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Monthly Market Brief-September

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief September 2017 for updates.

Here are some key highlights

 

 

 

 

 

 

POSITIVES:

  • Q2 GDP revised 4 tenths higher to hit the 3% annualized rate for the first time in two years.
  • Consumer spending rose at an inflation adjusted rate of 3.3%, best since Q2 of last year
  • Oil prices have strengthened in response to Hurricane Harvey & a strengthening Hurricane Irma.
  • Although factory orders for July declined to -3.3%, reflecting a slowing in strong prior gains for aircraft orders, there is 6 tenths upward revision to core capital goods orders up to a 1% gain and 2 tenths upward revision to core shipments, now at 1.2%. These numbers point to accelerating strength for third quarter business investment.

CHALLENGES:

  • Unemployment rates rose to 4.4% in August, up from 4.3% in July.
  • Trade surplus widened slightly in July to $43.7 Billion in July from $43.5 Billion in June, primarily due to fall in exports of 0.3%.
  • Trade gap with China widened by $1 Billion to $33.6 Billion, and widened with EU by$0.9 Billion to $13.5 Billion.

Monthly Market Brief-August

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief August 2017 for updates.

Here are some key highlights:

POSITIVES:

  • Non-farm payrolls added 209,000 jobs in July, bringing this year’s monthly average additions to 170,000 which is well above the minimum 100,000 needed to absorb new entrants
  • Second quarter GDP came in at an annualized growth of 2.6% for one of the best postings in 2 years
  • Business investment posted a strong increase of 5.2% in 2Q17, driven by a sharp increase in equipment investment of 8.2%
  • Factory payrolls have come alive with unfilled orders jumping to a two-year high, increased shipments rising to a five-year high, and new orders standing at a three-year high

CHALLENGES:

  • With unemployment at 4.3%, average hourly earnings should theoretically be trending higher rather than remaining at a flat 2.5%
  • Given the relatively flat wage trend, consumer spending has been trending lower over the last three months with an average growth of 0.16%, near a cycle low

Monthly Market Brief-July 2017

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief July 2017 for updates.

Here are some key highlights:

POSITIVES:

  • Non-farm payrolls beat consensus expectations, adding 222,000 jobs in June
  • The ISM Manufacturing Index surged nearly 3 percentage points in June to 57.8, driven by strong new orders, production, and backlog
  • Consumer confidence came in at a strong 118.9, the highest posting in 16 years

CHALLENGES:

  • Consumer inflation remains weak which does not support the Federal Reserve’s plan to increase interest rates and reduce their bond buying
  • Consumer spending will likely remain relatively weak if income continues to slip
  • Housing remains soft as indicated by relatively weak pending home sales and building permits

Investment Outlook-June 2017

What Would Goldilocks Do?
by Jim McElroy, jmcelroy@argentfinancial.com


So far this year, the S&P 500 has broken its previous record high six times and has appreciated about 8% since the end of 2016. The run actually began in the last two months of 2016, after the election, when optimism surged over the new administration’s market friendly plans. The prospect of less onerous financial regulations, tax reform with tax cuts, billions in repatriated overseas corporate profits and much needed infrastructure construction trumped the previously held conviction that the world was coming to an end. Lately, however, the euphoria has waned: Congress has not been cooperative, the president’s style has so far been counter-productive and now there’s a special prosecutor on the hunt for impeachable offenses or crippling legal processes. So, since the thrill of political new hope and new change that drove the market to new highs is largely gone, why isn’t the market reversing course?

Forgive our skepticism, but we’ve never had much faith in the ability of politics to single handedly alter the course of economic cycles; from our perspective, the effects seem to flow in the opposite direction. The market, for now, is paying more attention to economic possibilities than to political dysfunction. And although the recent reports of economic strength don’t suggest acceleration, they also don’t suggest weakness; not too fast and not too slow is, of course, the Goldilocks scenario. As long as the market foresees a steady and gradual improvement in future economic conditions, and as long as the preponderance of actual data reinforces this forecast, equity prices should continue their upward trajectory. So far, nothing definitively predicts an overheated boom or a collapsing bust — the porridge is neither too hot nor too cold — but the statistics deserve close monitoring.

