August 2019
In This Issue
Welcome to MONTH-2-MONTH, an e-Newsletter from Alexander Financial Planning, Inc. MONTH-2-MONTH is intended to provide you with updates on AFP and timely financial planning and investment information on a variety of topics. You are welcome to forward this e-mail on to others.


Still Time for End of Summer Adventures

As Labor Day approaches, we know the sun is setting on another summer! Get out and enjoy it before the popsicles melt. It is a great time to enjoy a day trip to the zoo or the pool. Now that the kids are back in school, these activities can be enjoyed free of large crowds and at a slower pace. The Farmer's Market is another option as the harvest season is approaching. Not sure what to do with a free day? Check out the website to find hidden treasures.  


  • Our Portfolio Management software transition continues with baby steps. There is a lot of work associated with this change. We are excited to learn the new program, Orion, and we (Teri, Maria, and Tracey) will be attending a launch session in mid- November in Omaha, NE. 

  • Teri and Bob continue to work on adjustments to financial planning and investment management services. Maria is assisting Teri with investment research and Bob with financial planning while also working on design elements for client presentations and marketing. 

  • In the midst of this, we will be preparing for a state audit scheduled for mid-September. This occurs every other year so it is old hat for us. We welcome the review as it provides us an opportunity to maintain the quality of our fiduciary service. 

Fall Program  

We are excited to host a program  entitled, "Investing in the Current Economic Environment".  The program is Thursday, September 26 at 7 pm and our speaker is Matt Lord with JP Morgan. It will be held at the Open Door in Grandview Heights and it will be followed by a tour and tasting at High Bank Distillery. The tour and tasting is only available to the 1st 25 people who sign up for this. Invitations were sent out late last week via email. If you missed this in your inbox, please click the link below for details. No e-mail box? We mailed you a copy. 

On a Personal Note:
Teri's World -  The beginning of August was centered around her son-in-law's serious bicycle accident that occurred on July 31st. The family has kicked in to help out while Jared recovers. Beyond this the family celebrated Logan's first steps (youngest grandson) and Jordan turning 3 years old (oldest grandson). Much of her other time has been spent in the office, watering the garden, running, hiking and walking the dog. Teri is taking some time off the last week of August and traveling East with her son to visit with family, a high school friend who now lives in Maine, and hiking in Acadia National Park. 

Wh at a bou t Bob? - It has been a rather quiet month of August for Bob & Christine. Christine loves her job with Agilon Health and the opportunity to make a difference. Their grandson, Logan turned 6 months old and is growing so quickly!!! They spent the weekend at the University of Notre Dame on a retreat for a new Diocesan program called Missionaries to the Family. They are very excited to see what this program has in store. 

Tracey's Time -  Tracey and Andy are doing their very best to make use of the RV. Their latest family adventure was a weekend camping trip to Cedar Point for Cayleigh's 13th birthday. It was lots of fun despite being beat-up on the rides!
The back to school routine is falling into place with homework, music, and sports. Cayleigh is a member of the school golf team and has resumed her guitar lessons. 

Maria's Moments - Maria is heading back to school to finish her Master's in Business Administration with a concentration in Finance at Ohio Dominican University. She is excited to get back into a school routine and finish her Masters. She spent a lot of time with her friend Anna this past month, Anna left for Zambia with the Peace Corps for the next two years.

At the end of August Maria will be receiving her Great Midwest Athletic Conference (GMAC) Regular Season Championship Ring. This is Ohio Dominican Softball's second Division II Conference Championship. Leaving this legacy with the program has been a dream come true.

(Current Economic and Investment Information)

