LONGEVITY EVER AFTER

June 2, 2020 Tyler Goodrich

Dear Clients and Friends:

Volume 3 – May 2020

Have you called your favorite aunt lately? What about your neighbor up the street? Studies show that elder fraud is more likely to occur when an older individual is isolated or there is an absence of a guardian.(1) Now more than ever, it is important that we stay connected with our family members and friends, even if we must follow physical distancing. Coronavirus-related scams are on the rise, and the lack of in-person connection puts us at heightened risk.

Here are some tips to help protect against scams:(2)

Do not order at-home test kits. The U.S. Food and Drug Administration (FDA) has only approved one at-home test, and it still requires a doctor's order.
Ignore information about vaccinations. There are no approved treatments or vaccinations for coronavirus at this time.
Disconnect from robocalls. Robocalls are illegal, and scammers are using them to hook people with work-from-home and health insurance schemes.
Be wary of emails claiming to be from official government bodies. Reference sites like coronavirus.gov for important information.
Research the organization before making a donation. It is great to help others during a difficult time, and we can help you research the best options before you make a gift.

We encourage you to visit the Federal Trade Commission’s “Coronavirus Advice for Consumers” page. It is regularly updated with new scams. This will help you be in the know and protect you and your family and friends. If you ever have any questions about this topic, please don’t hesitate to reach out. Our office has a number of resources to help you manage the ongoing challenges related to the protection against financial fraud.

Additional Articles

Retirees And Seniors - It’s A Critical Time To Protect Your Finances | Forbes

Four Ways To Help Prevent Loneliness While You're Social Distancing | Forbes

Scammers Claiming To Be CDC Employees Seek Donations, Offer 'Tests' To Seniors | KSMU Radio

Sincerely,

Matt Goodrich Larry Goodrich, CFP ®

President, Goodrich & Associates, LLC Vice President, Goodrich & Associates, LLC

Branch Manager, RJFS Co-Branch Manager, RJFS ~

[1] Elder Fraud and Financial Exploitation: Application of Routine Activity Theory, Marguerite DeLiema, PhD, 2018, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6044329/

[2] Coronavirus Advice for Consumers, Federal Trade Commission, 2020, https://www.ftc.gov/coronavirus/scams-consumer-advice  Raymond James is not affiliated with Broadspire Care Management, PinnacleCare or EverSafe.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members

Volatility Reemerges After “Too Far, Too Fast” Stock Gains

May 15, 2020 Tyler Goodrich

May 15, 2020

Dear Clients and Friends:

We hope you and your loved ones are safe and well, coping as best you can with the changes brought about by the coronavirus pandemic. As policymakers discuss the appropriate course for reopening the economy and mitigating both health and economic risks, it can be just as challenging to make personal decisions about how to proceed. Understanding recent volatility in the financial markets may be adding to your sense of uncertainty, we want to share with our valued clients the latest insights from strategists at Raymond James.

The S&P 500 index has experienced declines this week. Volatility can be attributed to a variety of factors, including concerns from national health advisors over a possible resurgence in the spread of the virus as a result of reopening the country too soon, comments by the Federal Reserve chairman emphasizing downside risks to the economy, elevated jobless claims, partisan differences on additional fiscal stimulus legislation and renewed tensions between the United States and China.

“As difficulties in ending social distancing have become more apparent, hopes for a rapid recovery seem to have faded,” Raymond James Chief Economist Scott Brown said.

The S&P 500 had gained 31% over a 26-day period from its low on March 23 – too far, too fast, according to Joey Madere, senior portfolio strategist for the Equity Portfolio & Technical Strategy group. The rally was driven disproportionately by the Technology and Health Care sectors, which buoyed the index amid business closures and decreased consumer spending.

“Given the size and speed of the recovery, it is not surprising to see the recent uptick in volatility over recent days,” Raymond James Chief Investment Officer Larry Adam said. “With equity valuations at multi-year highs, less optimistic messages weighed on the market this week. Volatility will likely remain elevated over the coming weeks and months as the market gauges the scope of the reopening of the economy and awaits a reliable therapeutic or vaccine. Despite this, we believe the trajectory for the market is up over the next 12 months.”

The week’s renewed volatility reflects the short-term uncertainty around the competing needs to reopen the economy and mitigate the spread of COVID-19, the respiratory illness caused by the virus.

“Early indications suggest improvements to consumer activity are likely to be gradual,” Madere said. “We expect volatility to continue, and would use pullbacks as an opportunity to continue to accumulate equities for the longer term. Remember, bear markets are often very fast and violent, whereas bull markets can last for years.”

Congress has provided about $2.9 trillion – equivalent to about 14% of gross domestic product – in fiscal support for households, businesses, healthcare providers, and state and local governments. U.S. Federal Reserve Chairman Jerome Powell indicated further fiscal support will be needed, adding that it “could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”

Raymond James Washington Policy Analyst Ed Mills is watching two developments that may affect markets: fiscal stimulus negotiations and the U.S.-China relationship. Mills views a fiscal stimulus proposal from the U.S. House of Representatives, where Democrats hold the majority, as a starting point for negotiations that could push the next phase of legislative relief response into June.

“Some parts of the Democrats’ $3+ trillion bill could become part of the final package, particularly targeted state aid, healthcare funding and adjustments to small business lending programs,” Mills said. “But the scope of the state aid as currently structured, as well as various other spending initiatives, signal that Democrats and Republicans remain far apart on the core issues.”

Mills also sees signs of escalating tensions in the U.S.-China relationship as a potentially significant risk for the market in the second half of this year should the Trump administration return to its trade-war playbook from before the Phase One agreement reached prior to the pandemic.

“Election year political considerations increase the odds of a return to confrontation in the coming months,” Mills said.

As we all look to stay abreast of the latest developments, we will continue to keep you updated with relevant, and hopefully, useful information. Meanwhile, you can find the latest from Raymond James on the coronavirus and market volatility here.

Thank you for your trust in us.

Sincerely,

Matt Goodrich Larry Goodrich, CFP ®

President, Goodrich & Associates, LLC Vice President, Goodrich & Associates, LLC

Branch Manager, RJFS Co-Branch Manager, RJFS

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Individual investor’s results will vary. Past performance may not be indicative of future results. Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of Raymond James and are subject to change. There is no assurance that any of the forecasts mentioned will occur. Economic and market conditions are subject to change.

Material prepared by Raymond James for use by its advisors.

The Job Market

May 13, 2020 Tyler Goodrich

Economy and Policy

May 13, 2020

Chief Economist Scott Brown discussed current economic conditions on May 8th.

The April Employment Report was flawed, reflecting issues with data collection, classification, and methodology. However, results were consistent with an unprecedented, sharp deterioration in labor market conditions, mostly at the lower rungs.

Payrolls fell by more than 20 million, nearly erasing the number of jobs gained since the financial crisis. The unemployment rate jumped to 14.7%, but that understated the problem. Correcting for a classification issue, the figure would have been closer to 20%.

So many lower-income workers were jettisoned in April, average hourly earnings surged. None of this tells anything about where we’re going. While many are hoping for an economic rebound, recovery will take time and there is going to some permanent job destruction.

Nonfarm payrolls fell by 20.5 million in the initial estimate for April, the largest decline on record, dwarfing the amount of job losses during the financial crisis. Private-sector jobs were down 14.5% from a year earlier. Leisure and hospitality lost 7.65 million in April, down 48% in the last two months (5.49 million of that in restaurants). Manufacturing shed 1.3 million jobs. Construction lost 975,000. Retail jobs fell by 2.1 million. Temp- help payrolls fell by 842,000 (-30.9% y/y). State and local government lost 981,000 jobs, about two-thirds in education (in comparison, we lost about 700,000 state and local government jobs in total during the financial crisis).
Click here to view chart

In a normal April, we would expect to add around one million jobs. Prior to seasonal adjustment, payrolls fell by 19.5 million. The Bureau of Labor Statistics uses a birth/death model to account for business creation and destruction. This model does well in normal circumstances, but tends to miss badly at turning points. The model would have added 246,000 to the unadjusted payroll total, but the BLS adjusted that to -553,000 to account for the effects of COVID-19. Annual benchmark revisions will eventually correct that, but why worry about the nearest million or so at this point.

