Happy Summer, Clients and Friends!
I hope you and your family are finding ways to keep cool this summer while making memories at a favorite vacation spot, or simply enjoying the company of family and friends. This summer has already solidified its position as one for the record books, with record-high temperatures recorded throughout much of the U.S., and the Dow Jones Industrial Average (DJII) reaching new, all-time highs. Our Market & Economic Update below provides our thoughts on this market milestone, as well as our outlook for the months ahead.
In June, we were happy to once again welcome many of you to our 11th Annual Cleveland Economic Summit. I hope you’ll take a minute to read about this successful event below, along with all the latest news from your team at Planned Financial Services.
This fall, we look forward to celebrating our 25th Anniversary as a firm at a very special event we will be hosting on Thursday, October 24, 2019 at Sapphire Creek Winery & Gardens. Details about the event are included below, under Upcoming Events. Please be sure to mark your calendars now and watch for your formal invitation to arrive in the mail soon! We look forward to celebrating with you.
While Planned Financial Services has experienced significant growth over the past 25 years, welcoming new clients and expanding our team resources and advisory programs, our commitment to helping families and businesses like yours pursue your desired Return on Life® has never wavered. Your happiness is our first priority and the reason so many of you continue to refer family, friends, colleagues and business associates to our experienced team. We are deeply grateful for your continued trust in your dedicated team at Planned Financial Services and look forward to helping you and your family work toward enjoying life on your terms for the next 25 years!
What’s in It for You?
At-a-glance guide to your 2nd Quarter 2019 Frank Talk newsletter:
- News & Events
- Frank Fantozzi named “Northeast Ohio Smart 50 Honoree”
- Cynthia Yang earns CAIA® designation
- Smart Women’s Breakfast and Awards
- 11th Annual Cleveland Economic Summit
- Upcoming Events
- Smart Business Family Business & Business Longevity Conference
- PFS 25th Anniversary Event
- Market & Economic Update
News & Events
Frank Fantozzi Named “Northeast Ohio Smart 50 Honoree”
Frank was named among Northeast Ohio’s top executives for 2019. Since 2014, the Corporate College Smart 50 Awards, presented by Smart Business recognizes the top executives of the 50 smartest companies in the region for their ability to effectively build and lead successful organizations. Out of 90 nominations received; 50 awards were granted.
Frank was recognized for his leadership as a business owner and entrepreneur, as well as his long history of service to the greater-Cleveland community.
The award program considers how organizations develop and bring to market new products, services and solutions; how these services, products and solutions benefit clients, the organization, its employees, investors and other constituents; and how the combination of innovation and impact lead to a sustainable, scalable business that develops and fosters community.
All 50 winners were honored at a special celebration, on June 27, 2019, at Executive Caterers at Landerhaven, and in a special editorial report in the June edition of Smart Business Cleveland. Additionally, all guests were treated to a keynote address on what it takes to lead a successful “smart” company. The Smart 50 Awards currently takes place in the cities of Cleveland, Columbus and Pittsburgh. Eligible Smart 50 nominees must be a top executive of an organization with a physical office in their award region.
Cynthia Yang Earns CAIA® Designation
We’re proud to announce that Wealth Advisor, Cynthia Yang, CFA®, CIPM, CAIA®, earned the Chartered Alternative Investment Analyst (CAIA®) designation, the globally-recognized credential for professionals managing, analyzing, distributing, or regulating alternative investments. Cynthia’s ongoing commitment to advancing her knowledge in highly technical and specialized areas of wealth planning embodies the firm’s philosophy and belief that a multi-disciplinary team approach is critical for helping clients pursue the Return on Life® they seek for themselves, their businesses and their families.
The CAIA Association established the designation as the benchmark for alternative investment education worldwide, to promote professional development through continuing education, innovative research, and thought leadership, to advocate for the highest standards of professional ethics, and to provide a network for industry professionals to connect globally. Congratulations, Cynthia!
2019 Smart Business: Smart Women Breakfast and Awards Program
For the third consecutive year, Planned Financial Services participated as a program sponsor for the Northeast Ohio Smart Business magazine’s Smart Women Breakfast. The annual event addresses issues facing women in the workplace and recognizes the achievements of leading businesswomen, inspiring male advocates, and effective women’s programs through the Smart Women Awards. This year’s program took place at the Westin Cleveland Downtown, on April 16, 2019. Click here to learn more about this year’s honorees.
11th Annual Cleveland Economic Summit
We hosted our 11th Annual Cleveland Economic Summit on June 12, 2019, at the world-renowned Cleveland Botanical Garden. The 2019 Summit featured two distinguished speakers:
Executive Vice President and
Chief Investment Strategist
at LPL Financial
Mr. Lynch shared his midyear outlook for the economy, financial markets, business climate and political landscape. Key points included:*
- For now, the odds of a near-term recession appear to remain low. U.S. stocks may endure periodic volatility as the bull market ages, but we encourage investors to focus on long-term trends instead of short-term noise.
