240 South Pineapple Avenue, Suite 200  Sarasota, Florida  34236

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 Inflation
Federal Reserve Chairman Jerome Powell has repeatedly cited that the Fed’s goal is to have the domestic inflation rate run at or close to a 2% annual rate as measured by PCE (Personal Consumption Expenditures Price Index). Through the first half of 2018, the Fed’s goal was in sight which prompted a series of interest rate hikes which were supported by strong underlying economic data. However, in mid-2018 the PCE began moving sharply lower and away from the Fed’s stated benchmark. What is not as clear, is why the inflation data has changed directions so quickly. The economic data remains strong, consumers are still confident, and interest rates are still at relatively low levels. All of these observations would tell us that inflation should be moving upwards. However, as the chart suggests, inflation has moved lower which is one of the reasons—along with marginally softer economic data—that the Fed has backed off raising rates in the near term. The Allegiant Private Advisors team will be paying close attention to the inflation data as we move through 2019, to see if the present catalysts begin to drive the inflation data back towards the target range.

GDP Report 2019 First Quarter

Gross Domestic Product (GDP) grew by 3.2% in the first quarter, which was significantly higher than expectations of 2.3%. While the headline number is quite strong, the underlying details are in-line with our expectations for a slowdown in growth for the American economy this year. A buildup in inventories, a surge in net exports and growth in government spending accounted for over 2% of GDP growth during the quarter. All three of these factors are highly unlikely to be sustained moving forward and stripping them out, underlying growth was just 1.1% - the weakest growth in nearly six years. The weakness below the surface was driven by a sharp deceleration in spending by consumers and a slowdown in business investment. Consumer spending grew only 1.2%, which represents the second weakest spending growth since 2013. In sum, while many people are celebrating GDP growth ticking back over 3%, a deeper look reveals that the U.S. economy appears to have lost some momentum in early 2019.

Investing without foresight invites significant risk to client portfolios. As fiduciaries, we have an obligation to explore how current trends may impact our collective economic future, and in turn, how they may affect our investment strategy. Combining research with independent thinking leads us down exciting roads, and in our current environment, there are significant, sweeping developments that provide context for our approach.

Paul Cantor, CFA, AIF®, CFP®, a Principal and Chief Operating Officer at Allegiant Private Advisors, delves into investment strategy and "The Devolution of Globalization" in a new article for Financial Advisor Magazine. Click here to read more

APA Vorndran 3x4HI RGBAllegiant Private Advisors is pleased to announce that Paraplanner Kristina (KJ) Vorndran, CFP®, CRPC®, has earned the Chartered Retirement Planning Counselor® designation. 

The CRPC® program focuses on the entirety of the retirement planning process, encompassing pre-and post-retirement needs from sources of retirement income including personal savings and employer-sponsored retirement plans to income taxes, retirement cash flow, Medicare, asset management and estate planning. Individuals who hold the CRPC® designation must complete a course of study, pass an examination and adhere to standards of professional conduct.

Chart Growth Stocks vs Value Stocks
The chart above shows the relative performance of growth stocks compared to value stocks over ten-year periods dating back to 1937. The blue bars illustrate ten-year periods where value stocks outperformed growth, while the red bars indicate periods where growth stocks outpaced value. As you can see, value stocks have generally outperformed growth stocks – over 75% of the time to be exact. However, over the last ten years, growth has outperformed value by almost 4% per year – the second worst relative ten-year period for value stocks. While many investors and market commentators tout this as a reason to shift more money into growth stocks, we prefer to not let recent performance influence our expectations for market returns. So, while value investors may be kicking themselves right now, it is more than likely that over the long-run value stocks will continue to reward their shareholders with strong returns. 

Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results. Talk to your financial advisor before making any investing decisions.

Portfolio Manager Luke Nicholas, CFP®, CFAAPA Nicholas 3x4HI RGB, earned a promotion to Principal in January 2019, but even greater things are in store for him over the next year. We invite you to get to know Luke better, in his own words:

It is hard to believe that I am quickly approaching my six-year anniversary at Allegiant Private Advisors. I consider myself extremely blessed to have found a company with such an accomplished, close-knit team and incredible client base. While the financial industry is rife with sales-driven quotas and greed, I am proud to know that all of my co-workers and I come to work every day with only one thing in mind – providing top-level, fiduciary guidance for our clients. Before I dive into my time at Allegiant further, let me take a step back and tell you how I got here. 

Chart Construction Spending

Construction spending is a great indicator of the health of the underlying economy and therefore one that the team at Allegiant likes to track closely. The chart above shows the year-over-year growth rate of construction spending broken down in two main categories: residential and non-residential. Although the total construction spending (dotted line) growth is still positive, the growth rate has been declining for almost six years. The real drag on construction spending growth recently has been the residential segment (grey line), which turned negative on a year-over-year basis late last year. The housing market has been confronted with rising material and labor costs, along with rising interest rates – which have both hurt homebuyer affordability. While non-residential spending (gold line) has remained strong, largely driven by a recent surge in government-related spending, the drop off in residential housing is a concern. If in fact the declining spending is signifying a looming slowdown in the housing market, that could have a significant impact on the economy. Coupled with additional economic indicators, the construction data supports our narrative that economic growth is set to slow in 2019 after the one-time boost of the tax cut. 

The Allegiant Private Advisors team regularly helps guide our client families through many of the most crucial decisions in life, from purchasing a new business or preparing portfolios to support living life to its fullest, to the important duty of planning legacy gifts.

Many people wish to leave a gift to charity when they pass away. These legacy gifts are often outlined in a Will or Trust agreement. While this path works for many people, there may be a more tax-effective way to gift to charities after your death: naming them as the beneficiary of your IRA. This strategy can improve outcomes for all parties involved and can be especially attractive for those wishing to leave money to a mix of charities and family members, especially those in high tax rates. 


Should We Be Worried? Here’s Your Call to Action.

A lot has happened since last month’s commentary. The February employment report came in well below expectations (20,000 versus 180,000 new jobs). The Federal Reserve reacted by shifting course and announced a dovish stance on interest rates and monetary policy. Global manufacturing PMIs declined more than expected. And finally, the big change, the one worth noting above everything else, was a dramatic drop in long-term interest rates, leading to a very important inversion of the yield curve. Click here to read Allegiant's Monthly Insights: March 2019.

Chart ISM Services Breakdown

This month’s ISM Services reading came in at a very strong 59.7. Prior to this report, the past few ISM readings had shown some weakness, which was a concerning sign for a domestic economy that is comprised of primarily service-based businesses. More concerning than the down trend in the headline Services PMI number was the sharper decline in some of the segments that roll up into the headline number, such as new orders and backlog. New orders give some insight into the spending businesses are experiencing, while backlog gives us details about how strong a company’s existing pipeline of work is. The fact that almost all of the reported segments rebounded so nicely is encouraging given some of the geopolitical and trade related risks that are looming. Overall, the report showed that the U.S. economy has entered 2019 on solid footing.