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What Happened Last Week and What It Means to You: Week Ending July 5, 2024

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Week Ending in July 5, 2024

 

The June ISM Manufacturing Index checked in at 48.5%…The consensus was 49.1%. This is down slightly from the month of May that came in at 48.7%.

What does it mean – The dividing line between expansion and contraction is 50.0%. The June reading suggests there was a faster pace of contraction in the manufacturing sector than in May. This was the third straight month (and 19th out of 20) that economic activity in the manufacturing sector contracted.

Factory orders declined 0.5% month-over-month in May…following a downwardly revised 0.4% increase (from 0.7%) in April.

What does it mean – Business spending dropped off in May, which is consistent with a slowdown in manufacturing activity.

New home sales declined 11.3% month-over-month in May…On a year-over-year basis, new home sales were down 16.5%.

What does it mean – Homes are sitting on the market longer. Due to current interest rates, inflation, and the current sales pace, the supply of new homes for sale stood at 9.3 months, versus 8.1 months in April and 6.9 months in May 2023.

Median existing home price for all housing types increased 5.8% year-over-year to $419,300…This is the highest ever recorded and the eleventh consecutive month of year-over-year price increases.

What does it mean –While inventory continues to be an issue, first time home buyers are struggling more now than at any time in recent history. The government created this mess through cheap money and massive spending programs creating inflation across every sector of the economy. Especially housing.

Bureau of Labor Statistics (BLS) is at it again…Jobs report was solid until one actually read it. Not to mention, we got another revised month to the downside. Got to ask how things in DC got so bad so fast. Month after month the BLS and almost every other agency misses reality.

What does it mean – It must be the water. The numbers just don’t add up. For nearly three years we have watched the BLS continue to over state the numbers only to have them revised down by record numbers.

Last week’s report looked solid. The headline was great – Nonfarm payrolls up more than 200,000 in June. Yet, after reading the report, here are the facts:

Per the BLS, the downward revisions to the prior two months reduced the net gain in total payrolls to just 95,000, with a net gain of only 50,000 for the private sector.

Here is where it gets a bit weird. Not only does the President and his advisors continue to quote the great job market, the BLS buries the facts and struggles to even come close month to month or even over the course of a year. Economist, Brian Wesbury, pointed out that nonfarm payrolls are up 2.6 million versus a year ago. But civilian employment, an alternative measure of jobs that includes small business startups, is up a grand total of only 195,000 in the past year! Not 195,000 per month, but a total of just 195,000 over the past twelve months. Weird, right? I guess this can better explain the massive revisions we have seen over the last couple of years.

Energy prices on the rise…The Biden administration just signed an economic suicide pact with the rest of the G7. It would require the United States and the other six to shut down coal power plants by 2035.

What does it mean – First, who made this President and the Environmental Protection Agency (EPA) king for a day? While the CPI is showing relief and inflation is coming down on many items, this administration continues its war on energy forcing the American citizens to subsidize countries like China and India who have more than 1,000 new coal power plants in the planning or construction phase. Let’s hope congress gets involved and stops the EPA and this administration’s war on energy. Here is a look at the current Coal consumption throughout the world. No amount of electric cars and green energy initiatives will offset China and India’s demand for cheap and efficient energy.

 

 

India continues to build new coal plants and is investing heavy in the cheap natural resource.

The graphs above should be more than enough to paint a picture of reality. Hopefully these graphs make their way through DC and into this administration’s EPA office.

The net zero ideology explains why many (if not most?) western analysts and talking heads think coal is dead and on the way out (sound familiar?). While coal use in the U.S.A has been attacked for the last couple of decades by the EPA and folks forcing net zero and is on the decline due to absurd regulations, it is easy to see why unelected bureaucrats who are hired to protect our energy freedom at the EPA have misconstrued reality. The EPA and this administration think coal is done and on the way out globally. Unfortunately, these swamp creatures are not far off from the crocodiles and other swamp creatures that are handicapped by their nictitating membrane. At the very top and throughout most of these agencies like the EPA, their vision is truly mired by their distorted view of who they actually work for and lack of accountability in DC.

According to the chart above, it is easy to see that China and India more than made up for what was the U.S.A.’s lack of commitment to energy efficiency and willingness to sacrifice their children’s freedom. The rest of the world now realizes that they need energy independence to remain economically free.

And it doesn’t look like this trend will reverse itself anytime soon as those countries keep burning coal like there’s no tomorrow.

Don’t get me started on the war on natural gas and appliances. Just wait CA, lots to come on that

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.

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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.