- Even though the economic environment has become more challenging, the pillars of fundamental investing—policy, economy, fixed income, and equities—still appear sound to us. We will continue to monitor the impact of trade developments on the indicators we watch.
- Historical patterns forecast more strength through the end of the year. The S&P 500’s 13% gain in the first quarter was a rare event: The index has risen 10% or more in the first quarter just 10 times since 1950. Stocks’ strong start to a year usually has boded well for the rest of the year, as the index has historically risen an additional 6% over the rest of the year after a first-quarter gain of 10% or more.
Mr. Lynch reminded investors that volatility is the blessing—and curse—of long-term investing. During volatile periods, it can be tempting to make emotional, short-term decisions that could conflict with long-term goals. But we could also view bouts of volatility as opportunities, when suitable, to rebalance portfolios toward long-term allocations. By focusing on the fundamentals, we believe we all can make more prudent and effective decisions about how to achieve our long-term goals.
President and CEO
Downtown Cleveland Alliance
Mr. Marinucci provided insight on the local Cleveland economy, including real estate development, the city’s future growth initiatives, and what he believes Cleveland must do to remain a relevant, competitive and vibrant force among the nation’s top cities. Below are highlights of some of the exciting growth opportunities taking place in Cleveland, including ways the DCA is partnering with organizations to nurture growth and development.
- Downtown Cleveland is home to 17,500, with residential market rate occupancy operating at 92% and is the largest jobs hub in Ohio with 105,000 workers.
- Three notable companies, Electronic Merchant Systems, NRP Group, and Millennia Companies relocated their corporate headquarters to Downtown Cleveland, making Northeast Ohio the 2nd largest concentration of corporate headquarter jobs in the U.S.
- 1,544 residential units were under construction by the end of 2018, and 30 new shops and restaurants were added to the retail market.
- In collaboration with Philadelphia-based Urban Partners, DCA identified housing priorities to meet the demand and fill an additional 3,800 housing units, with a goal of growing downtown’s population to 30,000 by 2030.
- The efforts of the DCA and our neighborhood based partners to advocate for the creation of Healthline, the Euclid Historic District, the Ohio Historic Preservation Tax Credit Program, the E-Line Trolley, and the inclusion of brick sidewalk and crosswalk pavers to enhance the pedestrian experience serve as a model for future development in Downtown Cleveland.
Smart Business Family Business & Business Longevity Conference
PFS is proud to participate as a program sponsor for the Smart Business: Family Business Conference and Family Business & Business Longevity Conference, which will take place on Thursday, September 19, 2019, from 7:30 a.m. – 10:30 a.m., at the Westin Cleveland Downtown. Presented by Cuyahoga Community College, the program will feature a dynamic line-up of keynote speakers and panelists, including Frank Fantozzi.
PFS has actively supported the Family Business Conference & Family Business Achievement Awards in various capacities since its introduction in 2012, including being repeat program sponsors, panelists, and attendees. Beginning with the 2019 event, Smart Business will combine its Business Longevity Awards with this conference to also recognize non-family organizations who have reached at least 50 years in business.
Attendees will hear from a dynamic line up of panelists as they share real life examples of what separates success stories from failures. This networking breakfast and interactive workshop will offer perspectives from both industry experts and business owners, addressing issues facing both family-owned and non-family businesses every day. Click here to learn more about the program or register to attend.
Save the Date!
PFS 25th Anniversary Celebration
You and your guest are invited to join us on for an evening cocktail reception on October 24th at Sapphire Creek Winery & Garden as we celebrate 25 years of helping families and businesses pursue their desired Return on Life®.
Date: Thursday, October 24, 2019
Time: 5:00 p.m. – 8:00 pm
Location: Sapphire Creek Winery & Gardens
16965 Park Circle Drive
Chagrin Falls, Ohio 44023
Watch for more details and an invitation to this event in your mail and email in the coming weeks. Visit Sapphire Creek Winery & Gardens for directions, or to learn more about the winery and gardens.
Market & Economic Update
U.S. economic growth lately has rested squarely on consumers’ shoulders
*Consumer spending likely added about 2.8% to second quarter gross domestic product (GDP), according to the Federal Reserve (Fed) Bank of Atlanta’s GDP forecasting model. At that rate, the consumer’s contribution to GDP would be the highest for any quarter since the end of 2014. Still, when the GDP report is released July 26, we may see that overall growth last quarter was 1.6%, the slowest since the beginning of 2016. Consumer activity has meaningfully lifted growth, but projections show other parts of the economy withered. The makeup of growth has been unusual year to date, a product of trade uncertainty that has plagued the global economy for more than a year now.
