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What Happened Last Week and What It Means to You: August 5th, 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:

  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

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Michelle DeShields

Executive Assistant

Michelle is typically the first person you will speak to when we answer the phone. She manages the calendars and ensures meetings are booked. Michelle is a key member of our team by making sure you get to the right person and that the client experience is always exceptional and evolving to be better.

Fadi Ahmed

Chief Operations Officer and Chief Compliance Officer

Fadi works with clients to ensure an exceptional experience. He coordinates and assures the planning process and wealth management tools are at your fingertips to provide the clarity you deserve and the transparency and access to all your accounts. Fadi ensures the data and information is reflective in our planning software. All changes and updates flow through his desk and he coordinates those changes with the rest of our team.

Andrew Krout

Wealth Advisor, Co-Chief Investment Officer

Andrew Krout is a Wealth Advisor at De Groote Financial Group, LLC. He also serves as a Co-Chief Investment Officer for the firm, focused on wealth management.

Previously, Andrew served as CIO with Kelly Financial in Boston Massachusetts since 2013. He is a licensed investment advisor representative and insurance producer. He graduated from Saint Francis University with a bachelor’s degree in both finance and accounting. He is a candidate for CERTIFIED FINANCIAL PLANNER™ designation. Andrew holds life insurance licenses in Massachusetts, New Hampshire and Connecticut.

Andrew is passionate about serving his clients and investment management and how to apply news and current events to investment decisions. He played Division 1 golf in college, and still enjoys playing and watching the sport in his free time.

David Darst

Co-Chief Information Officer

David Martin Darst, CFA is an Investment Advisor to DeGroote Financial Group, specializing in asset allocation and product selection. Previously, David served for 17 years as a Managing Director and Chief Investment Strategist at Morgan Stanley Wealth Management, with the responsibility for Asset Allocation and Investment Strategy. He joined Morgan Stanley in 1996 from Goldman Sachs, where he held Senior Management Posts within the Equities Division and earlier, for six years as Resident Manager of their Private Bank in Zurich.

David is the author of 13 books, including bestsellers The Art of Asset Allocation, 2nd Edition (McGraw-Hill), and The Little Book that Still Saves Your Assets (John Wiley & Sons). He also appears as a frequent guest on CNBC, Bloomberg, FOX, PBS, and others, and has contributed articles across a variety of publications.

David graduated with a BA in Economics from Yale University, and earned his MBA from Harvard Business School. He has lectured extensively at Wharton, Columbia, INSEAD, and New York University Business Schools, and for nine years, David served as a visiting member at Yale College, Yale School of Management, and Harvard Business School. He is a CFA Charterholder and a member of the New York Society of Security Analysts and the CFA Institute. 

Doug De Groote

Managing Director

Doug is a Certified Financial Planner™ (CFP®) with an MBA in Financial Planning, and is an active member of the Financial Planning Association (FPA). Before establishing De Groote Financial Group, Doug founded the United Wealth Management division of United Capital. Prior to that, Doug was a partner at Crowell, Weedon and Co. He regularly contributes to a variety of financial and general media.

Doug’s passion, and what he believes, is that everyone deserves the opportunity; they deserve to have the freedom and responsibility to be pro-active in achieving independence and financial success.

Doug’s life is focused around his family, wife and three children, and making sure they get the foundation that is necessary for them to have the awareness of the opportunities that abound in our great country.

Doug helps increase his client’s awareness and success, to identify and take advantage of opportunities that present themselves and help protect them from some of the pitfalls or obstacles that are thrown in our paths. With regards to their financial circumstances, Doug helps his clients identify their goals, plan for various outcomes and manage their assets to help them make their vision a reality.