White House claims inflation is ZERO Percent…

Annual rate at 8.5% it is nowhere near zero.
What does it mean – Energy surged 7.5% in June and was down 4.6% in July offsetting food prices, rent, and nearly everything you consume to come in at 0% or flat for July. It still means the inflation rate is at 8.5% annualized. Don’t let DC math confuse you.

New York Fed’s Empire State Manufacturing plunges 42.4 points…

NY Fed’s survey index of general business condition plunged 42.4 points to negative 31.3.
What does it mean – This is the second worst reading since the NY Fed has been keeping records. The index for new orders dropped 35.8 points to negative 29.6, the lowest reading for this gauge outside of the lockdown period of March through May 2020. The index for shipments fell 49.4 points to negative 24.1. This indicates a sharp decline in both orders and shipments.

Q2 GDP decreases…

Report indicated that real GDP decreased at an annual rate of 0.9%.
What does it mean – This report will stir the debate as to whether the U.S. economy is in recession. Regardless, it also makes it clear that the economic environment has undoubtedly weakened.

Consumer debt increased by $22.3 billion in May…

As inflation hits consumers, consumers hit their credit cards.
What does it mean – Consumer credit has slowed a bit in the first half of the year but is slowly on the rise again.

CPI unchanged in July…

While many will go out on a limb to say inflation is flattening or slowing, etc.
What does it mean – Don’t fool yourself. Inflation is not transitory, and the Fed only has limited if any control over inflation, but they are now forced to exert their will on the American consumer. The Fed is nowhere near being done with raising rates.

Do not be fooled by the Orwellian ruse…

Inflation Reduction Act (IRA), a degraded version of the failed $4 trillion Build Back Better Act.
What does it mean – IRA is more government, more regulation and will soon become better known as the Build Back Beijing Act. The media has already stopped calling it the Inflation Reduction Act and now refer to it as what it really is – a “$430 billion climate, health care and tax bill”. Most of the spending for this Green New Deal will go to Chinese companies producing equipment made with coal so that we can purchase things we don’t need to save the environment we are allowing China to pollute. All of this is at the expense of the you, the American Taxpayer. You just can’t make this stuff up.

Go East young man…

We may want to change the once famous saying attributed to Horace Greeley, New York Daily Tribune, July 13, 1865. “Washington [D.C.] is not a place to live in. The rents are high, the food is bad, the dust is disgusting, and the morals are deplorable. Go West, young man, go West and grow up with the country.”
What does it mean – New Housing sales in the West were down a whopping 36.7% month-over-month. As higher mortgage rates and higher prices create affordability pressures for prospective buyers, the exodus from the West continues. More businesses and taxpayers are taking their jobs, employees, and money with them. Will CA ever get a clue?

Prop 30…

Nope. That is the answer to the question above.
What does it mean – Prop 30, if passed in November, will add 1.75% in taxes on people earning income of over $2 million and will direct 45% of the revenue to “green” initiatives made in China with (not clean-burning) coal, 35% to charging stations made in China from coal and from natural gas drilled here in America, as well as 20% to wildfire prevention. Lightning strikes are now controllable according to elected officials in Sacramento. With only 560,000 electric vehicles on the roads in CA, this will not benefit or help the 96.1% of drivers and only the wealthy will benefit from the incentives or charging stations.

CA and this administration in DC are well on its way to living up to the awesome example of the Russian auto industry. When was the last time you saw a Lada (Russian made car) on the road. Never. There aren’t a Lada them.

Let’s roll America!!

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

805.230.0111 Main
800.984.3302
818.642.9789 Cell
805.230.0061 Fax

2660 Townsgate Rd Suite 450
Westlake Village, CA 91361

doug@degrootefinancial.com
www.degrootefinancial.com
www.lw4ip.com

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.

The post What Happened Last Week and What It Means to You: August 12nd, 2022 appeared first on DeGroote.

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:

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 in 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 destroy 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.

With out 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

805.230.0111 Main
800.984.3302
818.642.9789 Cell
805.230.0061 Fax

2660 Townsgate Rd Suite 450
Westlake Village, CA 91361

doug@degrootefinancial.com
www.degrootefinancial.com
www.lw4ip.com

De Groote Financial Group, LLC is a federally registered investment adviser that maintains a principal office in the State ofCalifornia. 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.

The post What Happened Last Week and What It Means to You: August 5th, 2022 appeared first on DeGroote.

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

805.230.0111 Main
800.984.3302
818.642.9789 Cell
805.230.0061 Fax

2660 Townsgate Rd Suite 450
Westlake Village, CA 91361

doug@degrootefinancial.com
www.degrootefinancial.com
www.lw4ip.com

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.

The post What Happened Last Week and What It Means to You: July 29th, 2022 appeared first on DeGroote.

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 20^th 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

805.230.0111 Main
800.984.3302
818.642.9789 Cell
805.230.0061 Fax

2660 Townsgate Rd Suite 450
Westlake Village, CA 91361

doug@degrootefinancial.com
www.degrootefinancial.com
www.lw4ip.com

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.

