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Market Brief-October 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 October 2017 for updates.

Here are some key highlights


  • Although, the income and spending trend has been downward over the past 3 years,consumer spending and personal income are still growing and inflation is low, which makes our dollar go further.
  • The PMI Manufacturing report (reflective of activity in private sector economy) continues to report moderate growth. September figure of 53.1 compared to 53.0 in August, shows little change. Hurricane effects can be seen in delivery delays which has slowed the most since Feb 2016.
  • ISM Manufacturing index has strengthened to an index of 60.8 in September, which is a 13-year best, signifying that there has been growth in the manufacturing sector. Hurricanes increased input prices but did not slow down production.
  • European equities (except for Spain, due to the Catalan referendum) have been up in the last week of September, partially due to weakening of the EURO. Gains ranged from 0.2% to 1.9%.


  • September payrolls are likely to slow down. Forecasters predict only a 95,000 rise for September non farm payrolls (compared to 156,000 increase in Aug). The risk is that Harvey and Irma could further impact the results.
  • Jobless claims in Texas rose early in September, while claims in Florida began to rise mid September. We are yet to see the effects on Puerto Rico.
  •  House sales in the south

Investment Outlook -September 2017

“It’s the Economy, Stupid”
by Jim McElroy,

A quote from a past presidential campaign provides an answer to bull market deniers who question the validity of the current market’s optimism. That’s not to say that the skeptics don’t have their point: this past quarter has provided enough troubling news to satisfy the most pessimistic doomsday prophets. The litany of ills reads like a biblical description of the end of days: hurricanes, floods, rolling balls of fire ants, violent mobs attacking statues and each other, governments too dysfunctional to confront looming crises and world rulers threatening nuclear Armageddon. Nevertheless, the world economy and its markets have chosen to ignore these troubling signs — some might say bury their heads — and to focus instead on the positive signs appearing in financial statistics. History is full of prophesies of doom that never materialize and economic booms that thrive against backdrops of fear and existential angst: the era of the Cold War, which from 1950 to 1989 held the world in constant fear of nuclear annihilation, was witness to unprecedented economic growth and multiple bull markets. Although the first correct prophecy of the end of the world will have a profound effect on the economy and markets, until that happens or until the financial news turns negative, we can expect a continued disconnect between what is reported on the front page and what is reported in the financial section.

And the reports from the financial pages remain significantly promising. U.S. GDP for the second quarter of 2017 registered 3.1%, the highest rate since the first quarter of 2015. Although GDP has probably taken a hit in the third quarter due to disruptions from hurricanes in Houston and Florida, these negatives will likely reverse in the fourth quarter as infrastructure and home rebuilding moves into full swing. And although it’s not included directly in the calculation of U.S. GDP, the hurricane that devastated Puerto Rico will generate similar negative and then positive results. It is, after all, an ill wind that blows no good. The unemployment rate has likely hit bottom at near 4% — probably a full employment level — while gains in employment continue at a strong or at least moderate pace of between 150,000 to 200,000 a month. Consumer confidence remains robust due to low unemployment and increasing home and stock prices. Corporate profit growth, which finally began appearing after the third quarter of 2016, continues to show progress. As a result of improving profitability, capital expenditures (key to productivity growth, low inflation and increasing real standards of living) have also returned to an upward slope after a slowdown in the 2014-2016 periods. All in all, the economic data describes an economy that is somewhere near the halfway point in its cycle. And the element of the economy, which for the last fifty years has marked the beginning of the end of almost every economic cycle, inflation, is virtually nonexistent.

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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








  • 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.


  • 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:


  • 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


  • 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:


  • 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


  • 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,

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.

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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.

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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:


  • 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%


  • 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 ( 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.

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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.

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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).

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