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You can find reports from our Investment and Research team, timely and informative financial planning topics from our Wealth Management team, and deeper dives on various important topics in our white papers from any team member. Read online, share with friends, or download for your convenience.

Chart A Tough Trade Off

Recently, the 10-year U.S. treasury yield fell below the S&P 500 dividend yield for the first time since 2016. A positive spread between the two data sets has typically provided an incentive for investors to favor equities relative to bonds. However, in previous positive spread environments equities were trading at lower relative valuation multiples than today. At almost 16x forward earnings and 18x trailing earnings, the S&P 500 is not at bargain prices. This environment puts income seekers in a tough position. They must either accept lower expected returns by investing in fixed income securities or take on the risk associated with equity markets. Unfortunately, this time around equity markets are not quite as attractive, making the decision that much more difficult.

APA Cross 8x10 smallAllegiant Private Advisors is a fully independent, fee-based financial advisory firm that will always act in your best interests. Our team includes wealth advisors, financial analysts, portfolio managers and customer service professionals who work tirelessly to address all phases of your financial life. We employ, serve, and collaborate with good people only - and we truly feel our clients are part of our family.

This summer, we are pleased to expand the strength of our committed team offering deep expertise, long-term vision and concierge-level service as we welcome two new team members to your Allegiant family.

Michelle Cross, CFP®, CPA, CDFA®, has joined Allegiant Private Advisors as a Wealth Advisor. Having worked in the financial services industry since 2002, her role at Allegiant focuses on a holistic advisory approach, guiding client families through all areas of financial planning to help define and achieve their financial goals. Michelle previously worked for Deloitte & Touche’s investment management audit group and spent several years as an audit manager at a large local CPA firm before becoming an independent financial planner. Originally from Philadelphia, PA, she received her Bachelor of Science in Accounting from the University of Delaware. Michelle holds the CERTIFIED FINANCIAL PLANNER™ certification, is a Certified Divorce Financial Analyst® designee, and Certified Public Accountant currently licensed in Florida and Pennsylvania.

APA Nantes 8x10 smallKaryn Nantes has joined Allegiant Private Advisors as an Operations Specialist. She is responsible for processing money transfers, new account setup, account maintenance, and handling client questions with the highest quality of service. Prior to joining the firm, Karyn worked for Harvest Partners Private Equity in New York and Mallitz Investment Group in Sarasota, FL. Karyn received her B.S. in Interdisciplinary Studies in Social Science from Michigan State University.

APA Vorndran 3x4HI RGBIn her role as Paraplanner at Allegiant Private Advisors, Kristina (KJ) Vorndran, CFP®, CRPC® and a Master of Science, Personal Financial Planning candidate, works with both clients and the Wealth Advisor team to help establish and then coordinate client relationships, gather information, analyze and develop financial plans, implement solutions and ultimately monitor the client’s agreed upon strategic plan.

You’ve likely seen recent Features about KJ as we proudly recognized her achievement in earning her CFP® certification and CRPC® designation over the past year in addition to her newest volunteer role as the youngest board president in the history of Just for Girls. We’ve asked KJ to share a little more about her background, path to Allegiant and numerous passions, in her own words:

Second Quarter 2019 GDP Report Chart

Gross Domestic Product (GDP) rose by 2.1% in the second quarter, which marginally beat expectations of 1.8%. As opposed to previous quarters, growth was not as broad-based, but instead derived from two primary areas - consumer and government spending. Consumer spending was responsible for the majority of Q2 GDP growth, growing 4.3% and contributing 2.85% to the final growth figure which represents the strongest contribution since Q4 2017. Gross private domestic investment, which encompasses business investment, residential investment, and the change in business inventories was the biggest detractor from GDP growth in the quarter, shaving 1% off of growth. Business investment had its worst quarterly result in 15 quarters, as trade and geopolitical concerns have begun to increasingly affect business confidence. Housing also continued its slide, representing the 8thquarter of detraction from GDP in the last 9 quarters. Trade was a drag as well. Net exports nearly reversed the 5.4% growth in Q1 with a 5.2% decline in Q2 as exports detracted 0.63% from GDP growth and imports were basically a non-factor. If the dollar continues to strengthen, trade may continue to detract from GDP growth. Finally, government spending was quite strong in the quarter, contributing an abnormally large 0.85%. All in all, it was nice to see such a resilient consumer amid increasing trade and geopolitical concerns, however the trend in business investment when coupled with recent poor business confidence releases is something that we are keeping a close eye on. 