Consumer activity rebounded strongly in the second quarter
Recent data has hinted toward a rebound in consumer activity. Our best view of consumer spending’s contribution to economic growth is through control group retail sales, a kind of core reading that excludes some categories. Control group sales have risen for four straight months, the longest streak since the end of 2017. Month-over-month growth in control group sales averaged 0.6% in the second quarter, one of the highest quarterly averages in this economic cycle.
Consumer spending has been primarily supported by a strong U.S. labor market. U.S. companies have added jobs for 105 straight months, by far the longest streak on record. Claims for unemployment benefits have been contained, wages have grown at a healthy 3% clip, and the unemployment rate remains near a cycle low. Fiscal stimulus enacted in 2018 provided an extra boost of income for the consumer through lower tax rates and added tax credits.
Other short-term catalysts have propelled consumer activity as well. Oil prices are historically low after a steep sell-off late last year, allowing consumers to allocate more income from gas purchases to discretionary spending. Consumer activity was also weak in the first quarter (thanks to trade tensions and a record-long government shutdown), so we expected to see a rebound in the second quarter solely from pent-up demand.
The U.S. consumer provided a solid base for GDP growth in the second quarter, but it did not get much help from other sectors in the economy. Business investment, housing, government spending, trade, and inventories are collectively expected to drag down GDP by about 1.2%, according to Atlanta Fed projections. Output from trade and inventories alone likely stripped around 1.5% from GDP, almost negating their 1.7% boost to growth in the first quarter.
Most importantly, U.S. businesses need to step up at this point in the cycle. We’ve been watching for a pickup in capital expenditures (capex) growth, especially after fiscal stimulus’ implementation. Year-over-year growth in nonresidential fixed investment has averaged 3.9% in this cycle, the second-lowest rate among all expansions since 1970. We saw a healthy pickup in business spending in the first half of 2018, but that momentum fizzled as U.S. companies sidelined expansion plans in the face of increasing trade and political uncertainty.
Business investment is especially crucial for growth prospects as the personal income boost from fiscal stimulus wanes over the next few years. Higher capex leads to higher productivity, which directly feeds into higher economic output. Productivity also promotes healthy inflation as it keeps employer costs in check.
All the fundamental pieces are in place for a resurgence in capex, but the chilling effect of uncertainty remains. We think some trade uncertainty will dissolve with meaningful progress in U.S.-China trade talks, but only if the policy outlook also stabilizes and businesses believe it’s safe to plan long-term projects. Once there is more clarity on trade, we expect capex to pick up again as companies take advantage of fiscal incentives, record cash piles, and low borrowing costs.
We’re maintaining our GDP forecast of 2.25–2.5% growth in 2019, which implies some moderation from the 3% pace we saw in the first quarter. Even if growth trends lower than our forecast this year, it’s important to remember that annual GDP growth has averaged only 2.3% in this expansion. Average growth is satisfactory at this point in this cycle, but the underlying details show the economy has yet to reach its full potential.
We’re encouraged by strength in consumer spending, especially in the face of global headwinds. Still, we believe capital expenditures will need to rebound as the cycle matures to extend the expansion. A U.S.-China trade deal would be an important first step.
Twenty-five years ago, I founded Planned Financial Services on the belief that wealth is only one determinant of success in life. Happiness and fulfillment are dependent on many variables that must come together to achieve each individual’s definition of success—or what we like to call, Return on Life®. Many of you have heard me say this before, but it bears repeating. The amount of money you have means little if your wealth and your goals are not properly aligned to support what matters most to you. Misalignment creates self-doubt, frustration and a mindset that you’ve got to stay on the treadmill, constantly creating more…just in case. As a result, people—and business owners in particular—sacrifice valuable time with family and friends, and the life experiences that bring them true joy and fulfillment. While your personal life experiences are the very things you’re working toward, it can be difficult to get off the treadmill and live the life you desire if you do not know how much is enough. That’s where we provide our greatest value, working through all the financial and nonfinancial issues to create clarity, confidence and the direction needed to help you experience and enjoy what matters most to you.
We look forward to another 25 years serving your family by simplifying the complexities of wealth. As always, please don’t hesitate to reach out to your experienced team of wealth advisors at 440.740.0130 if you or someone you know has questions or concerns about your personal or business finances. We are always honored to help our clients’ friends and business associates take greater control of their future with guidance from the PFS team. We welcome and are grateful for the many introductions our clients continue to provide.
Real People. Real Answers.
Health, Happiness, and Good Fortune,
CPA, MST, PFS, CDFA, AIF®
President & Founder
*Research sources provided by LPL Financial, July 2019.
*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
All performance referenced is historical and is no guarantee of future results. The economic forecasts set forth in this material may not develop as predicted. Investing involves risk including loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. All information is believed to be from reliable sources; however, Planned Financial Services and LPL Financial makes no representation as to its completeness or accuracy.
John Lynch, LPL Financial; Joe Marinucci, Downtown Cleveland Alliance; Smart Business; the CAIA Association; and Planned Financial Services are all separate, unaffiliated entities.