Weekly jobless claims have been trending lower in recent weeks, but the level remains elevated. Over the seven weeks ending May 2, 33.5 million workers had filed a claim. The Labor Department’s seasonal adjustment is multiplicative, which exaggerates the headline figure. Prior to seasonal adjustment, 30.7 million filed claims (18.7% of the labor force, or more than one in six workers). There may be multiple filings, as some workers get tired of waiting and file again, but that is likely small. On the other hand, a lot of workers can’t file, so the headline figure tends to understate the amount of job losses.

The unemployment rate spiked to 14.7% in April. Furloughed individuals should be tallied as “unemployment on temporary layoff,” but a lot weren’t. Enough, according to the BLS, to reduce the unemployment rate by about five percentage points. In other words, the unemployment rate should have been reported closer to 20%. The unemployment rate for teenagers jumped to 31.9% (from 14.3 in March and 11.0% in February). The rate for young adults (aged 20-24) rose to 25.7% (from 8.7% in March and 6.4% in February). For prime-age workers (25-54), the rate rose to 12.8% (from 3.6% in March and 3.0% in February).

Click here to view chart

The weakness in the labor market was better reflected in the employment/population ratio, which fell to a record low of 51.3% (vs. 60.0% in March and 61.1% in February).Average hourly earnings are lower in leisure & hospitality than in other industries (in February, $16.85 vs. $28.52 for the private sector as a whole). Hence, greater job losses in lower paying industries would boost the overall average. However, average wage gains picked up across a wide range of industries in April. It appears that lower-income workers fared the worst in general in April – not just in leisure & hospitality.

Click here to view chart

Many furloughed workers can expect to return to work at the economy opens up, but not all. The Payroll Protection Program, “recovery rebates,” and extended unemployment benefits should help to less the damage, but many will fall through the cracks and not every job will come back. There will be some permanent damage. How much is unclear.

Most of the economic data reports are backward-looking, but weekly jobless claims will remain the key real-time figure to watch. Claims have been coming down in recent weeks, but they have remained in the millions. Seeing claims falling a lot more would be a hopeful sign, but that may not happen anytime soon.

The opinions offered by Dr. Brown should be considered a part of your overall decision-making process. For more information about this report – to discuss how this outlook may affect your personal situation and/or to learn how this insight may be incorporated into your investment strategy – please contact us.

All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates (RJA) at this date and are subject to change. Information has been obtained from sources considered reliable, but we do not guarantee that the foregoing report is accurate or complete. Other departments of RJA may have information which is not available to the Research Department about companies mentioned in this report. RJA or its affiliates may execute transactions in the securities mentioned in this report which may not be consistent with the report's conclusions. RJA may perform investment banking or other services for, or solicit investment banking business from, any company mentioned in this report. For institutional clients of the European Economic Area (EEA): This document (and any attachments or exhibits hereto) is intended only for EEA Institutional Clients or others to whom it may lawfully be submitted. There is no assurance that any of the trends mentioned will continue in the future. Past performance is not indicative of future results

QE Infinity and Beyond

May 5, 2020 Tyler Goodrich

Research Reports

QE Infinity and Beyond To view this article, Click Here

Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist

Date: 4/29/2020

The Federal Reserve has been extremely aggressive since the Coronavirus and related shutdowns hit the US economy and made it clear today that it will continue to be so until the US economy has gotten back on its feet. This includes keeping short-term interest rates near zero, continuing to expand its balance sheet with purchases of Treasury debt and mortgage-backed securities (both residential and commercial), as well as using facilities to maintain liquidity and the flow of credit to households, businesses (both large and small), and state and local governments.

Chairman Powell made it clear at his press conference that the Fed will continue to use the full range of its legal powers "forcefully, proactively, and aggressively" and wants to see an economic recovery that is "as robust as possible."

After the Great Recession, the Fed didn't raise short-term rates again until December 2015, well into the recovery, and when the unemployment rate was 5.0%. Given the Fed's commitment to make sure the economy heals from the current crisis, don't expect the Fed to raise rates for the next couple of years, perhaps not until 2024. As Chairman Powell said at his press conference, the Fed won't be in any hurry to raise rates.

Does this mean higher inflation? Not right away. If anything general price measures will keep falling in the short term due to lower commodity prices. After that, we expect a return of general price increases, but not rampant inflation. Yes, the supply of money is growing by leaps and bounds. But the demand for money by households and businesses has also grown enormously. Cash is King right now and likely to remain so over the medium term. One key issue is how long the federal government maintains very generous unemployment benefits in which a large share of workers can earn more through July by not working than by going back to work. If these benefits remain in place into 2021, we may see faster inflation as the businesses that are growing and hiring need to ramp up wages to entice people back to work. Time will tell.

Looking forward, expect more of the same in 2020: continued expansion of their balance sheet and short-term rates near zero.

This report was prepared by First Trust Advisors L. P., and reflects the current opinion of the authors. It is based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

Follow Brian Wesbury
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Sincerely,

Matt Goodrich Larry Goodrich, CFP ®

President, Goodrich & Associates, LLC Vice President, Goodrich & Associates, LLC

Branch Manager, RJFS Co-Branch Manager, RJFS

The attached information was developed by First Trust, an independent third party. The opinions are of the listed authors at First Trust Advisors L.P, and are independent from and not necessarily those of RJFS or Raymond James. All investments are subject to risk. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Individual investor's results will vary. Past performance does not guarantee future results. Forward looking data is subject to change at any time and there is no assurance that projections will be realized. Any information provided is for informational purposes only and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. ~

Stocks Regain Ground as States Discuss Plans to Reopen

May 1, 2020 Tyler Goodrich

May 1, 2020

Stocks Regain Ground as States Discuss Plans to Reopen

Dear Clients and Friends:

Globally, billions remain at home under some variation of COVID-related lockdowns and social distancing, a phrase many of us hadn’t heard or used up until this year. Unsurprisingly, this has affected just about every industry, from restaurants to airlines to the oil industry. Oil demand has dropped precipitously, prompting prices to briefly turn negative in April for the first time in history. While prices have begun to stabilize and governments are starting to ease lockdown policies, it will take a long time for oil demand to fully recover, explains Raymond James Energy Analyst Pavel Molchanov. “We anticipate COVID’s oil demand impact peaking in the second quarter, and then subsiding in the summer and especially toward the end of the year,” he added.

Reopening state economies is a leading theme in the news, however, we believe that doing so will need to be done carefully and deliberately, most likely in phases, according to Washington Policy Analyst Ed Mills. Federal reopening guidelines are more restrictive than some might think in an attempt to stave off a resurgence in cases, which, of course, would hinder a return to large-scale economic normalcy. The timing of an economic restart remains up in the air, and there are still challenges around therapies, a possible vaccine, the impact on consumer behavior and the general trajectory of an economic recovery, adds Joey Madere, senior portfolio strategist, Equity Portfolio & Technical Strategy.

In the meantime, the policy response has thus far activated close to $3 trillion to help people in need and bolster the economy, but lawmakers are not done yet. The scope and scale of another fiscal relief package will be heavily debated, but additional support for individuals, markets and the economy should arrive over the next few weeks, Mills notes.

Despite deteriorating economic data (e.g., U.S. jobless claims increased by 26 million over a four-week span; consumer confidence declined to multi-year lows) as a result of stay-at-home orders to combat the coronavirus, risk assets moved sharply higher during April, explains Chief Investment Officer Larry Adam. Investors looked through the near-term halt in economic activity with increased optimism for a potential coronavirus therapeutic (Remdesivir). Market observers are also seeking more clarity regarding a timeline for the reopening of the U.S. economy.

Record stimulus and a slowing of new COVID-19 cases has proved a more stable environment for U.S. equities, explains Madere. Stocks have continued to push higher, although they haven’t yet made up for the deep losses of last month and still ended April in negative territory. The S&P 500 climbed about 12.68% for April, while the Dow Jones rose about 11% and the Nasdaq delivered 15.45%.

