We hope your summer is off to a great start. While the weather in the desert in May was spectacular, the 100 degree days are now upon us in June. Which means for all us Arizonans, planning a get a away to leave our hot weather and head to cooler climates is a must over the next 3 months for a reprieve and our sanity.
With the market volatility back among us over the last few weeks, I wanted to send you some information and prospective on what we believe is happening. Also wanted to share some exciting changes that are happening at Legacy Wealth Alliance.
The nemesis to the market over the last 3 – 4 quarters have been the proposed tariffs against goods being brought into the US by our trading partners. More specifically, China and the announcement last week of tariffs with Mexico. Part of President Trump’s campaign involved new trade agreements with other countries and, for the most part, has been part of his administration’s focus since he took office. While this is nothing new, the media attention has again brought these tariffs back to the forefront. In the new age of Social Media, media attention now typically causes reactions in the markets. China, as a country, is the single largest exporter to the United States. Mexico is number two.
While we have been watching these events closely, as we did in the 4th quarter of 2018, the media has not done a good job of providing perspective. Our hope is that some of the data we have collected, helps keep this volatility in context:
- The “true” economic impact of the tariffs, with both China and Mexico, is relatively limited. According to Goldman Sachs, if 25% tariffs are applied to all Chinese imports, they estimate that the S & P 500 earnings-per-share estimates, will decline by as much a 6% in 2019. That said, Goldman also suggested that this could be offset if every company in the S & P 500 raised their prices by 1%.
- According to the New York Fed, the latest round of tariffs will cost the average American household $831 this year, or $106 billion collectively. It’s not a huge number, but not insignificant either.
- At a 5% tariff rate, the Mexican tariffs are much less economically significant than those applied to China. The question is if this is a political move intended on jump starting a change or the beginning of a larger escalation.
- The larger concern is the escalation, instability, and unintended consequences these tariffs could create for the US. Last week, it was reported that China is establishing a list of “unreliable entities” which would bar certain US companies from doing business in China.
- On a possible positive outcome of these tariffs and recent volatility, as of Friday Fed Fund Futures have a 92% chance that the Fed will cut rates before year end. The yield curve is sending a message to the Fed that the December rate hike may have been a mistake and that they need to lower rates sooner rather than later.
This data means nothing, unless we can apply it to you and your wealth:
- This is why diversification matters. Trying to “trade the headlines” is a not a tangible investment strategy and puts the probabilities at odds with your long-term goals and objectives. While the US economy is still strong and in decent shaped, this may be another headline that with time, as is the case with most “headlines”, will eventually pass. That is certainly what we saw from the 4th quarter 2018 volatility into the 1st and 2nd quarter 2019 positive momentum.
- Therefore, at this point, we are encouraging you to stay the course.
We will continue to keep our eye on these developments and communicate as needed. At the same time, this is your money and we work for you. If you would like to discuss this regarding your investments, please don’t hesitate to reach out to any member of our team. While we can’t predict the timing or the path the markets are headed, we do want to keep you informed on what is going on and our recommended position when they do.
SPEAKING OF TEAM
Due to the great individuals, families, and companies you so graciously allow us to serve, Legacy Wealth Alliance has been growing. We are working on the next 5 – 10 year plan of our organization and many of you have generously and candidly provided us helpful feedback in why you do business with us and what services or additional offerings we can provide to deepen our relationships and increase our value. We take great pride in the advice and service our team provides, but by no means are we perfect. There is always room for us to improve. If you have any feedback that you would like to share, please feel free to reach out to me or Pattie. We are open to both the positive and areas you would like to see us improve to make every experience with us, the best of any industry.
We also wanted to share with you that Brian Frambes on our team is currently transitioning out of Legacy Wealth Alliance. Brian has been a great asset to our team and to you during his tenure with us. Late last year, he came to us and shared he needed to get back to Florida to help care for his elderly mother and father in law. While we hated to see him leave, we admire him for wanting to be there for the support and care of his aging in laws. Brian moved back to Florida in March and has been working remotely. He will be with us for a few more weeks as his primary role is training his replacement, Jon Launder, CFP. Please join us in wishing Brian the best of success in his new pursuits and endeavors. We will miss him and will keep his desk warm, if he ever wants to return to Arizona.
JON LAUNDER, CFP
As with most losses, there is positive gain. Jon Launder came to the Legacy Wealth Alliance team from Milwaukee, Wisconsin after four years of experience in the wealth management profession. He graduated from the University of Wisconsin-Milwaukee with a bachelor’s degree in Business Finance in 2015. During his time as a Para Planner, Jon worked extensively in helping individuals develop and implement a broad scope of financial planning concepts and serviced existing clients. Jon has completed his Health & Life Insurance Licenses, Series 7 & 66, and CFP designation. Jon thoroughly enjoys working with individuals and helping them achieve successes in their financial lives and looks forward to meeting all our current and future clients.
Jon decided to relocate to the Scottsdale area with his girlfriend Emma to move closer to family. Emma is a Registered Nurse and is completing a residency ending in August in Wisconsin and will be joining Jon at their apartment in Scottsdale upon completion. As Jon’s better half, being apart from Emma for the next two and a half months may be a challenge so we would ask that you make him feel welcome. Outside of work Jon enjoys being active outdoors including hiking, mountain biking, camping and golfing. He also greatly enjoys spending time with family and friends and is excited to explore Arizona and the surrounding area. We are working on forgiving him for being a Packers fan.
Jon will be the primary point of contact going forward as he takes over Brian’s responsibilities. Jon can be reached via email at Jon@legacywealthalliance.com or by phone, 480-212-7000 x 2, Please join us in welcoming both Jon and Emma to the Legacy Wealth Alliance family. He will be sure to meet all of you personally on your next visit.
That covers all the information and updates we wanted to share with you for June. We continue to be thankful for your business and the relationships we share together. We are working hard to exceed your expectations and want to know when we fail. Also, thank you to those of you whom have graciously introduced us to new clients that can use our help and expertise. Again, because of you and your generous referrals, we are now licensed in multiple states across the country. Please let us know what more we can do to help and continue to help us grow by introducing us to others that can benefit from what we offer for them, their family, and their businesses focusing on building and protecting their wealth. Have a safe and enjoyable summer.