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.

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 where 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 123^rd 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 to 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

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 1st, 2022 appeared first on DeGroote.