does it mean – While existing home prices nationally are up 14.8% year-over-year, representing 123rd consecutive month of year-over-year growth, which is the longest-running streak on record. It is also the first time the median price went above $400,000. The markets have been on a terror and nationally hitting new records. While still a tight market, the west coast was down 5.3% and folks looking to lock in gains and move to low tax states from CA are hitting the bid.

Housing starts down 14.4% month-over-month…It is about darn time.

What does it mean – This rant has nothing to do with why housing starts are down 14.4%. But everything to do with why it should be down in CA a heck of a lot more.

If you live in CA, your local water district issued a warning if you use too much water. You will be penalized, and they will send you to water jail!!! Not really, they will just dox you and make sure your neighbors know how evil you are and put a governor on your water main. Ok, maybe not dox you. But they will limit your water.

As a CA resident and an American, I am sick of being told what I can and can not use. If I want to pay for it, then it is my choice. My decision and yours too. Seems to work for Obama in Palm Springs, Hawaii, DC, and now his fourth home in the Hamptons. Or how about our climate czar, John Kerry, who travels the world on private planes and uses more energy and water than most the folks on his block combined. Or how about Governor Newsom and his wine vineyards wine vineyards which were miraculously allowed to stay open while everything else shut down in 2020. I am sure he is getting whatever he needs. I can guarantee you they are living by different rules than you and I.

Here is the real science. Since records began in 1895, statewide annual precipitation has ranged from a low of 9.4 inches in 1924 to a high of 41.66 inches in 2017. According to the California Office of Environmental Health Hazard Assessment and the chart below it sure looks like we are tracking just as we have since the beginning of keeping records. Folks, we do not have a water problem. We have a government problem. Just like Smokey the Bear said, “Only you can prevent forest fires”. The same can be said about CA. Keep electing what we have had for the last 30 years, and you will get more of the same. Less water, less energy, less farming, fewer jobs, more homeless, more crime, more waste, more corruption, and less accountability. Are you picking up what I am putting down?

In CA, we have nearly 8 million people here illegally that we know of. We are building massive amounts of low-income housing that is being pushed by the federal and state governments on local municipalities by holding them hostage for state and federal grants, all while we have a “water shortage”. Ask yourself why? What we have is to many people attracted to our state for free handouts. California just announced they are going to give out a $1,000 to people to help fight inflation. Ahhhh, that is inflationary.

Bad policy is what is wrong. It is not a drought issue it is a planning issue and the greed of government officials who live off the property tax, planning fees, and permitting fees to fund their pet projects and secure enough votes to stay elected are driving the bus (over the cliff). Enough is enough. The reality is we have roughly the same rain and snow fall year over year on ten year rolling averages. Yes, we have droughts. Most of CA qualifies as a desert. But for some reason, God sees fit to fill our dams and rivers and aquafers even when we tear them down for the delta smelt, a frog, a bird or what ever else we deem irreplaceable and can be justified by “climate change”. What we need is CA government change.

Let’s 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 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. […]