Click here to read more.

Heritage Trust Company at The Heritage OKC

Building of Heritage

By: Lillie-Beth Brinkman, The Journal Record, June 23, 2017

The new owners of the remodeled historic Journal Record Building held their grand opening Wednesday night, and the community turned out in droves to see it.

The building, built in 1923, is now aptly named The Heritage because of both its history and its owner and primary tenant, The Heritage Trust Co. Touches throughout celebrate both the building’s heritage and that of the Oklahoma roots of the Payne family that founded the trust company.

About 350 people attended the reception this week and enjoyed touring the building from the lower levels to the sixth-floor penthouse, with its expansive views of the Oklahoma City skyline in different directions and of the Oklahoma City National Memorial and its Survivor Tree to the south. Aunt Pittypat’s catered the event, and Oklahoma City singer-songwriter Aaron Newman entertained.

The Heritage Trust Co.’s move downtown was the vision of Bond Payne, co-founder of the trust company and now its chairman. Members of the Payne family, headed by his mother, Nancy Payne Ellis, another Heritage trust co-founder, are longtime and major supporters of numerous Oklahoma organizations.

The Heritage Trust occupies the bottom two floors, and Saxum, a communications and marketing firm led by Renzi Stone, occupies the top two, including the penthouse. The Eide Bailly tax and accounting firm occupies the second floor; about 50,000 square feet of space remains available for lease.

Click here to read the full article.

Monthly Market Brief- June 2017

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief June 2017 for June 2017 updates.

Here are some key highlights:

POSITIVES:

  • European equities continue to outpace the U.S. market with solid fundamentals and increased investor confidence in response to Emmanuel Macron’s French presidential win
  • The ISM non-manufacturing Index came in at 56.9, driven by strong backlogs and strength in employment
  • 1stquarter GDP was revised up from 0.7% to 1.2%

CHALLENGES:

  • As the pool of candidates dwindled to a 9 year low, non-farm payrolls posted its weakest reading in nearly 5 years, adding just 138,000 jobs in May
  • Wage growth remains surprisingly weak even as the unemployment rate sits at a 16-year low of 4.3%
  • The effects of low wages has likely played a part in weakening vehicle sales & a decline in existing home sales; further weakness in consumer spending is expected
  • Political uncertainty remains a near-term risk given the multiple challenges facing the Trump administration

Will Social Security Be There When I Retire?

by Byron Moore,  June 2017

Q: Should I plan on Social Security being there for me when I retire?

A: Yes, if you are a worker covered by Social Security, you’ll receive a monthly income from Social Security when you retire.

How much? That depends on how much you earn during your working years and how well the government can manage the ever-escalating costs of delivering these benefits.

In prior columns I’ve discussed the financial problems of Social Security, which can be summarized as “too few workers, too many retirees.” The plan isn’t going to go broke – but neither can it continue as promised. Either taxes are going up, or benefits are going down…or maybe some of both.

When that will happen is anybody’s guess – it’s been a can both political parties have kicked down the road for decades. And there’s probably enough wiggle room left to kick it down the road a few more years yet. But one day…

What doesn’t need to be put off is doing everything you can do to maximize your own Social Security benefits. Here’s how.

Know your numbers. The Social Security Administration has an easy to navigate website (www.ssa.gov) that allows you to obtain an estimate of your Social Security benefits. Obviously the closer you are to retirement the more accurate these benefit projections will be. This is the best place to start to get a feel for the benefits Social Security will offer you.

The website gives you an option to print your four-page Social Security Statement or save it to your computer. Do this as you’ll need this information for the next step.

click here to read more.

