Year-End Special Edition: 
A Look  Back at 2018
DECEMBER 31, 2018
In This Issue
The close of the year provides an opportunity for investors to step back and consider the wider financial landscape. This week, we're reviewing some key issues that defined 2018, as well as some factors that may influence financial markets in the coming year .
Year in Review

Wall Street began 2018 in rally mode, as enthusiasm for the 2017 Tax Cuts and Jobs Act spilled over into the New Year. Strong economic news encouraged investors, who put aside fears that rising inflation may lead to higher interest rates. What Wall Street did not see coming were the spring and summer trade disputes with China, Canada, Mexico, and the European Union. Fear of a global economic slowdown contributed to a sharp decline in stock prices in October. U.S. economic growth forecasts were tempered in November for 2019, with bull and bears engaged in a fierce tug-of-war as the year came to a close. [1]

Economic Growth

After expanding at a middling 2.2% pace in the first quarter, the Gross Domestic Product (GDP) rose 4.2% in Q2 and 3.4% in Q3. [2] The Federal Reserve Bank of Atlanta forecasted a 2.7% increase for Q4, which will be released on January 30, 2019 by the Bureau of Economic Analysis. [ 3][4] The Congressional Budget Office expects GDP growth in 2019 to slow to 2.4% "as growth in business investment and government purchases slows." [5]

Interest Rates

At the close of its September 2018 meeting, the Federal Reserve raised the federal funds rate to 2.25%, a full percentage point higher than it was a year earlier. Federal Reserve Chair Jerome Powell appeared to change his stance on monetary policy, saying interest rates were "just below" a neutral level. Previously, he indicated rates were a "long way" from neutral. [6]

Consumer Prices and Wage Growth

The number of future interest rate hikes by the Fed may largely depend on its reading of inflation. An uptick in consumer prices or an increase in wage growth may prompt the Fed to consider additional hikes in 2019. [7]

Trade Talk Progress

Tariffs were a highlight of 2018 news. On July 10, the Trump administration announced a list of tariffs on $200 billion in Chinese goods. [8] The escalating trade dispute between the U.S. and China is an enormous overhang on the financial markets. The continuing impasse may affect economic growth and push consumer prices higher.

2018 also was a year in which a major trade pact started to come together. The United States-Mexico-Canada Agreement (USMCA) was approved in principle in October. However, the agreement must be approved by Congress and the legislative bodies of Mexico and Canada before it can take effect. [9]

U.S. Dollar

Rising interest rates and robust domestic growth in 2018 lead to a strengthening of the U.S. dollar. A strong U.S. dollar can negatively affect profits of U.S.-based multinational companies, since it can make their products more expensive to overseas buyers. [ 10]   This will also be something to watch in the coming year.  

Real Estate

The trend of higher interest rates in 2018 was also felt in the real estate market. The average rate on a 30-year conventional home loan stood at 3.95% in January 2018. At year's end, it was hovering near 5% according to Freddie Mac. [11]

We hope you enjoyed this look back at 2018! Next week, we'll be back to covering the market numbers .

Blattel News
Dealing With Uncertainty
I hope that all of you had a wonderful holiday season. As many of you wind down from the whirlwind of holiday activity, you will notice that t here is volatility in the stock market. Below are a few timely quotes from some people you might recognize, as well as some thoughts we want to share with you.

"Price is what you pay; value is what you get. Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."
- Warren Buffet

Bob's Thoughts: Our managers are finding bargains for us as the fluctuations continue. We will benefit from these deals as time goes on.

"The only investor who shouldn't diversify are those who are right 100% of the time."
- Sir John Templeton

Bob's Thoughts: Diversity means looking in more than one place for value. Stocks, bonds and global diversity are important. Our portfolios are diversified.

"Never look back unless you are planning to go that way."
- Henry David Thoreau

Bob's Thoughts: The allure of hindsight investing is a trap that is easy to fall into. What could I have invested 5 years ago that would be worth more now than what I have today? While you are at it, what Super Bowl winners could you have bet on if you had only knew the future? Rather than look back, I believe we should be looking forward. By making the best choices now with the information that we have today, we will be putting ourselves in a position to be better off tomorrow.

It's possible that the stock market may continue this bumpy road and we are ready to help you navigate it. If you have any questions or concerns, please reach out out to us. We wish everyone a happy 2019 and appreciate your confidence in us! 