The post What Happened Last Week and What It Means to You: July 22nd, 2022 appeared first on DeGroote.

Nonfarm payrolls…

Increased 372,000 in June. beating the consensus expected 265,000.
What does it mean – Overall, good news and really strong numbers for the economy. Payroll gains grew by 539,000 per month in Q1 and 375,000 per month in Q2. The big issue is the participation levels continue to fall.

Wage earners or the labor force dropped 353,000 in June…

While unemployment remains at 3.6%, we continue to see the participation rate fall.
What does it mean – Expect the trend to continue as more baby boomers start to retire and the gig economy (Uber, Lyft, Door Dash and Grub Hub) continues to struggle due to high gas prices. Unemployment remained at a low 3.6%, the participation rate (the share of adults who are either working or looking for work) slipped to 62.2% from a prior 62.3%.

Civilian employment declines…

Civilian employment, an alternative measure of jobs that includes small-business start-ups.
What does it mean – Down 315,000 in June. While not often spoken about, small business start ups are the life blood of our economy. Policy that helps or hurts risk takers ultimately finds its way into the economy.

Remember, big businesses love barriers to entry and while they will speak out against regulations, they often are backing regulations if it helps build a moat around their business. President Eisenhower warned us about the unholy alliance between government and big business when he delivered his speech about the military-industrial complex. He worried about, “The total influence — economic, political, even spiritual — is felt in every city, every state house, every office of the federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.”

It is that very behavior we are faced with in several other industries. A perfect example of this today is Facebook and Twitter going to Washington and asking for more regulation on free speech on the internet. Another would be the pharmaceutical industry. It takes $ hundreds of millions to get a drug to the market. Due to this high cost and rightfully so, many startups are acquired or fail before their product ever sees the market.

I am not against regulations. We need to protect our citizenry against the temptation that comes from a close relationship between government and private industry. I am merely pointing out the heavy hand of regulations and its cost on society. Free speech, healthcare, manufacturing, energy, etc. All are seeing the high cost associated with the increase of government intervention. And in some cases, like the drug industry, the very bureaucracies (CDC and FDA) and unelected employees of our government who are hired to safeguard society are being rewarded in sharing of the fees from patents in the drug industry. Our elected leaders influenced by K Street and the lobbyists. You might even call it bribery. We should all be asking ourselves, who actually has our best interest at hand? Simply put, is the fox guarding the hen house? Is there an unholy alliance between big business and government that is hurting business creation? Or are we a society that has matured and become apathetic and more risk adverse.

Housing…

Sellers start to drop prices
What does it mean – from the chart below, Redfin did not give us the data from 2008 to 2012, but I have to believe we are going to see similar data as the fed will continue to raise rates to fight of inflation which is eating folks out of house and home.

Welcome home…

US continues to see more and more companies returning to America.
What does it mean – Check out the chart below. The American dream is real. Businesses recognize the value of the rule of law, intellectual property protection, a healthy job market and an at will employment vs. mandates. They are seeking talented, educated work force that is motivated. And finally, a low corporate tax rate.

If Governor Newsom helped businesses, lowered taxes in CA, reduced and eliminated burdensome regulation on everything businesses build, makes, or grows. Enforces the rule of law, he would not have to run silly adds in FL attacking a governor who gets it and is open for business. Poor CA. It was not long ago we were the envy of the nation.

Could you imagine seeing 150 companies come back to CA from FL and TX.
Reminds me of the old Beach Boys song, California Dreaming. Enjoy the song. Let’s keep making every day the very best.

https://www.youtube.com/watch?v=zBHz_V59RpM

Let’s roll America,

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

805.230.0111 Main
800.984.3302
818.642.9789 Cell
805.230.0061 Fax

2660 Townsgate Rd Suite 450
Westlake Village, CA 91361

doug@degrootefinancial.com
www.degrootefinancial.com
www.lw4ip.com

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.

The post What Happened Last Week and What It Means to You: July 8th, 2022 appeared first on DeGroote.

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

Let’s roll America,

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

805.230.0111 Main
800.984.3302
818.642.9789 Cell
805.230.0061 Fax

2660 Townsgate Rd Suite 450
Westlake Village, CA 91361

doug@degrootefinancial.com
www.degrootefinancial.com
www.lw4ip.com

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.

The post What Happened Last Week and What It Means to You: June 17th, 2022 appeared first on DeGroote.

Economy Created 390,000 new jobs…

Better than expected but growth rate continues to slow.
What does it mean – Unemployment up from 3.5% to 3.6%. Yet there are still over 10 million less 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, 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 80’s and Nobel Laureate Milton Friedman, one of my economic heroes, harped on this throughout the 70’s 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.”

Let’s roll America,

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

805.230.0111 Main
800.984.3302
818.642.9789 Cell
805.230.0061 Fax

2660 Townsgate Rd Suite 450
Westlake Village, CA 91361

doug@degrootefinancial.com
www.degrootefinancial.com
www.lw4ip.com

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.

The post What Happened Last Week and What It Means to You: June 3rd, 2022 appeared first on DeGroote.