  • U.S. TREASURY BONDS - The US Treasury Department has auctioned off 30-year government bonds since 1977.  The lowest yield ever on our nation's 30-year paper until last week was 2.10% on 7/08/16.  The 30-year Treasury bond yield fell to 1.98% on Thursday 8/15/19, an all-time record low (source: Treasury Department). 
  • CHINA TARIFFS - China has increased the tariff that it applies to imports coming into its country from the USA by an average of 12.4 percentage points since May 2018 (source: Peterson Institute).  
  • U.S. DEBT HOLDER - Japan replaced China as the largest foreign holder of US Treasury debt as of June 2019.  Japan ($1.123 trillion) has increased its holdings by $90 billion during the last year while China ($1.113 trillion) has reduced its holdings by $79 billion over the last year (source: Treasury Department).  
  • INCOME TAX - 44.4% of US individual tax filers (76.4 million out of 172.0 million) did not pay any federal income tax in tax year 2018, i.e., 4 out of every 9 tax units in the United States (source: Tax Policy Center).   
  • WAGES - 21 of 50 US states have a minimum hourly wage of $7.25 in 2019, the federally mandated minimum wage, including Texas and Pennsylvania.  29 of 50 US states have implemented a minimum wage higher than $7.25, including California ($12) and Colorado ($11.10) (source: National Conference of State Legislatures).       
  • RETIREMENT PLANS - 64% of working Americans are active participants in a defined contribution plan (e.g., 401(k) plan) or a defined benefit pension plan, or their spouse is an active participant in a pre-tax retirement plan.  This study was released on 8/05/19 (source: Investment Company Institute).   
  • U.S. GROWTH - The US economy has grown by +2.1% per year since 2000 (i.e., the 19 years from 2000-2018), by +2.8% per year since 1975 (i.e., the 44 years from 1975-2018), and by +3.2% per year since 1950 (i.e., the 69 years from 1950-2018) (source: Commerce Department).    
  • BREXIT IMPACT - The US economy (largest in the world) has contracted during 10 quarters in the last 20 years (80 quarters), most recently in the 1st Q 2014.  The UK economy (5th largest in the world) has contracted during 8 quarters in the last 20 years, most recently in the 2nd Q 2019 (source: Office for National Statistics).  
  • BROKE BOOMERS - 12.2% of individual bankruptcy filers were at least age 65 in 2016, i.e., 1 out of every 8 bankruptcies.  2.1% of individual bankruptcy filers were at least age 65 in 1991, i.e., 1 out of every 48 bankruptcies (source: "Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society).
  • U.S. DEFICIT - The US government has incurred an $867 billion deficit through 10 months of fiscal year 2019, i.e., the 10 months ending 7/31/19, the difference between $2.860 trillion of receipts and $3.727 trillion of outlays.  The all time record for receipts and outlays took place just last year in fiscal year 2018 - a total of $3.330 trillion of receipts and $4.109 trillion of outlays (source: Treasury Department).   

  • COLLEGE COSTS - 45 million Americans owe $1.48 trillion in student loan debt as of 6/30/19, a +114% increase (up +$790 billion) in just the last 10 years (source: Federal Reserve Bank of New York).   


Dollar's Strength Pressures Markets Broadly
Commodities, earnings and emerging nations 
all have been dented by U.S. Currency's rally

By Ira Iosebashvili
The Wall Street Journal

A prolonged dollar rally is pressuring U.S. corporate earnings, hitting commodity prices and threatening to deepen a selloff in emerging markets.

The U.S. currency has continued to grind higher this year despite an escalating trade fight with China and broadsides from President Trump, who has complained that the dollar's strength is curbing growth. Last month, the greenback rose even after the Federal Reserve cut interest rates for the first time in a decade, defying expectations that lower rates would cut the appeal of U.S. assets to yield-seeking investors.

The ICE Dollar Index, which tracks the dollar against a basket of six major currencies, stands near its highest level in more than two years and is up nearly 11% from its 2018 lows.

One key driver of the dollar's gains has been the relative strength of the U.S. economy, which since 2015 until recently has allowed the Fed to raise rates far above the levels of borrowing costs in other developed countries.

As recently as last year, investors were betting that growth would accelerate abroad, boosting foreign currencies as central banks outside the U.S. raised rates. 

That pickup never materialized an d investors now believe the gap in yields is likely to remain in place as central banks ease monetary policy to counter the effects of a global slowdown.

Even with last week's decline in Treasury yields, investors can still expect to collect a far larger payout from U.S. government bonds than from those in any other developed country, including Europe and Japan, where negative yields have proliferated in recent years.

"There is nothing exceptional about U.S. growth, but it still looks pretty exceptional compared to other parts of the world," said Alan Ruskin, chief international strategist at Deutsche Bank.

The dollar's strength has been a double-edged sword, both inside and outside the U.S.

A stronger dollar is a negative for U.S. exporters because it makes their products less competitive abroad. It also is hurting U.S. multinationals by making it more expensive for them to convert foreign revenues into U.S. currency-a worrisome trend for investors betting on an earnings rebound in the second half of the year.

The earnings of S&P 500 companies with more international exposure fell an average of around 12% in the second quarter compared with a year earlier, while those with more domestic revenue posted growth of more than 4%, a FactSet analysis of a selected group of recent earnings reports found.

Companies that have cited the dollar as a negative factor this year run the gamut from Levi Strauss & Co. and International Business Machines Corp. to medical-technology company Hologic Inc.

At the same time, the dollar's strength has made investors more cautious on emerging markets, which in recent months have been hit by fears of slowing global growth stemming from the trade battle between China and the U.S.