- Bob


January 21: Office Closed
Our office will be closed for MLK Day.
February 9, 2019: Client Breakfast Seminar: Tax Law Changes & You
Save the date! We have booked Dan Mioli, SEI Director of Planning, to talk to our clients about tax planning. We have already started taking early reservations, so click here to RSVP. Paper invitations will be mailed in January.

Tax Document Dates

For the 2018 tax year, the dates for printing and mailing recipient copies are as follows:
  • 1099-Rs (IRAs) available on:
    • SEI mail date: January 31
    • FCC mail date: January 31
  • 1099-Bs (non-Qualified) available on:
    • SEI mail date: February 15 &/or February 28
      • Will be produced & mailed in 2 batches; your mail date will depend on when SEI is able to process the information on the holdings within your account.
    • FCC mail date: February 15
Helpful phone numbers:
  • SEI - Call Us - 636-397-8303
  • First Clearing 1-800-727-0304
  • IRS help line 1-800-829-1040
If you or your tax preparer need us to help gather any information, please give us sufficient notice to fulfill your request. Please note that the new 2018 tax laws will mean a few new do's and don'ts, such as you don't need to report your advisory fees but you do need to report your Qualified Charitable Distribution amount. Check with your tax preparers to make sure you understand what is needed for your specific situation this year. Do not hesitate to call our office at 636-397-8303 with any questions.
Blattel & Associates does not provide tax advice.  Please consult with your tax advisor with regard to your personal situation.

"The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind."
T.T. Munger

Beef Stroganoff
Serves 4

  • 2 tablespoons olive oil
  • 10 ounces cremini mushrooms (sliced)
  • Kosher salt
  • Pepper
  • 1 pound lean beef sirloin (thinly sliced) 
  • 2 cloves garlic (finely chopped) 
  • 2 tablespoons Dijon mustard
  • ½ cup dry white wine 
  • 3½ cups low-sodium beef broth
  • 8 ounces fusilli pasta 
  • 3 tablespoons crème fraîche or sour cream
  1. On medium heat, heat 1 tablespoon olive oil in large skillet. 
  2. Stir in cremini mushrooms, season with salt and pepper, and cook until browned, 5 minutes. Move to bowl.
  3. Put the pan back on medium heat. Stir in 1 tablespoon olive oil, season thinly sliced lean beef sirloin with salt and pepper, and cook until no longer pink.
  4. Add garlic, cook 1 minute, and stir in Dijon mustard. 
  5. Put in dry white wine, cook. Scrape up any browned bits. 
  6. Mix in low-sodium beef broth. Bring to a simmer. 
  7. Mix in fusilli pasta and mushroom with juices. Bring to a simmer again. Stir often until the pasta is al dente, 14-18 minutes. 
  8. Mix in crème fraîche or sour cream. Season with salt and pepper.

Recipe adapted from Good Housekeeping [12]

To Itemize or Not to Itemize *

The passage of the Tax Cuts and Jobs Act (TCJA), slightly more than one year ago, changed the way you can itemize your deductions.
The act nearly doubled the standard deduction and altered several itemized deductions that you can claim on Schedule A, Itemized Deductions.
The changes in itemized deductions may make using the higher standard deduction more enticing if, in previous years, you itemized your deductions. You can only do one or the other: Use the standard deduction, or use itemized deductions.
The tax reform law made the following changes to itemized deductions that can be claimed on Schedule A for 2018.

The act suspends the limit on overall itemized deductions.
The act modifies deductions for state and local incomes and sales and property taxes. You may only deduct a total of $10,000 ($5,000 if you're married and filing separately) on those items. You may not deduct anything above that amount.
The act changes the amount you may deduct on your qualified home-loan balance. If you have a mortgage or a home equity loan, you may be able deduct the interest. If the mortgage or loan was obtained on or prior to December 15, 2017, you may deduct up to $1 million in qualifying debt.
If you obtained the loan after that date, you may only deduct interest on up to $750,000 in qualifying debt.
The cash contributions to charities rose from 50% to 60% of your adjusted gross income. If you're a big giver, you may be able to take advantage of this deduction by donating more this year .

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Tip adapted from[13]
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Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies. 

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.
The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Platinum Advisor Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

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