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APA Jones 3x4HI RGBAllegiant Private Advisors, an independent firm offering fiduciary-level financial planning and investment advisory services, has announced the promotion of Benjamin W. Jones, CFP®, AIF®to the role of President. Jones, who currently serves as Allegiant’s Chief Investment Officer, will formally transition into the leadership position by the year-end. Allegiant Private Advisors Co-Founder Martin Kossoff, CFP®, AIF®, who has served as President since the firm was established in 1997, will assume the role of Chairman. 

“Our commitment, rooted in a unique team approach to customized wealth management, remains resolute,” said Jones. “Under Marty’s leadership, Allegiant was created as a company with staying power, permanence and lasting value, employing a talented team who believes in the vision to create, enhance, and maintain the most trusted independent financial advisory firm in the region.  I look forward to leading the firm as we continue to serve, advise and guide our clients and their families for generations to come.” 

Chart Getting Closer to Neutral
Since the Federal Reserve began raising short-term interest rates in 2015, there has been substantial debate about how far they would go during this tightening cycle. The expectation has been that they would try to raise the fed-funds rate to be at least in-line with their projection of the neutral rate, or the rate that is neither speeding up or slowing down the economy. As you can see in the chart above, the fed-funds rate is approaching that level. Which is why when Fed Chairman Powell stated in an interview in early October that the fed-funds rate was “a long way from neutral,” markets reacted very negatively. His statement implied that there were many more interest rate hikes on the horizon, which would almost certainly act as a headwind for economic growth. However, just last week, Chairman Powell backtracked on his previous statement, stating that interest rates were “just below” the level that would be neutral for the economy. This led to a sharp drop in expectations for further rate increases. These mixed signals from the Fed are one of the reasons that volatility in financial markets has been so elevated recently. We will find out more at the Federal Reserve’s next meeting later this month, but for now it seems like the Fed has made a slight pivot away from significantly higher interest rates. 

Chart Recent Drop in Oil Prices


The price of oil has dropped sharply over the last few months, slumping 30% since its peak in early October 2018. A few factors are behind the move. The first is a continued surge in production from U.S. shale producers. Domestic oil production is up over 20% from a year ago. With OPEC pressing forward without supply cuts, the combination of booming U.S. oil production and stable OPEC production has led to a swelling of global oil supply. At the same time that oil supply has risen, concerns about global oil demand have started to surface. Just last week OPEC came out and cut their forecast for 2019 global oil demand for a fourth straight month. This confluence of factors has led the market to quickly and dramatically reevaluate supply/demand expectations as we move into 2019. While a further decrease in oil demand could mean that a slowdown in global growth on the horizon, thus far, the pullback in oil prices seems to be normal, albeit volatile, market behavior. 

With stock markets tumbling in October it is a great time to step back, evaluate the economy, and determine if this market correction is the start of the next big stock bear market. More likely than not this is the same run-of-the-mill correction we’ve seen four times in the last three years. But, as we move further along in this economic expansion, every decline deserves close attention. Needing no additional emphasis, it’s also never fun to see account values decline, even if only on a temporary basis. 

Several Allegiant team members recently heard Joe Deitch, author of the motivational book “Elevate" and Commonwealth Financial Network Founder and Chairman, describe his morning routine. He practices the habit of waking up and, before even getting out of bed, finding a few things to appreciate in his life. The appreciations he mentioned ranged from more commonly heard gratitudes, like health, family, and the sound of the ocean, to the more mundane: clean sheets, a favorite t-shirt, a comfortable bed.  As we enter the season of giving thanks, and then move quickly into the season of giving, we’d like to take a step back from our usual conversations, which often include discussions of portfolio values, volatility, and even charitable giving, and share some perspective on what we’re grateful for this holiday season - those we’re surrounded by, the community we’re part of, and the country we live in. 

Although the holiday season is known for gift giving and good cheer, it’s also known for an increase in cybercrime and identity theft. Before you get a jump start on your holiday shopping, follow these four tips to ensure that you’re protecting yourself this season.