Here is a look at some key factors we are watching, both here and abroad:

Economy

As mentioned above, economic data has taken a hit. Real gross domestic product fell at a 4.8% annual rate in the advance estimate for the first quarter, reflecting sharp declines in consumer spending (-7.6%) and business fixed investment (-8.6%), notes Chief Economist Scott Brown. Second quarter figures are expected to be much worse, as one in six American workers filed a claim for unemployment benefits over the six weeks ending April 25.
Following the April 28-29 policy meeting, Federal Reserve officials left short-term interest rates unchanged and retained their guidance that rates will remain low until the economy is firmly back on track. Fed Chair Jerome Powell said that the central bank will use its full range of tools to support the economy.
The economic outlook depends critically on the virus and efforts to contain it. As the economy begins to re-open, consumer spending will pick up, but gradually, and there is a risk of a second wave of infections that could lead to a longer period of social distancing. Once the virus is truly under control, the economy should improve significantly, but consumers may be reluctant to resume normal activities, Brown adds.

Equities

After dropping 34% from late February to late March, the S&P 500 has been able to recover over half of its losses since then, but Madere believes the move has been too far, too fast. It is likely, in his view, that we’ll see a consolidation where the market can rebuild itself for a more durable path higher.
Earnings seasons is moving along, and the S&P 500 is expecting earnings contraction for the first quarter, mostly from the Energy, Consumer Discretionary, Financials, Industrials and Materials sectors. We’ve seen better performance from Health Care, Technology and Consumer Staples names.

International

Global equity markets outside of the United States also continued to build upon the stabilization seen toward the tail end of March, predominately on investor confidence about the economic outlook, according to European Strategist Chris Bailey.
COVID-19 cases appear to have peaked across most of Europe and East Asia. While we have seen unprecedented downward revisions to economic data as well as a large demand for wage subsidies and unemployment assistance, hopes of recovery have been boosted by both the magnitude of government/central bank responses and also the lack of a secondary infection wave in East Asia.

Fixed income

The bond market has calmed down considerably over the last couple of weeks. The 30-year Treasury is down 9 basis points from last month’s close, while all other yield curve points are within 3 basis points of where they closed in March. Municipal and corporate spreads have narrowed for the month, yet remain wide vs. pre-crisis levels, according to Chief Fixed Income Strategist Kevin Giddis and Doug Drabik, managing director for fixed income research.
Despite Treasury rates falling, municipal and corporate bonds have kept positive sloped curves with relatively wide spreads to maintain yield.
Demand for high-quality credits is strong. The market is also easing on concerns for the lesser credits as the government continues to provide support to facilitate more normalized trading. Government stimulus is contributing to lower yields and spreads as they bridge the dislocation, making loans more readily available for small to large businesses and municipalities.
Interest rates on Treasuries are near historic lows across the yield curve and reinvestment risk is limited. New cash and cash flows for longer term strategic fixed income allocations may serve investors’ interests by pulling in maturities and reducing durations. Shorter holding periods will produce quicker reinvestment periods, thus positioning investors more strategically for an economic cycle turnover.

Bottom line

Long-term investors may want to consider reserving some buying power to strategically add to positions during pullbacks.
From a fixed income perspective, this is a period to stick with high quality and conservative maturities, in general.

We know life may feel very different from “business as usual” these days, but we hope you take some comfort in knowing your financial plan was tailored to your risk tolerance and ability to handle market volatility. Know, too, that we are thinking of you and your family and wishing you all good health.

As always, please reach out with any questions you may have – about the markets, your financial plan or anything else that we may be able to help with. We want to hear how you’re holding up and look forward to speaking with you. Thank you for your trust in us.

Sincerely,

Matt Goodrich Larry Goodrich, CFP ®

President, Goodrich & Associates, LLC Vice President, Goodrich & Associates, LLC

Branch Manager, RJFS Co-Branch Manager, RJFS

Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of Raymond James and are subject to change. Economic and market conditions are subject to change. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 is an unmanaged index of small cap securities. The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. An investment cannot be made in these indexes. Investing in the energy sector involves risks including the possible loss of capital, and is not suitable for all investors. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.

Chris Bailey is with Raymond James Investment Services, an affiliate of Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. Material prepared by Raymond James for use by its advisors.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. © 2020 Raymond James Financial Services, Inc., member FINRA/SIPC. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc.

Raymond James Financial Services does not accept orders and/or instructions regarding your account by email, voice mail, fax or any alternate method. Transactional details do not supersede normal trade confirmations or statements. Email sent through the internet is not secure or confidential. Raymond James Financial Services reserves the right to monitor all email. Any information provided in this email has been prepared from sources believed to be reliable, but is not guaranteed by Raymond James Financial Services and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for informational purposes only and does not constitute a recommendation. Raymond James Financial Services and its employees may own options, rights or warrants to purchase any of the securities mentioned in this email. This email is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of, or taking of any action in reliance upon, this information by persons or entities other than the intended recipient is prohibited. If you received this message in error, please contact the sender immediately and delete the material from your computer.

Falling Oil Prices Disrupt the Financial Markets

April 22, 2020 Tyler Goodrich

April 22, 2020

Falling oil prices disrupt the financial markets

Dear Clients and Friends:

Lawmakers, business leaders and healthcare professionals around the country are searching for solutions to curtail the spread of COVID-19 and reopen the U.S. economy. In such challenging times, it can be difficult to know how to proceed. Because fluctuations in the financial markets may also give you cause for concern, We want to share with our valued clients the latest insights from the strategists at Raymond James.

A sharp drop in the price of oil disrupted the financial markets this week, ending a record rally for equities. After the S&P 500 had its best 18-day performance since 1933, it’s not surprising to see the market digest those gains, Raymond James Chief Investment Officer Larry Adam said.

“Equity markets do not move in a straight, uninterrupted line, especially in an environment predicated on headline news flow,” Adam said. “Continued uncertainty surrounding the timeline for the reduction of social distancing measures and the reopening of the economy, combined with an unprecedented decline in oil prices, led to an uptick in volatility.”

Oil prices dropped precipitously because supply greatly exceeds demand at a time when travel is diminished and much of the world’s population is staying home to help curtail the spread of the virus. The price of West Texas Intermediate (WTI) crude oil – considered the benchmark for the price of oil in the United States – briefly went into negative territory.

“The cause of this highly bizarre situation is a physical lack of storage,” said Raymond James energy analyst Pavel Molchanov. “Storage tanks around the world are becoming saturated.”

The problem is especially severe at a storage hub in Oklahoma, where the WTI price is set. For now, Molchanov suggests the Brent price – considered the global benchmark – is a better reflection of oil industry fundamentals. The Brent price has come down, too, but is less affected by conditions at any single facility. It’s a strange reality to see oil prices so low at a time when many of us have nowhere to go.

“In past decades, lower oil prices were beneficial to the economy,” Raymond James Chief Economist Scott Brown said. “Spending less to fill their gas tanks meant consumers had more money to spend on other things. But now we see big hits in energy jobs and capital spending when oil prices fall.”

The sustainable solution to the oil glut is for demand to recover, but with billions of people around the world subjected to lockdowns or stay-at-home orders, no one should expect a “flip the switch” moment, Molchanov said.

The reopening of the U.S. economy, it appears, will be similarly gradual. While state governments balance letting people return to work with the potential for increased COVID-19 cases, the federal government is expected to provide fiscal relief in the form of a fourth stimulus bill. Raymond James Washington Policy Analyst Ed Mills anticipates another $350 billion in funding for small businesses and $100 billion for the healthcare response to the virus.

“While this is likely to be an interim step, we expect certainty around support for struggling businesses and the appetite for additional action on Capitol Hill to help provide ballast for the current market volatility,” Mills said.

Adam, the firm’s chief investment officer, expects volatility will remain heightened for the near term.

“Favorable news on the medical front – concrete evidence of a reliable therapeutic or vaccine – is the likely next catalyst to push the equity market higher,” Adam said. “Ultimately, assuming a modest rebound in both earnings and economic growth during the second half of the year, we expect the equity market to be higher relative to current levels over the next 12 to 24 months.”

Thank you for your trust in us.

