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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.

AllegiantPA Economic Dashboard Portrait August 2018 webFor months I’ve written about the strengthening U.S. economy. More evidence of such came in the 2nd quarter GDP report, which showed the U.S. economy grew at a robust 4.1%. There were some one-time fluctuations in the number, but after canceling out the one-time effects, growth was still quite good (read our recent Feature about the GDP report to find out more). Even more impressive, on July 27th the Bureau of Economic Analysis released their once every five-year comprehensive update and it showed years of economic data were actually better than originally thought. One of the changes was a 2% per year increase in the national savings rate over the past five years (click here to read more). Trade remains the major economic concern and it will remain front and center until we have some resolutions. As there has been little further development on trade, this month I will focus on the markets.

U.S. equity markets have so far pieced together quite a good 2018, even with increased economic uncertainly and market volatility. As of the end of July, the S&P 500 was up 6.5%, not bad for seven months of the year. However, this number may be misleading. As I’ve written numerous times, breaking down data different ways provides greater insight. The devil is always in the details. For example, understanding where the returns came from - what did well and what did poorly - tells us more about the health of the markets.

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.