APA Jones 3x4LOAs a Principal and Chief Investment Officer at Allegiant Private Advisors, Benjamin W. Jones, CFP®, AIF, is responsible for establishing the firm’s overall investment strategy, security selection, portfolio management, and research activities. Since joining the firm in 2005, we suspect you have come to know Ben through our market update presentations as well as his Monthly Insights. This month, Ben is sharing his personal story about an unpredictable path to a wonderful life in Sarasota and a career at Allegiant.

As most good things happen in life, my path to Allegiant happened somewhat unexpectedly. I first met Marty Kossoff, President of Allegiant, during the summer of 2004. I was down in Florida on summer vacation when Hurricane Charlie ravaged the area. Feeling fortunate that Sarasota avoided the worst of the storm, I wanted to help those impacted any way I could. I spent my first day in Arcadia passing out water and food to those impacted and the second day on an orange grove in Fort Ogden. It was while working cleanup and repair on that orange grove that I met Marty. The connection: the farm belonged to the family of one of our partners at Kerkering Barberio. Little did I know that this connection would turn into lunch a year later and a job a few months after that. As is often the case, when you give, there’s a good chance you get back much more than you gave. 

The transfer of wealth, your estate plan, communicates many things to those we leave behind. It says who is remembered, who is loved, who is important, and who we trust to be in charge. Therefore, dividing your assets between your children can be a stressful ordeal. Many parents want to be fair to everyone, which may equate to an even split of all assets. For most families, however, an even split doesn’t make the most sense. How you handle this delicate situation with your own family depends on many personal factors. Nonetheless, if you don’t make the division of assets clear in your estate documents, and overlook account titling and beneficiary designations, it could lead to many complications and mistaken messages for your children after you are gone. 

As a parent you might easily forget that you do have the option of leaving your estate to whoever you want, in whatever portions you want. You’re not required to split your assets fairly or evenly (and this may be heresy, but nor are children entitled to an inheritance either). In most cases, parents want to be fair to each child, but it’s important to remember that it’s not a necessity. 

Chart Similarities in Last Four 10 Market Dips

For years, equity markets have moved higher on very limited volatility. But, as we expected at the beginning of the year, 2018 has proven to be quite the opposite, already with corrections in both February and October. Although hard to remember, the S&P 500 has had four 10% corrections over the last 3+ years. The chart above overlays the last four market corrections over a three-month period, with the most recent decline shown in red. Although the current pullback has not lasted for the full three months yet, the general trends of all four periods look very similar. All of these market pullbacks were driven by concerns over trade, interest rates, and commodity price changes. Market pullbacks such as these can be nerve-racking, but often do not turn into a major bear market. However, it is very important to examine economic data during these market pullbacks to evaluate whether any fundamental economic data is flashing red. We are paying close attention to current market trends and the global economic environment to decipher whether or not a bigger economic and market downturn is on the horizon.

Q3 GDP 2018 Chart

Gross Domestic Product (GDP) grew by 3.5% in the third quarter, ahead of estimates which called for growth of 3.3%. Consumer spending, which accounts for over two thirds of the U.S. economy, grew by 4% - its strongest level since 2014. A robust labor market and record high consumer confidence are clearly leading consumers to spend. Government expenditures were also a positive contributor to growth, increasing by 3.3%, up from 2.5% in the second quarter. Despite these two factors driving the headline number higher, there were signs of weakness in some sectors of the economy. Residential investment contracted by 4%, its third consecutive quarterly decline. This weakness comes on the heels of a slowdown in many housing related indicators in the last few months. Higher interest rates and input costs seem to be starting to weigh on the housing market. Nonresidential business investment was also disappointing, growing at only 0.8%. This is underwhelming given an expected boost to business investment that was supposed to come on the heels of this year’s tax cuts. Finally, the always volatile inventory and net exports numbers added 2.1% and subtracted 1.8%, respectively. Overall it was a solid GDP report, despite the pockets of weakness. However, as this year’s fiscal stimulus begins to fade over the next few quarters and higher interest rates continue to provide a headwind, we expect growth to slow as we move into 2019.