Sincerely,

Matt Goodrich Larry Goodrich, CFP ®

President, Goodrich & Associates, LLC Vice President, Goodrich & Associates, LLC

Branch Manager, RJFS Co-Branch Manager, RJFS

Investing involves risk, and investors may incur a profit or a loss. Investing in the energy sector involves risks and is not suitable for all investors. All expressions of opinion reflect the judgment of Raymond James and are subject to change. There is no assurance that any of the forecasts mentioned will occur. Economic and market conditions are subject to change.

Material prepared by Raymond James for use by its advisors.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. © 2020 Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.

Monday Morning Outlook 'Job Destruction'

April 14, 2020 Tyler Goodrich

Monday Morning Outlook

Job Destruction To view this article, Click Here

Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 4/13/2020

Normally, we're not big fans of enhanced unemployment benefits. But the current severe economic contraction brought about by the Coronavirus and the government-mandated shutdowns of businesses meant to stop the disease is a completely different animal from a normal recession. It's not just that people are staying away from certain economic activities because of the virus: the government is requiring businesses to shut down, magnifying job losses across the country.

Initial jobless claims averaged 216,000 per week in the four weeks ending on March 7, before the shutdowns. That's a total of 863,000, which was very low by historical standards, particularly relative to the size of the labor force. In the four weeks since then, 17.1 million workers have filed claims, blowing away previous records.

Many of these layoffs were the direct result of the government forcing businesses to shut their doors. When people are being deprived of their livelihoods by government fiat it resembles a "taking" under the Fifth Amendment of the US Constitution. In this unique situation, unemployment compensation resembles a "just compensation" for that taking.

The problem is that the boost to unemployment benefits enacted by Congress is over-kill for many workers, leading to perverse incentives. For example, let's take a worker in California earning $46,700 per year. Normally, a layoff would give them six months of unemployment benefits at a rate of $450 per week, which is an annual benefit rate of $23,500, about half of what they were earning when they worked.

But Congress is now throwing in an extra $600 per week for unemployed workers, for four months. That means for four months these workers will get $1,050 in benefits per week, which translates into an annual benefit rate of $54,600, which is even more than they were earning when they were working!

Because the extra $600 is a flat extra benefit, the gap between what unemployed workers can get now versus what they were earning when they worked is even larger for lower-earning workers. And it's not just deep-blue states like California. In Texas, for example, unemployed workers who previously earned up to $58,000 per year will be better off unemployed, at least for the first four months.

Yes, as we've noted the extra benefits only last for four months. But it's hard to believe there won't be enormous political pressure to extend the length of those extra benefits come the summer when they'd otherwise expire. After all, the unemployment rate is still likely to be 10% or more.

Now think of what this means when we re-open the economy. Some workers will go back to work because they might fear their job disappearing if they hold-out. But many won't want to give up the higher payments and businesses will now be competing with government for workers at the same time they'll be digging out of a huge financial hole. In fact, many low margin businesses may not be able to afford those higher wages. Don't get us wrong; we like faster wage growth; what we don't like are government policies that create perverse incentives to avoid work once it becomes more available.

If wages go up because of bad policies that will leave less room for businesses to hire, leading to a more prolonged surge in unemployment and a slower return to the standard of living we had before the virus struck.

Early in the Great Depression, the Hoover Administration urged companies to maintain wages in spite of deflation. The idea was that if wages were kept high workers would have more purchasing power, boosting output. But workers who kept their wages were already getting a boost from falling prices. Meanwhile, firms that kept wages high wouldn't hire new workers. It made the Depression worse, not better. By boosting unemployment benefits, the government has put businesses in a position where they have to boost wages, indirectly making the same mistake as President Hoover.

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Sincerely,

Matt Goodrich Larry Goodrich, CFP ®

President, Goodrich & Associates, LLC Vice President, Goodrich & Associates, LLC

Branch Manager, RJFS Co-Branch Manager, RJFS

Here to help with new wellness and market resources

April 8, 2020 Tyler Goodrich

Dear Clients and Friends:

As the COVID-19 situation continues to develop, it’s difficult to even remember what day it is. One blends into the next. What does stay top of mind is the desire to stay connected, to let you know that we are wishing you and your family well. And that includes your emotional and mental health. We will keep sharing tips that we come across and will continue to reach out with the latest from Raymond James leaders who have their fingers on the pulse of the situation.

We know the news can be overwhelming, so we’ll only send you a curated selection – just enough to lend perspective and keep you informed.

Weekly Headings from CIO Larry Adam

We thought you’d enjoy the latest short video from Raymond James Chief Investment Officer Larry Adam. He highlights “10 encouraging signs amid this difficult market environment.” To help you prepare for the week ahead, Weekly Headings offers a glance at upcoming events and shares insights regarding the global economy and capital markets.

Weekly Market Guide from Mike Gibbs

For perspective on what’s going on in the markets, check out the latest portfolio strategy commentary in the Weekly Market Guide with Mike Gibbs, managing director of Equity Portfolio & Technical Strategy.

Cares Act Resources

You likely know someone whose livelihood or education has been impacted by the COVID-19 response. Here’s a brief glimpse at some assistance available through the Coronavirus Aid, Relief, and Economic Security, or CARES Act. The CARES Act is intended to combat the economic risks associated with a slowdown in individual spending and help businesses of all sizes avoid closures and employee layoffs. It also provides necessary funds to help support states and municipalities. Check out our latest digital resources:

For small businesses

For students

For healthcare providers and patients

For those planning for retirement

We’d like to thank you for your continued trust but, perhaps more important, to send heartfelt gratitude to all those on the frontlines of essential services, those selfless individuals taking care of the sick, feeding us, stocking grocery shelves, and the countless volunteers who are working tirelessly on our behalf. Life is strange, but it’s inspiring to see our community continue to care for one another. Raymond James committed $1.5 million to support charitable organizations providing essential services like access to food and healthcare throughout communities affected by COVID-19.

As you know, we are doing our part to flatten the curve although we remain open for business. In the meantime, we’re also making a point to:

Stay clean, close, calm and in touch via email, phone, social media and other electronic means. GoogleDuo, Marco Polo and other video chat services should help.
Set some boundaries. It is all too easy to be online and accessible 24/7. We strive to be as responsive as possible for our valued clients, but would still encourage anyone working remotely to get enough rest and step away from the computer on occasion. Only you know what is sustainable for you and your family, and your health and well-being should be top priority.
Do something for others. If you can, consider buying gift certificates to local retailers and restaurants in a show of solidarity. Buy tickets to future community events, including theater productions. Donate to artists, performers and arts venues if you can. Purchase items off your favorite charity’s wish list.
Connect to the broader community. Many colleges and places of worship, for example, are holding online gatherings.
Get some exercise. A brisk walk can clear your head, but there are also myriad online and streaming classes offered these days, from yoga to dance to guided meditations and everything in between. There are even classes aimed specifically at young ones (e.g., GoNoodle).
Rest and relax. In addition to the usual streaming services, HBO Now and HBO Go are offering some programming for free and many zoos and aquariums are sharing adorable videos of animal interactions for the whole family to enjoy. We’re particularly entertained by those from the Shedd and Florida aquariums. The National Parks are also offering virtual tours and live streams.
Take care of the kids. In addition to all the teachers and administrators working tirelessly to educate our children, you can continue to feed their brains and spirits with free children’s books on Audible; a variety of podcasts; and Khan Academy classes.
Learn something new. Coursera offers a lot of free educational content. Epicurious can help you feel more confident in the kitchen. Let us know what skills you sharpen!

Though these uncertain times will last longer than any of us want, they won’t last forever. We will get through this. In the meantime, please don’t hesitate to reach out.

Sincerely,

Matt Goodrich Larry Goodrich, CFP ®

President, Goodrich & Associates, LLC Vice President, Goodrich & Associates, LLC

Branch Manager, RJFS Co-Branch Manager, RJFS

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.

CARES Act passes

April 1, 2020 Tyler Goodrich

March 31, 2020

Dear Clients and Friends:

From rebate checks to small business support, there’s a lot packed into the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed into law on Friday. The $2+ trillion emergency fiscal stimulus package is intended to mitigate some of the economic effects of dealing with COVID-19.

