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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.

By Melissa Walsh, CFA, CFP®
Wealth Advisor

As serious observers of the economy, we are often reminded that money is fungible and should be compounded by investing appropriately. However, the presence of well-documented biases, such as considering sunk costs and participating in so-called “mental accounting,” demonstrates that many people view money in different ways depending how and why it was earned, spent, or saved. I recently listened to an interview with Richard Thaler, a Nobel Prize-winning behavioral economist, who explained that even he occasionally finds himself engaging in these biases. If even a renowned behavioral economist admits to economic errors, it is easy to conclude that we do, too. A behavioral finance inspired method called the “bucket approach” takes advantage of this realization. For specific situations, this approach is one of several options for account and investment management.

Chart SP 500 High

The S&P 500 hit an all-time high Tuesday despite the volatility that has been present in markets in 2018. Second quarter earnings growth from S&P 500 companies certainly aided in the index’s performance leading up to the new high. We will be watching to see how markets respond to trade and political developments as well as second half earnings.

All indices are managed, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges or expenses. Past performance does not guarantee future results.

Looking for a back to school gift for your child or grandchild? The following books can be a great way to introduce elementary school-aged children to the basics of finance and help facilitate conversations about money. Thoughtfully covering themes of earning, saving, and spending money, these books will also introduce emotional and behavioral drivers of financial decisions.

The eyes of the financial world have been fixed on an unlikely country in recent weeks – Turkey. A 40% depreciation in the Turkish Lira so far this year has many people wondering if their economy is on the brink of financial collapse. The situation in Turkey has been exacerbated by numerous issues including very high inflation, a large current account deficit and a less than ideal geopolitical environment. However, possibly the largest issue is that Turkey has a large portion of debt that is denominated in foreign currencies. The decline in the Turkish Lira has made this debt much more expensive to service, which has led to concerns about the solvency of the country. This has triggered a sharp decline in the price of Turkish assets. While at this point the sharp selloff has been contained to Turkey, there has been some spillover into other emerging markets and there are fears that this may trigger an emerging market crisis like we saw in the late 1990s.

By: Paul Cantor, CFA®, AIF®, CFP™
Chief Operating Officer, Principal

I was recently asked by friends why my economic and market outlook was tinged with some concern. It was a valid question from some very intelligent non-financial professionals. The financial media is filled with positive bias as they cheer Apple becoming the first company in history to reach a $1 trillion-dollar market capitalization. Additionally, we just posted the strongest GDP growth that we have seen in years of 4.1% for the quarter. The stock markets hover at near record highs. Consumer confidence is bordering on ebullient. S&P 500 earnings are estimated to grow by nearly 23% for the quarter. Corporate managements are repatriating funds from overseas and buying back stock at unprecedented rates supporting both stock prices and earnings growth. According to S&P Global Rankings, “Total cash held by U.S. nonfinancial companies, including money parked domestically and overseas, rose 9% to a record $2.07 trillion.”1 The unemployment rate ticked down to a new low of 3.9%, the lowest we’ve seen in over 17 years.

Consumer and corporate balance sheets are ostensibly in terrific condition. We are enjoying the second longest economic expansion since 1945 according to the National Bureau of Economic Research. So, why the concern? This paper will add some perspective, looking deeper into the averages to show why they could be fallacious.

Click here to read our full white paper: The Fallacy of Average.

The Bureau of Economic Analysis (BEA) released its 15th comprehensive update of the National Income and Product Accounts data last week. The comprehensive update occurs every five years and revises economic data from the previous five years. Since it is historical data the release does not garner much attention; however, there are important insights to discern from the changes. 

APA Nicholas 3x4HI RGBAllegiant Private Advisors is pleased to announce that Portfolio Manager Luke Nicholas, CFA, CFP® has earned the CERTIFIED FINANCIAL PLANNER™ designation.

Luke joined Allegiant Private Advisors in 2013. In his role as portfolio manager and member of the firm’s Investment Committee, he is responsible for using internally-generated research to tailor customized investment portfolios for each client. Prior to joining Allegiant Private Advisors, Luke graduated from the Honors Program at The University of Florida with a bachelor’s degree in Finance. Luke holds his Chartered Financial Analyst® designation in addition to having earned his CERTIFIED FINANCIAL PLANNER™ accreditation in the summer of 2018.

Allegiant’s team approach to customized wealth management with concierge-level service is rooted in recruiting and retaining consummate professionals who possess important industry credentials as well as the utmost character. We’re proud of Luke’s latest accomplishment as he works diligently to serve your portfolio goals.

The chart below displays the average monthly rise or decline in payrolls across business sectors from January to July in 2017 and 2018. As seen in the July jobs report, demand for manufacturing labor remains very high, and has seen the highest growth in payrolls versus 2017 in the measured time period. Manufacturing job trends will be important to watch as we get deeper into the trade war and labor supply gets constrained further. We are paying close attention to future job reports and broader economic developments.

Chart JobsMarketTakeways
All indices are managed, and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges or expenses. Past performance does not guarantee future results.

As we are now about halfway through companies reporting their second quarter earnings reports, we wanted to take a look at how different sectors of the market have performed. While earnings growth has been strong overall, there have been wide swings in stock prices upon the release of their financials. The most notable occurrence of this earnings season has been the performance of the technology sector which has been plagued by sizable selloffs in big names such as Netflix, Facebook, Twitter, and Intel.

Q2 2018 US GDP Growth
The first estimate of second quarter GDP growth showed that the U.S. economy grew at a solid pace, driven in part by the recently enacted tax cut. The economy grew 4.1% in the second quarter, the strongest reading since the third quarter of 2014. The largest contributor to growth was a 4.0% increase in consumer spending. Business investment growth was also solid at 7.3%. However, a drawdown in inventories offset the entirety of this underlying investment growth. Government expenditures were another positive contributor, increasing 2.1% during the quarter. The final component of GDP, net exports, added 1.06% to growth, as exports surged 9.3%. While at first glance the export growth appears to be a very positive piece of data, it is an aberration that may be unsustainable moving forward. Almost all the growth in exports derived from a surge of soybean and other agricultural shipments ahead of pending tariffs beginning on July 1st. This means that the surge is likely to be reversed next quarter.