• AFP Open House – Our new office Open House will be held on Thursday, September 14th from 4:00 pm - 7:30 pm. There will be hors d'oeuvres, desserts, and 3 door prize drawings for attendees. We hope to see you!

• Travel Photos – We are making a slide show of travel photos to play during our Open House. If you have any photos you would like included, please submit them to Erik by 9/11/2023.

• Schwab Migration – The Charles Schwab migration will be taking place over Labor Day Weekend. You should not have to take any action during this process. You can access additional information about the migration at welcome.schwab.com/alliance.

• RMDs – In quarter 1, we mailed TD Ameritrade IRA Distribution forms to clients needing to complete their required minimum distribution (RMD) in 2023. RMDs must be completed by 12/31/2023. Please note that the TD Ameritrade forms previously provided will not be accepted after the TD Ameritrade accounts migrate to Charles Schwab & Co. Please call to request a Schwab Distribution form if completing your RMD after Labor Day. You may disregard if you have completed your 2023 RMD or have authorized fund transfer instructions to your bank account.

• AFP August Financial Friday Webinar – 'Financial Planning at Every Life Stage; What it Looks Like & Why it's Important' with Teri Alexander CFP®, MSFP, CeFT®, AIF® and Nathan Swab CFP®, AWMA®. We will discuss why it’s important to pull it all together and the differences between Goal Driven vs. Cash Flow financial planning. Would you like to attend? Let Erik know at [email protected]. Webinar links will only be sent next Friday morning to those who confirm their attendance ahead of time. If you know anyone who would like to attend or could benefit from this information, please pass along the webinar email to them.

• Upcoming Webinar –  In September, AFP will be hosting "The New Retirement" with guest speaker, Virginia Macali, JD, MS, founder of High Point Transitions.

Click below to read our August 2023 Blog edition.

5 Ways That Buying a Car Has Drastically Changed

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A ROUGH EARNINGS SEASON – Through August 2nd, the 946 stocks reporting results this earnings season averaged a one-day decline of 0.8%. The weakest earnings reactions have come from tech and communication services stocks, the two best performing sectors YTD. (source: Bespoke)

PRODUCTIVITY SURGE – US worker productivity surged 3.7% in Q2, the largest increase since Q2 2020. If sustainable, higher productivity should help curb the impact of higher wages. Unit Labor Costs also rose by just 1.6%, nearly a full percentage point below economist forecasts. (source: BLS)

SHELTER PRICES HEADED FOR BASEMENT – A primary factor keeping consumer price index (CPI) elevated recently has been the price of shelter, accounting for 30% of the overall index. Shelter inflation is set to slow, and maybe turn negative, by mid-2024; which would be the most severe contraction of shelter inflation since the Financial Crises of 2007 - 2009. (source: San Francisco Fed)

INTEREST IN HIGHER DEFICITS – Of the 14 countries rated AA or above by Fitch, the US has the highest estimated 2023 deficit as a percentage of GDP (6.5%) and the second highest interest expense as a percentage of revenues. Only the UK is higher (10%+) than the US (8%+) and the only other country over 4% is Canada. (source: Fitch)

BANKING HAS GONE DIGITAL – Digital banking has become the norm for middle-income Americans across all demographics. 91% of middle-income Americans have completed a digital transaction in the last month. Surprisingly Baby Boomers are just as likely as Millennials (91%) and more likely than Gen Z (88%) to complete a digital transaction. (source: Minneapolis Fed)

S&P 500 Top 10

As of last Friday’s market close, the top 10 stocks in the S&P 500 accounted for 90% of the index’s year-to-date gains. While market breath has been narrow and returns have been highly concentrated, the rally has broadened out relative to May, when the S&P 500’s 10 largest names accounted for all of the year-to-date gains. This decline in concentration can be attributed to surprisingly resilient economic data, which in turn has fueled better than expected profit growth and stock market performance. In fact, with the 2Q23 earnings season coming to a close, profits have surprised to the upside, with particular strength in the consumer sectors, construction, travel, and streaming/gaming. The top 10 stocks currently account for over 30% of the index, which is down from the peak levels we saw in April/May but still extremely high relative to the last 25 years. Importantly, the earnings contribution of these top 10 stocks is sitting near its pre-COVID level, but well below the pandemic era highs. Despite this misalignment in weights and earnings, the VIX has remained at historically low levels, which has been aided by the market becoming increasingly confident in a soft landing. Whether this performance is sustainable hinges on inflation. 

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Next Social Security Raise Expected To Be 3%

The recent slowdown in inflation points to a 2024 Social Security

cost-of-living adjustment, or COLA, of around 3%.

By Mark Miller

Source: The New York Times

More than 74 million Americans can expect a healthy inflation adjustment to their Social Security benefits next year — just not as large as this year’s historic 8.7% raise.

The recent slowdown in inflation points to a 2024 Social Security cost-of-living adjustment, or COLA, of around 3%, according to a forecast by the Senior Citizens League. That would still be higher than the average 2.6% adjustment over the past two decades, said Mary Johnson, a policy analyst for the league, a nonpartisan seniors’ organization.

“People need to be real — we just went through rates of inflation we haven’t seen in four decades,” she said. “A 3% COLA would be nothing to sneeze at.” Other estimates point to a possible raise of just over 3%.

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Credit Card, PayPal or Cash App?

How You Pay Matters

A guide to weighing security, convenience and benefits of each payment option.

By Imani Moise

Source: The Wall Street Journal

Buyers have more ways to pay for things than ever before: Apple Pay, Venmo, credit cards and dozens of other options. What you choose might matter as much as the purchase itself.

Each of the different payment methods provides various conveniences, perks and protections from fraud. Credit cards have long been the default option of choice. But higher interest rates have now raised the cost of carrying a credit-card balance.

Money-transfer apps such as Venmo and Zelle processed nearly $900 billion last year, and the Consumer Financial Protection Bureau expects that number to reach $1.6 trillion by 2027.

These apps and services provide easy instant payments, usually for free. The downside is that these options offer fewer protections from scams and unfulfilled orders.

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“August is the slow, gentle month that stretches out

the longest across the span of a year. It yawns and

lingers on with the light in its palms.”

- Victoria Erickson