Here’s a look at some of the key provisions.

A check – Based on income and family makeup, most Americans can expect to receive $1,200 individually ($2,400 for joint filers) and $500 per dependent. Amounts phase out for those who reported adjusted gross incomes over $75,000 for individuals and $150,000 for joint filers in 2018 or 2019.
A buffer – The CARES Act eliminates the 10% early withdrawal penalty for coronavirus-related distributions from retirement accounts. Withdrawn amounts can be repaid to the plan over the next three years. In addition, required minimum distributions (RMDs) are waived for 2020. Investors who have already taken an RMD for 2020 have options that may include returning the amount or rolling it over, as long as the distribution was not made from a beneficiary IRA.
Support for small businesses – In the form of more than $350 billion, including forgivable loans (up to $10 million) to help keep the business afloat, a paycheck protection plan and grants.
Expanded unemployment benefits – Unlimited funding to provide workers laid off due to COVID-19 an additional $600 a week, in addition to state benefits for up to four months. This includes relief for self-employed individuals, furloughed employees and gig economy workers who have lost work during the pandemic.
Fortified healthcare – $100 billion is allocated to hospitals and other health providers to help offset costs and provide relief. In addition, the legislation provides funding for numerous other areas including state and local COVID-19 response measures, an increase to the national stockpile for medicine, protective equipment, medical supplies and additional FEMA disaster relief funding.
Enhanced education – $30 billion to bolster state education and school funding, as well as the deferral of federal student loan payments through the end of September.
State and local government funding – $150+ billion allocated to “state stabilization funds” to combat the pandemic and economic crisis and provide supplemental funding for joint state-federal programs like unemployment compensation and Medicaid.
Other provisions – A $500 billion buffer for impacted and distressed industries and general economic support, with loan guarantees for medium to large businesses, as well as states and municipalities. This includes specific provisions for airlines, air cargo and national security organizations. The Economic Stabilization Fund is intended to provide loan support for businesses/nonprofits between 500 and 10,000 employees with the interest rate capped at 2% and forbearance on federally backed loans for 60 days.

What’s next? Treasury Secretary Steven Mnuchin has targeted early April to deliver the funds. Discussions are starting in D.C. around a possible next phase of economic relief, although it’s just talk for now.

We’ll continue to keep you updated with relevant, and hopefully, useful information. You can find the latest on efforts to battle the pandemic here.

Thank you for your trust in us.

Sincerely,

Matt Goodrich Larry Goodrich, CFP ®

President, Goodrich & Associates, LLC Vice President, Goodrich & Associates, LLC

Branch Manager, RJFS Co-Branch Manager, RJFS

Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of Raymond James and are subject to change. There is no assurance that any of the forecasts mentioned will occur. Economic and market conditions are subject to change.

Material prepared by Raymond James for use by its advisors.

Cut the Politicians' Pay

March 25, 2020 Tyler Goodrich

First Trust

Economic Research Report

www.ftportfolios.com

March 23, 2020

The government-mandated shutdown of business, and the massive drop in economic activity it is causing, may actually do more harm to the United States than the coronavirus itself. Early estimates suggest the U.S. economy will contract at a staggering 20% annualized rate in the second quarter, and the number may move even higher. Despite multiple recessions, global wars, the avian flu, SARS, 9/11, and natural disasters, the U.S. hasn't experienced a quarterly drop in activity like this since the Great Depression.

The unemployment rate is likely to double from 3.5% to 7% in the coming months, representing a loss of more than 5 million jobs. And the longer the shutdown lasts, the further that number is likely to rise. Few businesses have cash hoards that can tide them over for this drastic a decline in activity. People are coming up with creative solutions, stopping rent and loan payments, but there isn't enough money in most business coffers to survive a trillion-dollar drop in economic production. The greater the number of businesses that don't survive, the slower the path to recovery when this global tragedy passes.

Tax payments to federal, state and local governments will fall precipitously, and many government entities will face serious financial challenges (if they didn't already). Illinois, for example, still has billions of dollars of unpaid bills, not to mention a severely underfunded pension system. A 10%-to-20% drop in tax revenue makes these problems that much worse. And every extra day the shutdown continues, the deeper the hole is dug.

The Federal Reserve -- never one to stand on the sidelines -- has pumped trillions of dollars into the economy. But let's face it, low interest rates and cash can't fix a virus; they are simply a stopgap measure to keep markets liquid while business and asset prices decline. Congress is working on what could be a $2 trillion bailout package that would grow the size of federal government spending by 45% this year -- money that will eventually have to be paid back.

The government's reaction is being driven by models that are highly uncertain. Fear and panic by the masses are amplified by poor reporting of the data. For example, we hear that coronavirus cases in the U.S. are doubling every "x" number of days. While technically correct, this is also misleading. We have significantly ramped up testing, and as should be expected, we are finding cases in larger numbers, rapidly. The data show us how fast we are finding cases, not how rapidly the virus is really spreading.

The governor of California said the other day that 25.5 million (56%) of his state/s citizens will get the virus. This is a model-based estimate, generating a number that no country in the world has come even remotely close to realizing. Add in the changes in behavior and shutdowns of activity, and it looks logically preposterous. But politicians have an incentive to use the worst-case models, and assumptions of unusually high and long-lasting spread rates, even though we know every virus follows a bell-shaped curve. I don't disagree with those who say "one life lost" is too many. But we don't stop driving because of the chance, albeit small, of serious injury or death when behind the wheel.

We have to start trusting individuals, as we do in so many other areas of life. We have all learned that our most effective measures to prevent the spread of disease are to wash our hands, not touch our faces, and stay away from others if you (or they) are sick. What individuals can't do is fight a massive recession. You can reduce the odds that your family is affected by a virus, but when you lose your job because the government shuts down the economy, your problems are far more likely to multiply. The government does not create wealth – it never has – and cannot possibly offset every dollar of damage.

We know that recession and unemployment hurt the health of citizens – emotionally and physically. At the same time, the shutdown of the economy will reduce the wealth of the U.S. over time, grow the government, and lead to fewer resources in the long run to deal with future economic problems. This is one of the issues facing Italy and other countries, which have been growing slower than the U.S. for decades, and which, as a result, have underinvested in health care.

The sooner we open America up for business, the less the economic damage, and the better off we will be in the long run. Viruses kill people every day. If not this one, then another. Giving up our freedom due to fear is a price we will pay for generations. The secondary economic effects, too, could be significant. We are holding back the supply of goods, while the government sends money out to stimulate demand. This will likely lead to price increases, then government price controls to fix "price gouging," which in cases like Venezuela have been shown to increase "hoarding" and further reduce supply.

To focus the minds of our politicians who are shutting down the economy, we should stop paying them as long as the shutdown lasts. Government employees keep getting paid, while millions of Americans will lose their jobs. They "solve" the problems they helped create, by spending other people's money. Businesses – free markets -- are chastised, destroyed, casualties left in the wake. But they are the only ones that, if they can weather the shutdown, will be able turn the economic tide.

Our politicians and bureaucrats need to get creative. Let experimental drugs move ahead rapidly. Allow restaurants to open at 50% capacity, increasing the distance between tables. Allow people to create safer working environments on their own, letting only a few shoppers in at a time, wiping down counters, etc. The government needs to focus on building up hospital capacity, protecting those who are at high risk – the elderly and those with underlying conditions -- but we need to let others get back to work.

Remember, unless we stop all personal interaction, we are essentially deciding certain risks are necessary. Shutting down "non-essential" business slows the spread of the virus but does not stop it. The same calculus needs to be done for the risk coming from economic damage. Unfortunately, unless we can share the economic damage with our politicians, they won't be willing to make that calculation.

Brian S. Wesbury - Chief Economist First Trust

Fiscal Stimulus - What's Been Done And What Is in Progress?

March 20, 2020 Tyler Goodrich

March 18, 2020

Congressional leadership is working to develop a large-scale stimulus package that can win bipartisan support.

Washington Policy Analyst Ed Mills and Healthcare Policy Analyst Chris Meekins weigh in.