Guidance on Choosing a Trustee

by Jim Ferraro, March 2017

It is easy to be passionate when speaking of our families, businesses or other life achievements. However, conversations can become uncomfortable when asked about what plans are in place to protect those things that are most important to us.

“Should I do any estate planning?” or “When should I start my planning?” are not the hardest questions. Often the harder questions are “What do I want to have happen to all that I have worked so hard to achieve?” and “Who do I trust to understand my goals and to carry-out my wishes?”

Successful people delay such planning for many reasons, among them that they would rather enjoy what they have made today and continue to achieve new goals rather than think about the unavoidable future and consider the more challenging questions.

click here to read more.

Monthly Reflections-Populism and Productivity

Populism and Productivity
by Ken Alderman, May, 2017

Populism is a political doctrine that espouses a commitment to the good of the common citizen. It is typically viewed negatively in that it appears to, or is assumed to, appeal to the prejudices and emotions of people of less means and educational attainment and portrays a dark and pessimistic vision of the future. Maybe it’s neither positive nor negative, but rather a reflection of the reality of growing income inequality, an aging population, the impact of globalization and the growing trend of replacing workers with automated devices. Add to this the inability of societies to continue to support a large and expensive social contract due to high debt levels and low economic growth and much of the governed becomes very dissatisfied. So, what’s the solution?

One solution that would clearly help is raising productivity. In general terms, productivity measures how much is produced per unit of input, with inputs being both capital and labor. Since labor and capital are in limited supply, how efficiently an economy uses these resources is important to growing household incomes and to raising standards of living for the population as a whole. A typical example of increased productivity is replacing workers with machines in manufacturing. Machines don’t get tired, don’t make mistakes, perform a task repeatedly with the same quality of execution and don’t take vacations, need sick leave or go on strike. There are many more subtle ways productivity is enhanced, such as writing a computer program to automate the input of data previously entered into the system by a team of people. Next time you get frustrated with the automated call system when calling your cable provider, think of it instead as a productivity enhancer (for the cable company, not you).

click here to read more

Monthly Market Brief-May 2017

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief May 2017 for May 2017 updates.

Here are some key highlights:

POSITIVES:

  • The April employment report surprised to the upside as the U.S. economy added 211,000 jobs
  • Increased earnings growth along with slowly rising interest rates still make equities look relatively more attractive
  • With revenue surprises ex-financials the highest since 4th quarter 2014, company EPS growth in the 1st quarter 2017 has not been driven by cost cutting efforts alone
  • Even with a strengthening U.S. dollar, growth prospects abroad suggest international exposure remains attractive

CHALLENGES:

  • With equity and bond valuations running above average levels, investors should adjust near-term return expectations
  • With a lack of investment in new equipment and relatively soft innovation, productivity throughout the expansion has remained low
  • Because wage pressure is lacking, income growth remains relatively soft; thus, expectations for a big consumer spending spree in the 2ndquarter of 2017 seems unlikely

Monthly Market Brief-April 2017

Each month, our Heritage Investment team publishes a market brief to provide an overview of the major factors influencing the US economy, including a summary of key sectors and the current positives & challenges.

Click Market Brief April 2017 for April 2017 updates.

Here are some key highlights:

POSITIVES:

  • Construction spending rose 0.8% in February with a 1.2% increase in residential construction spending on single-family homes driving the results
  • Initial jobless claims declined a sharp 25,000 to 234,000 while the unemployment rate declined two tenths to 4.5%

CHALLENGES:

  • Non-farm payrolls added just 98,000 jobs in March, but the weaker-than-expected results may be at least partially explained by the winter storm that swept the Northeast
  • The continued contraction in vehicle sales points to weakness in consumer spending as the annualized rate fell to 16.6 million in March
  • The increasing trade deficit in response to period dollar strength and strong U.S. demand for foreign goods is not a positive indicator for first quarter GDP
  • With an unsuccessful attempt to repeal Obamacare last month, the market appears to be scaling back its growth expectations with declining demand for stocks and increasing demand for long-term treasuries.