The Fed Cut, Now What?

As was widely expected, the Federal Reserve reduced the Federal Funds Interest Rate by 0.25% on July 31. Citing slowing global growth, weakening business investment, declining exports and a soft housing market, the Fed is trying to maneuver the economy through an economic soft patch. However, the Fed stopped short of suggesting a series of interest rate cuts, meaning this could be all we get. This was a disappointment to many, sending markets lower after the news. However, taking a bit of a contrarian view, I am happy they did not detail a longer-term plan for continued rate cuts. In essence, the Fed is sticking to its recent mantra and remaining data dependent.

You’ve likely seen stories about the Equifax data breach and recent settlement with the U.S. Federal Trade Commission over the past few weeks. In a world where it can be difficult to sort through headlines or know which website to trust, the Allegiant Private Advisors team felt compelled to provide our clients an accurate update and explanation about the steps to take if you were impacted by the data breach. Please contact your Wealth Advisor if you have any questions regarding this process as the Allegiant team is always available to help guide you through cyber security concerns. We also encourage you to pass along this step-by-step tutorial to your friends and family. 

Chart Declining US Temporary Workforce

While the bulk of employment data paints a very strong picture of the domestic labor market, the team at Allegiant always looks for data that may presage any sort of looming slowdown. One dataset that has historically acted as a leading indicator for employment data is the change in temporary workers. As you can see in the chart above, a sharp slowdown in the temporary labor market has historically preceded a recession. This seems to be intuitive, as hiring managers would look to trim compensation expense first by parting ways with temporary workers before laying off full-time staff members. For the first time in years, this indicator just dipped into negative territory and is something we will watch very closely for signs that the longest economic expansion in history may be losing steam.

Chinese Slowing GDP Growth

In its latest quarterly report, China posted its slowest GDP growth figure in the last 27 years. Growth came in at 6.2% which is quite strong compared to other global economies, but a significant slowdown from the growth experienced in recent years. The slowdown is a clear sign that trade tensions with the U.S. are beginning to weigh on the Chinese economy. The Chinese government has been quick to try and counteract the negative trade impact, by cutting taxes and enacting pro-growth policies. However, it appears for now that those measures are coming up short. Chinese growth is very important to watch due to the tremendous impact it has on the global economy. A sharper slowdown would almost certainly spillover to other economies. We are keeping a close eye on the Chinese economy as well as developments from the U.S.-China trade dispute, as a resolution on trade has the potential to alleviate a good portion of Chinese growth concerns. 

APA Jones 3x4HI RGBSlowing economic growth, mild inflation, housing moderation, and a weakening manufacturing sector. You may think I’m talking about today’s economy. I’m not. I’m describing the economic factors prevalent during the 1995-1996 economic slowdown. Why is this an important comparison to today? Faced with these economic conditions the Federal Reserve Board, under the leadership of Chairman Greenspan, reversed course on interest rate policy. After doubling interest rates over the prior year, the Fed reduced rates by 0.75% over the span of 6 months. This led to a rebound in activity and laid the groundwork for the late-90s bull market (and subsequent tech bubble). Could this be 1995 all over again?

APA Walsh 3x4HI RGBBy Melissa Walsh, CFA, CFP®
Wealth Advisor 

Part of my role as a Wealth Advisor is to have meaningful conversations with my clients about their financial lives. These are often focused on goal setting and celebrating milestones -- but in some circumstances, we need to talk through more difficult subjects. 

One of the hardest conversations to have concerns the surviving heirs. I don’t mean discussing the death of a family member; while tragic, we prepare years ahead of time for that inevitability. I am specifically referring to when a client’s heirs are not prepared for their inheritance, have not heeded our counsel, and have spent through their bequeathment. We work hard to avoid this, but I have encountered the scenario too often after the passing of a client. 

It is for this reason that I am an advocate for utilizing carefully constructed trusts to safeguard your legacy. For the benefit of those you leave behind, I’d like to explain the advantages of restricting assets from being entirely and immediately accessed by your heirs.