Tuesday’s pivot toward a broad fiscal stimulus plan in the $1+ trillion range is a market-positive development, which was not a given at the beginning of this week. The package under discussion would provide Americans with a check of an amount to be determined as an initial boost for households and consumers.

Negotiations on this provision will focus on targeting the funds to certain income levels. We will be watching to see what income thresholds become the baseline in the coming days, or if other provisions such as refundable tax credits and expanded unemployment assistance are added to the direct payment section of the bill. President Trump, Secretary Mnuchin and Speaker Pelosi signaled agreement on the need for targeting in this respect on Tuesday. The broad agreement is a positive – the details will be the difficult part.

There appears to be broad agreement on boosting support for small businesses through loans via the Small Business Administration (SBA) and other relief in the amount of $250 billion. Support for the airline industry is currently projected to be in the $50 billion range and support for other businesses is also being discussed in the $50 billion range (with tax credit and net operating loss [NOL] carryforward provisions being discussed).

See below for a breakdown of Congressional relief measures that are currently active or in the negotiations stage.

Phase One

Title: Coronavirus Preparedness and Response Supplemental Appropriations

Act Cost: $8.3 billion

Status: Law as of March 6

Highlights:Outbreak preparedness and response. $6.7 billion for U.S. agencies to respond to outbreak and research therapies. Expanded research and development. $3.1 billion for the U.S. Department of Health & Human Services (HHS) Public Health and Social Services Emergency Fund. State and local resources. $2.2 billion to the Centers for Disease Control and Prevention (CDC) for response effort. Therapies and vaccines. $836 million for National Institutes of Health (NIH) response effort.International outbreak support. $1.6 billion for international response.

Phase Two

Title: Families First Coronavirus Response Act Cost: $100 billion (estimated)Status: Passed by the House on March 14; awaits Senate action.

Highlights: Free testing. Free testing for everyone who needs a COVID-19 test, including the uninsured. Paid sick leave. 14 paid sick days for businesses with fewer than 500 employees, partially reimbursed with a tax credit ($5,110 aggregate total).Food assistance. $900 million in nutrition assistance will be provided for students who are out of school and assistance for food banks and seniors. Unemployment assistance. Additional funding for states that experience a 10% increase in unemployment. Expanded Family and Medical Leave (FMLA). Expands existing FMLA protections that provide up to 10 weeks of time. Pay is 2/3 of monthly earnings up to $10,000 aggregate cap. Only applies to companies with fewer than 500 employees. Healthcare worker protections. Expanded federal safety and health protections for frontline healthcare workers.

Phase Three

Title: Pending

Cost: $800 billion to $1+ trillion (estimated)

Status: Negotiations ongoing, led by the Senate

Highlights: Payments to individuals. Cash infusion for consumers (potentially in $1,000 range). Payments may be provided multiple times. $250 billion initial payment to individuals, second $250 billion in payments at a later date. Targeted relief for airlines, potentially in the $50-60 billion range. Targeted relief for hotels, possibly. Targeted relief for cruise lines, possibly. Small business support. Expanded small business loans, potentially in the $250 billion range.

Phase Four

Title: Pending

Cost: $8+ billion (estimated)

Status: Still in the discussion phase; phase three response is the current priority

Highlights: Secretary Mnuchin has signaled the administration will ask for another emergency federal funding bill for agencies to mitigate the spread of the virus and implement some of the Trump administration executive actions.

Source: Raymond James research -
All expressions of opinion reflect the judgment of Raymond James & Associates, Inc., and are subject to change. Economic and market conditions are subject to change.~

Raymond James Chief Financial Officer Larry Adams Update on Monday

March 20, 2020 Tyler Goodrich

Please join Larry for a video update at 1:15 by selecting the link below:

COVID-19 Update

Fiscal & Monetary Response: March 23, 2020

Monday, 3/23/2020 at 4:15 p.m. ET
raymondjames.com/investment-strategy-client-call

View additional volatility resources~

Monday Morning Outlook

February 10, 2020 Tyler Goodrich

Monday Morning Outlook Jobs, Coronavirus, and the Budget To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 2/10/2020
In January, US payrolls expanded by 225,000, not only beating the consensus forecast, but also forecasts from every single economics group. Since January 2019 (12 months ago), both payrolls and civilian employment – an alternative measure of jobs that includes small-business start-ups – are up 2.1 million. The labor force – those who are either working or looking for work – is up 1.5 million, while the jobless rate fell to 3.6% from the 4.0%.

The labor force participation rate (the share of adults who are either working or looking for work) increased to 63.4% in January, the highest reading since early 2013. Participation among "prime-age" adults (25 to 54) hit 83.1%, the highest since the Lehman Brothers bankruptcy in 2008.

Meanwhile initial claims for unemployment insurance hit 202,000 in the last week of January, and initial claims as a percent of all jobs are at the lowest level ever. In other words, the job market and the economy look strong.

Only a few months ago, some analysts were saying that the inversion of the yield curve - with short-term interest rates above long-term rates - was signaling the front edge of a US recession. Now a recession seems nowhere in sight.

Lately, financial markets have become very jumpy on any news – good or bad – regarding the coronavirus. We aren't immunologists (or doctors) and would never make light of a virus that has killed more than 900 and infected over 40,000, but data released by the World Health Organization (WHO) cautiously suggests a positive turning point has been reached.

So far, the virus has had minimal impact outside of China, and the growth rate of new cases worldwide has slowed. Yes, these numbers must be taken with a grain of salt, given that the news is coming from China. But China's leaders have an interest in limiting the spread of the virus and the economic damage it causes, and they have allowed the WHO access.

China's President Xi Jinping has been able to accumulate more power than any leader since at least Deng Xiaoping, perhaps since Mao. We assume he is well aware that a major failure to contain the virus could give his political opponents an opening to vent their frustration with the current leadership, and perhaps push for change.

It's true that the Chinese economy has slowed precipitously, and this is affecting many companies' sales and production. However, we do not believe that this will damage global growth in a significant way, and the US stock market suggests that global investors agree.

Meanwhile President Trump is presenting his budget plans to Congress this week, and early reports suggest some proposals to rein in entitlement spending. We wouldn't hold our breath waiting for these policies to get implemented. No matter who controls Congress, the one bi-partisan thing DC is able to do is spend more taxpayer money. And even with a slowdown in spending growth for entitlements, the President's budget proposal still won't balance the budget until 2035.

To be clear, we do not think deficits are the proper tool to use for economic forecasting. What matters is spending, and federal spending has grown to be too large a share of US GDP. The bigger the government, the smaller the private sector.

In 1983, according to the OMB, federal spending was 22.9% of GDP. In 1999, under President Clinton, it had fallen to 18%, and from 1983 through 1999, real GDP grew 3.7% at an annual rate. This trend was reversed with government spending rising to 21.1% of GDP in 2019, and from 2002 to 2019, real GDP grew just 2.1% annualized. Bigger government leads to slower growth.

Taking all of this together, no recession on the horizon and improving news about the coronavirus suggests corporate profits will continue to grow in spite of moderate growth. Stay bullish! ~

Secure Act Update

January 30, 2020 Tyler Goodrich

Dear Clients and Friends -

We hope this finds you well. For some time now, we’ve been following the SECURE Act as it made its way through Congress. Now the retirement savings reform bill has become law, and we wanted to offer an update on its provisions.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 broadens the effectiveness of individual retirement accounts and employer-sponsored retirement savings plans.

Essentially, it expands access to tax-advantaged retirement savings accounts and, ultimately, aims to help Americans save enough for a secure retirement. That’s a goal we can all get behind.

Among other things, the Act:

Provides a startup credit to make it easier and more affordable for small businesses to set up retirement plans for their employees, even allowing them to band together to set up a plan for their collective employees.
Introduces a credit for those small employers who encourage savings through automatic enrollment, which has been shown to increase employee participation and boost retirement savings.
It removes the age cap that limits contributions to traditional IRAs after age 70½, which would give working people more time to contribute toward retirement.
Delays required minimum distributions (RMDs) until age 72, which allows the account to continue growing as life expectancies increase.

