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What Happened Last Week and What It Means to You: July 29th, 2022

Week Ending July 29th, 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

805.230.0111 Main
818.642.9789 Cell
805.230.0061 Fax
2660 Townsgate Rd Suite 450
Westlake Village, CA 91361
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.

Jeannie Ewing-Nicholson

Operations Manager

Jeannie started her career in the Financial Services industry in 1994 with Oppenheimer & Company. As part of the De Groote Financial Group, Jeannie is responsible for the operational needs of the firm including cash management and account administration. With her upbeat attitude and attention to detail, Jeannie provides an efficient streamlines experience to ensure clients meet their goals. Jeannie enjoys travel, outdoor activities, Pilates, and is a football and basketball fan. She resides in Westlake Village with her husband, daughter and son.

Mary-Ellen Lykken

Executive Assistant

Mary-Ellen, Executive Assistant at DFG, keeps the office running smoothly by providing administrative support and assisting with scheduling and organization. With a background in human resource and office management, Mary-Ellen comes from the non-profit and services industries.

Outside of the office, Mary-Ellen is committed to the advancement of independence and productivity for those with disabilities. By telling her story of the challenges and joys of raising a child with complicated disabilities, she hopes to help others navigate similar circumstances.

She is happiest when visiting her two grown sons. Otherwise, you can find her competing on the pickleball courts.

Sara Mariniello

Operations Manager

Sara is new to the financial industry only starting in 2022 when she was hired at De Groote Financial. As Operations Manager, Sara is responsible for all the paperwork surrounding opening accounts and investment paperwork and is also responsible for much of the client communication. Sara has her bachelor’s in science and nursing from Concordia University, Texas and worked as nurse for over a year prior to moving back to California. She loves all things sports and church related and is likely spending every free moment with her Husband visiting family in Texas and New Jersey.

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.