A rising dollar makes it more expensive for developing countries to service their dollar-denominated debt, pressuring those that have borrowed heavily in the U.S. currency. 

The outstanding dollar-denominated debt of emerging-market companies and governments stood at $6.4 trillion at the end of the first quarter, compared with $2.7 trillion a decade ago, according to the Institute of International Finance.

Prices of commodities, which have been buffeted by growth fears and the trade-war escalation, also have been hurt by the strengthening dollar. 

Oil, copper and most other raw materials are denominated in dollars and become more expensive to foreign buyers when the U.S. currency appreciates.

The strong dollar does benefit U.S. companies that import goods from abroad by increasing their buying power. It also, in theory, helps U.S. consumers buying foreign goods. American tourists also will see their money go further abroad.

The dollar's strength also has been a boon to countries trying to boost growth because it makes their own currencies cheaper. That has drawn the ire of President Trump and heightened speculation that the Treasury Department may try to weaken the dollar through intervention in currency markets, a tactic that hasn't been attempted by the U.S. since 2000.

Mr. Trump and his economic advisers discussed a proposal to intervene in foreign-currency markets to weaken the dollar but ultimately decided against such an action, officials said last month.

IRS Introduces New Tax Withholding Estimator To Help Taxpayers Avoid Surprises In 2020

Kelly Phillips Erb, Senior Contributor

Remember all of the times that the Internal Revenue Service (IRS) reminded you to do a payroll checkup? And remember that you didn't? The IRS is hoping you'll reconsider this year. The agency has launched a new Tax Withholding Estimator that they hope will make it easier for everyone to figure the right amount of tax withheld during the year.

Why the need for a checkup? Under the Tax Cuts and Jobs Act (TCJA), many individual taxpayers experienced significant changes. Those changes included new tax rates, limits on the deductions for state and local taxes (SALT taxes), a cap on the amount that you can borrow for purposes of the home mortgage interest, and exclusions for certain kinds of job-related expenses (like the home office deduction).

With the first official tax season following the TCJA now in the books, the IRS has been exploring ways to help taxpayers have a better tax year in 2020. That includes replacing the old Withholding Calculator with the new Tax Withholding Estimator.

"The new estimator takes a new approach and makes it easier for taxpayers to review their withholding," said IRS Commissioner Chuck Rettig. "This is part of an ongoing effort by the IRS to improve quality services as we continue to pursue modernization and enhancements of our taxpayer relationships."

One of the criticisms of the old Withholding Calculator was that it didn't work well for all taxpayers; it tended to benefit single-wage earners who were also W-2 employees. Now, the IRS says that the new Tax Withholding Estimator offers workers, as well as retirees and self-employed individuals, a more user-friendly tool to figure the amount of income tax they must have withheld from wages and pension payments.

You can find the Tax Withholding Estimator on the IRS website here. To get started, you'll need to be able to estimate your 2019 income, the number of children you will claim for the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC), and other items that will affect your 2019 taxes like itemized deduction amounts. You'll also want to have your most recent pay stubs and a copy of your last year's form 1040 handy.

The Tax Withholding Estimator is more user-friendly than its predecessor. Here's what the opening screen looks like:

You'll begin by entering information about you, including your dependents:

You'll next input information about your income. Unlike the last calculator, the new Tax Withholding Estimator gives you more options related to the kinds of income you might receive, like these:

Along the way, the tool uses plain language, asking taxpayers questions like:

Deductions reduce the amount of your income subject to income tax. Most taxpayers take the standard deduction. Would you like to take the standard deduction or itemize your deductions?

If you itemize, you can estimate the value of those deductions:

The Tax Withholding Estimator also allows you to go back and fix your errors without starting over - and skip questions that don't apply (that's a big change from before).

Remember that the results are only as good as the information you provide. And if your circumstances change during the year (say, for example, that you get a new job, buy a new house or have a baby), you'll want to revisit the Tax Withholding Estimator to make sure that your withholding is still correct.

If you are an employee, the Tax Withholding Estimator can help you determine whether you need to give your employer a new form W-4, Employee's Withholding Allowance Certificate (downloads as a PDF). You can use your results to help fill out the form and adjust your income tax withholding. For more information about form W-4, click here. If you receive pension income, you can use the results to complete a form W-4P (downloads as a PDF).

One more thing: if you're worried about privacy, the Tax Withholding Estimator will not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address or bank account numbers. Additionally, the IRS says that it does not save or record the information you enter on the Tax Withholding Estimator.


"Just when the caterpillar thought the world was ending, 
he turned into a butterfly. "


Alexander Financial Planning, Inc. | |