The SECURE Act also eliminates the “stretch IRA,” an estate planning strategy that allowed much-younger beneficiaries to inherit an IRA and “stretch” the required minimum distributions across their actuarial life expectancies. Basically, the heirs received smaller RMDs over a longer period of time until the money ran out, reducing their tax liability on the withdrawals. In the meantime, the account would continue to grow tax-deferred.

Withdrawals over a lifetime are no longer an option for inherited defined contribution accounts. The SECURE Act gives non-spouse beneficiaries (including trusts) just 10 years to withdraw all the money from inherited IRAs, 401(k)s or other defined contribution plans. These supersized distributions are likely to trigger higher taxes for heirs, with few exceptions. This change does not apply to IRAs inherited in 2019 or prior, but will be effective for IRAs inherited in 2020 and beyond.

For those of you who have extensive estate plans, it would behoove you to consult with your estate planning attorney, as there could be significant impact for reducing taxes for your heirs.

As we sort through the potential tax, retirement and estate planning implications, we will reach out again if we need to adjust your plans.

Please contact me with any questions.

Thank you, as always, for your continued trust in us.

Matt

Matt Goodrich

President, Goodrich & Associates, LLC

Branch Manager, RJFS

Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James financial advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. The information contained within this newsletter has been obtained from sources considered reliable, but we do not guarantee the foregoing material is accurate or complete.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. © 2019 Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.

Any information provided in this email has been prepared from sources believed to be reliable, but is not guaranteed by Raymond James Financial Services and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for informational purposes only and does not constitute a recommendation.

Look for Steadiness from the Fed

January 27, 2020 Tyler Goodrich

Monday Morning Outlook Look for Steadiness from the Fed To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 1/27/2020
The Federal Reserve is set to make its first policy statement of the year on Wednesday, so this is as good a time as any to reiterate our view that the Fed is likely to keep short-term interest rates steady through 2020 and, while pressures will build, the Fed seems content to hold them steady next year, as well.

We still think monetary policy is far from tight, and the economy could easily withstand higher short-term rates. Nominal GDP – real GDP growth plus inflation – is up 3.8% from a year ago, and up at a 4.8% annual rate in the past two years, figures consistent with higher short-term rates.

But the Fed is very unlikely to raise rates given its fear of an inverted yield curve, its desire to see a period of inflation in excess of 2.0%, and its propensity to always find something going on elsewhere in the world that could, at least theoretically, lead to slower growth. Last year it was political wrangling over Brexit, fears of a trade war with China, and slower growth abroad. This year it could be Brexit again, and perhaps the coronavirus coming from China.

Meanwhile, with equities so much higher than a year ago and the economy growing at a moderate pace, the Fed will lack a justification for cutting rates.

In the background, the Fed is likely to continue to gradually increase the size of its balance sheet via repurchase operations after having (temporarily) ended Quantitative Easing in October 2014 and reducing the balance sheet (Quantitative Tightening) starting in late 2015. The Fed restarted QE (without calling it that) near the end of last year, but even with the recent increases, the balance sheet finished 2019 at $4.13 trillion, still below the $4.45 trillion it hit during QE3.

And yet the S&P 500 is up 66% since the end of QE. By contrast, the Euro STOXX 50 is up only 25%.

What makes this so important is that it flies in the face of the theory that QE is behind the increase in equity prices. While the Fed pulled back, the European Central Bank continued expanding its balance sheet and even implemented negative interest rates in an attempt to stimulate the Eurozone economy. If QE and negative rates were so powerful, it should be US equities that lagged, not European equities.

It also suggests the Fed doesn't need to be gradually expanding its balance sheet again. There were still $1.49 trillion in excess reserves in the financial system at the end of 2019, and the banking system is far better capitalized than it was before the financial crisis.

When short term interest rates started periodically spiking upward in mid-September, the Fed had three possible courses of action. First, it could have let the free market work. No banks were going bust because of a temporary lack of liquidity; it just meant those in need of liquidity had to pay a high price so they wouldn't run afoul of tough financial regulations. Maybe some financial institutions needed to unwind positions that ate up cash.

Second, the government could have adjusted the very stringent liquidity regulations put in place after the financial crisis. These rules lead to temporary shortages of reserves when companies remove deposits to make large tax payments, participate in large Treasury auctions, or, when hedge funds attempt to borrow more money from banks. Loosening the rules would have quickly made more cash available!

Or third, the Fed could decide to start increasing its balance sheet again because that would increase its power.

Of course, the Fed picked Door #3. In the end, it behaved in just as self-interested a way as people do in the private sector. Except policymakers are doing it with other people's money, not their own. We don't agree with more QE, but the Fed will not get in the way of a continued economic recovery. This report was prepared by First Trust Advisors L. P., and reflects the current opinion of the authors. It is based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security. ~

Moderate Growth in Q4 of 2019

January 21, 2020 Tyler Goodrich

Monday Morning Outlook Moderate Growth in Q4 To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 1/21/2020
Back in mid-November, the highly respected GDP forecasting model from the Atlanta Federal Reserve Bank (also known as "GDP Now"), estimated that real GDP would only grow at a 0.3% annual rate in the fourth quarter, which, if accurate, would have been the slowest growth for any quarter since 2015. At the time, we were forecasting economic growth at a 3.0% rate.

Now, nine days from the government's first official report on Q4 GDP, the Atlanta Fed's model is saying 1.8%, while we're at 2.5%. In other words, they've moved a lot higher, we've moved a little lower. The consensus among economists is 2.1%, right between our forecast and the Atlanta Fed's.

Here's the thing: international trade and inventory figures are likely to have a huge impact on Q4 real GDP, with international trade a positive factor and inventories a negative. Trade relations with China were very volatile until recently, in part explaining a big drop in imports in Q4, which has a temporary positive influence on GDP. But, at the same time, fewer imports also meant less inventory accumulation in Q4.

We're telling you this because the day before the GDP report next week, we will get reports on both trade and inventories, which might lead us to make a substantive revision up or down to our 2.5% forecast.

Either way, what's most important is the trend, and we see healthy economic growth coming in 2020. Monetary policy is far from tight, companies are still adapting to a world where corporate profits earned in the US face lower tax rates, the regulatory environment has become more favorable, home building is poised to add to GDP, and consumer purchasing power (already strong) is growing.

Here's how we get to our 2.5% real growth forecast for Q4:

Consumption: Car and light truck sales shrank at a 5.3% annual rate in Q4, while "real" (inflation-adjusted) retail sales outside the auto sector shrank at a 1.4% rate. So far, not so good. But most of consumer spending is on services, and it looks like real spending on services grew at a 2.4% rate. Take the good with the bad, and it suggests real personal consumption (of goods and services combined) grew at a 1.9% annual rate, contributing 1.3 points to the real GDP growth rate (1.9 times the consumption share of GDP, which is 68%, equals 1.3).

Business Investment: It looks like continued investment in equipment and intellectual property offset a contraction in commercial construction. Combined, business investment grew at a roughly 3.3% annual rate in Q4, which would add 0.4 points to real GDP growth. (3.3 times the 13% business investment share of GDP equals 0.4).

Home Building: Residential construction turned up in Q3, the first positive quarter since 2017. Look for another positive quarter in Q4, with growth at about a 2.7% annual rate, which would add 0.1 point to real GDP growth. (2.7 times the 4% residential construction share of GDP equals 0.1).

Government: Both national defense spending and public construction projects show solid growth in Q4, which means overall government purchases were probably up, as well. Looks like an increase at a 1.7% rate, which would add 0.3 points to the real GDP growth rate. (1.7 times the government purchase share of GDP, which is 18%, equals 0.3).

Trade: Signs suggest China trade-policy related volatility led to an unusually large drop in imports in Q4, which translates into a large increase in net exports (exports minus imports). At present, we're projecting that net exports will add an unusually large 1.3 points to real GDP growth in Q4 but, as we mentioned above, this number could change dramatically with next week's advance report on trade. Also, a big plus from net exports in Q4 may lead to a large negative in Q1 as trade tensions ease and imports return to a faster pace. Only time will tell.

Inventories: Inventories are also a huge wild card in Q4. As of now, we're penciling in a drag on the real GDP growth rate of 0.9 points. After Q4, look for a rebound in the pace of inventory accumulation, which should add to economic growth in 2020.

Add it all up, and we get 2.5% annualized real GDP growth. Expect growth to average at least that pace in 2020, with our projection in the 2.5 to 3.0% range. There's no recession on the way, and plenty of reason to believe better profits will see this bull market continue to run.

Morning Brew

December 24, 2019 Tyler Goodrich

Portfolio Strategy

By: Michael Gibbs, Director of Equity Portfolio & Technical Strategy
Joey Madere, CFA
Richard Sewell, CFA
Mitch Clayton, CMT, Senior Technical Analyst

December 24, 2019

The S&P 500 futures trade three points, or 0.1%, above fair value on this Christmas Eve. It's been a tight-ranged session, with many other equity markets closed or closing early for the Christmas holiday.

The U.S. stock market will close at 1:00 p.m. ET today, but many market participants have likely already checked out for the holiday. Trading conditions may be thin, which could lead to some noticeable price swings in the shortened session.

The prevailing bias is positive, though, as investors have shown little interest to sell a market trading at all-time highs. Although not a certainty, the market does tend to rise in the last five trading days of December and into early January in a calendar effect known as the Santa Claus rally.

Elsewhere, the U.S. Treasury market will close early at 2:00 p.m. ET. Currently, the 2-yr yield is up one basis point to 1.66%, and the 10-yr yield is down one basis point to 1.93%. The U.S. Dollar Index is up 0.1% to 97.73. WTI crude is up 0.4%, or $0.26, to $60.78/bbl.

For more information on this article please click on the link below:

https://raymondjames.bluematrix.com/sellside/EmailDocViewer?encrypt=521bcf85-f3de-4bae-98d4-cc9a758c4a02&mime=pdf&co=raymondjames&id=matt.goodrich@raymondjames.com&source=mail

S&P 3650, Dow 32500

December 24, 2019 Tyler Goodrich

Monday Morning Outlook

Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist

Date: 12/16/2019

A year ago, we projected the S&P 500 would hit 3100 at the end of 2019. In spite of the swoon in equities in the fourth quarter of last year, we didn't see a recession coming and our model for estimating fair value for the stock market was screaming BUY.

At mid-year, seeing the economic and trade-policy stars aligning for further growth, and with our model for equites (more on that below!) still showing room for gains, we lifted our year-end forecast to 3250. At a Friday close of 3169, we were only 2.6% below that level with 16 days to go.

For 2020, we remain bullish. Our call is for the S&P 500 to end the year at 3650, which is about 15% higher than it finished on Friday, with the Dow Jones Industrials' average moving up to 32500.

The first consideration we make when forecasting the stock market is whether we see a near-term recession. This step is important because even if the stock market is undervalued relative to long-term norms, a recession would almost certainly send equities lower in the short term; stocks would go from undervalued to more undervalued.

Needless to say, we don't see a recession anytime soon. The economy is still adapting to lower tax rates and monetary policy remains loose. In addition, home builders are still generating too few homes given our population growth and scrappage rates, while banks are sitting on ample capital.

The second step, and usually the most important one, is to use our Capitalized Profits Model. The model takes the government's measure of profits from the GDP reports, divided by interest rates, to measure fair value for stocks. Our traditional measure, using a current 10-year Treasury yield of 1.85% suggests the S&P 500 is grossly undervalued.

However, we think long-term interest rates are headed higher and this change can have a large effect on the model's assessment of fair value. We anticipate that the 10-year Treasury yield will finish the year at 2.5%. Using 2.5% (instead of 1.85%) suggests an S&P fair value of 3775. In other words, we should finish 2020 with more room for the bull market to keep running.

In addition, it's important to notice that in recent years operating profits generated by the companies in the S&P 500 have risen much more than the government's measure of corporate profits that we use in our model. In the prior business cycle, the one that ended in the Great Recession, profits peaked in the second quarter of 2007. Since then, S&P operating profits are up 55% while the GDP measure of profits is up only 31%. This divergence suggests using the GDP measure of profits in our models may be underestimating the fair value of equities.

The biggest risk to our forecast is that someone on the far left wins the White House in 2020 and the Democrats simultaneously get a majority in the US Senate. We think that's very unlikely. Most likely, the outcome of the election ensures that the tax cuts remain in place without any radical new entitlements or expansions of the entitlements already in place.

Like we said last year, this will probably to be one of the most optimistic forecasts you'll see, if not the most optimistic one of all. But, in the end, we do best by our readers when we tell them exactly what we think is going to happen, without altering our projections so we can run with the safety of the herd.

Last year we told investors to "grit your teeth" because "those who stay invested in the year ahead should earn substantial rewards." Our advice remains the same. The bull market is not yet done.

To view this article follow the link below:

https://www.ftportfolios.com/Commentary/EconomicResearch/2019/12/16/sp-3650,-dow-32500

Giving Thanks

November 27, 2019 Tyler Goodrich

Monday Morning Outlook

Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist

Date: 11/25/2019

What an incredible time to be alive! We stand just five weeks from the end of a decade that saw prosperity spread far and wide. Some don't see it that way, as pouting pundits and rancorous politics skew our visions. But, if we simply step back from the day to day noise and take in the magnitude of progress around us, there is a great deal to be thankful for.

For starters, the US macroeconomy – the big picture – is in solid shape. The unemployment rate is 3.6%, just a tic above September's 3.5% reading - the lowest since 1969. What some people call the "true unemployment rate" (known to the Labor Department as the "U-6" rate), which includes discouraged workers and part-timers who say they want full-time work, currently stands at 7.0%, and recently touched lows not seen since the peak of the first internet boom nearly twenty years ago.

Average hourly earnings are up 3.0% from a year ago, compared to an increase in 1.8% in consumer prices. In fact, "real" (inflation-adjusted) earnings are likely to be up again for the year, making this the seventh consecutive year of higher real wages.

Importantly, the benefit of earnings growth has been widening out. In the past year, median usual weekly earnings for workers age 25+ with less than a high school diploma are up 9.0%. In the year before, these wages were up 6.5%. This is faster growth than for those with college and graduate school degrees. Making jobs plentiful is still the best way to raise living standards.

Meanwhile, US equities have recently hit all-time highs, pushing IRAs, 401ks, pension funds, and retirement wealth higher. Both workers and investors have good reason to be grateful.

But it's not only the big picture that looks good. The day-in, day-out lives of people the world over have improved because of the grit and determination of inventors and entrepreneurs.

A decade ago, how many of us had instantly ordered a car to pick us up via our phones (now more like pocket computers), and then watched its progress toward us in real time, not left to wonder when and if the car would ever show up? How many of us could optimize our travel routes with free apps that tell us the best time of day to take the route in question, or where to turn to cut travel time?

Think about the standardization of car and truck technology that used to be reserved for the upscale, like adaptive cruise control or blind-spot warnings, even self-parking cars. Backup cameras now come standard!

But it's not just the day-to-day, innovation is also helping save lives in crisis situations. This includes the 3D printing of body parts...skin cells, lungs, and soon partial livers. Yes, livers! We are on the cutting edge of gene therapies that are being used to treat cancer. Cancer death rates have dropped consistently for decades, and new technology promises further improvement.

Think about the advances in energy production. The average price of a barrel of oil (West Texas Intermediate) was $78 in November 2009, a decade ago, and that was when the jobless rate was around 10% and the global economy in the doldrums. It's now down to $58. Natural gas was trading around $3.70 per mmbtu, now $2.67. Lower prices are a direct result of the combination and widespread use of horizontal drilling and fracking. As a result, Americans can heat and cool their homes and businesses and travel for much less than they used to.

Put it all together and if we're honest we have so much to be thankful for. There has quite simply never, in the history of mankind, been a better time to be alive. Our ancestors could find faults in some things in the world today, but they'd be left speechless at our abundant (and growing!) opportunity.

Goodrich & Associates Holiday Hours

November 20, 2019 Tyler Goodrich

Our office will be closed in celebration of the Thanksgiving holiday! Beginning Wednesday, November 27th at 1:00 p.m. through Friday, November 29th we will be out of the office. We are back to our regular hours on Monday, December 2nd. Thank you and have a happy holiday!