Supply Chain Issues

In this video, Ashley Page lays out the 5 major supply chain issues that are not related to China, that need solving surrounding the COVID-19 pandemic.

 

Ashley Page, JD, MBA

Senior Vice President

Wealth Consultant

Email Ashley Page here

 

Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Economic forecasts set forth in this presentation may not develop as predicted.

No strategy can ensure success or protect against a loss.

Stock investing involves risk including potential loss of principal.

Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.

The post 5 Major Supply Chain Issues appeared first on Fi Plan Partners.

The post 5 Major Supply Chain Issues appeared first on Fi Plan Partners.

 

New Data

New rounds of testing have found that the infection rate is 10-50 times higher than the original estimates. That sounds terrible, but it means the denominator for figuring out the death rate was potentially a lot larger than initially suspected when it came to the Coronavirus. Instead of the original death rate, estimates of around 0.8%-3%, scientists are now suggesting the death rate is more like 0.1%-0.15%. In addition to that, investor sentiment is getting more information and it shows us where the vulnerable slices of the population are. Initially, studies showed that people under age 25 are least negatively impacted while the most heavily impacted are the elderly and people with obesity, diabetes, heart disease, and lung problems. It’s terrible than anyone is gravely injured or dead from exposure to the disease, but public health officials and politicians are starting to determine that there is probably a better way to deal with the pandemic than a broad lockdown of every citizen. The reason we share that information with you is that going forward, as we get into this week, we are going to start looking at economic data as well as data on the Coronavirus. There’ll be a major debate going on, which is going to put emotion into the market.

Unknown vs. Known

In the past two weeks, the market has been trending up on things that are unknown. The “unknown” has been that there’s a possible drug or vaccine for the virus and the talk of Americans possibly going back to work, which we hope is sooner rather than later. What we’re seeing in the market is that the market has been ignoring the things that are considered “known”, which have been negative. Last week, retail sales fell 8.7% which is its worst reading on record. Keep in mind that 68% of our economy is made up of consumer spending. In the past three weeks, we’ve seen 22 million Americans file for jobless claims. That puts the unemployment rate close to 20%. We also saw manufacturing fall 6.3%, which is the worst since 1946. We believe the market is going to be tested again this week when the earnings reports come out along with more economic reports. Jobless claims report comes out again on Thursday where we are wondering if we will see another 5 million Americans file for unemployment. We expect housing reports to be weak on this week’s report and Friday, the consumer confidence rating will be released. With all that being said, there’s a lot for the market to digest this week. Will we see good news on the virus and the markets trade up again, or is the market going to look more towards the negative economic reports and go down? 

Overall Look at 2020

Looking at 2020 overall, our current research shows that the S&P 500, the largest publicly traded companies in the U.S., has projected total earnings for the year to be around $139. If you multiply that by 18, which is a fair multiple, that gives an estimated value of around 2500. Currently, the market’s trading above 2800. It’s fair to say that $139 is optimistic and suggests that the fourth-quarter earnings will come in strong. Currently, the market is overpriced but we would say that 2500 is a relatively optimistic, fair value. When you see those prices and see the S&P 500 move, we think there is a lot of optimism built-in and is something we’re going to watch closely. The fundamentals of the earnings can impact the price and the value of investors’ portfolios overall. As earnings come in low, they’re going to reprice to what the fair value is. We like to be optimistic but at the same time, we must be realistic. We look at what the data says and where we see earnings going because that determines prices.

Saving Jobs

We went through $350 billion worth of PPP loans in three short three which exhausted the first round of available funds. However, it proved to be a very intelligent move to use the SBA to execute the loans. Everythin[...]

The 500

Often when you hear people talk about the market, they’re talking about the S&P 500. The S&P 500 is a representation of the 500 largest publicly-traded companies in the United States. When you hear that the market or the S&P 500 is down 200 points or down a percentage, that doesn’t necessarily mean that your personal portfolio, specifically, is down. We use the S&P because it is a very broad index. It doesn’t necessarily represent what each individual person owns. It represents a broad basket of 500 large companies, which likely represents what an individual owns and is weighted based on the size of the companies. The larger the company, the more impact it has on each price movement overall. While the market may be down 4 or 5%, a lot of the companies within the S&P 500 may not be down at all. It’s that the large companies were down and so each individual is impacted in some way by each of their holdings.

The Market

The reason we must use a market is because we have to have some type of base indicator to see what, on average, has happened each day. Outside of that, each individual case can be discussed one by one, person by person. We use an average as a way to tell where we might stand relative to history. It’s not really where we stand for you and your portfolios, it’s where the general population stands. It’s a good indication across the board where money may be moving. The stock market is really just a weighing machine. Are there more sellers one day than buyers and at what level have buyers or sellers come in to push prices lower or higher? That part is what’s really important. What we’re watching for is if there more buyers at these levels. If there are more buyers, then prices will naturally go up. It’s supply and demand. We use the S&P 500 because it’s such a broad indication of large companies in the United States that we feel like are a good indicator of sentiment by investors. Investors vote every day with how they put their dollars to work. Those price levels where buyers come in tell where investors are voting with their dollars and saying that they think that area is a point where they’re willing to put money in and push prices higher. That, in turn, helps raise the market and the portfolio value of our customers and investors across the board.

 

Trey Booth, CFA®, AIF®

Senior Vice President

Wealth Consultant

Email Trey Booth here

 

Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Economic forecasts set forth in this presentation may not develop as predicted.

No strategy can ensure success or protect against a loss.

Stock investing involves risk including potential loss of principal.

Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.

The post What Is The Stock Market? appeared first on Fi Plan Partners.

The post What Is The Stock Market? appeared first on Fi Plan Partners.

 

The Checklist

In the past few weeks, the market has traded up on the news that the virus cases are starting to peak. We think the true test is going to start this week and continue into the next couple of weeks as the market tries to digest the first-quarter earnings reports. We look at a couple of things along with the earnings reports. We look to see if companies are having solvency issues and if they are having supply chain interruptions. Are they having layoffs that there’ll be talking about and how strong are their dividends? Company guidance and company outlooks will be crucial here in the next two to three weeks. We’re also looking at economic reports. We’ve already seen 17 million people lose their jobs over the past few weeks. If this continues, we’re trending to have an unemployment rate above 15%. Auto sales declined 35% and consumer confidence is down 10% month over month. This week our attention will be paid close to retail sales. We expect that number to come down lower than it was in the last report. We’ll also be getting the credit card charge off the report. Are people having a hard time paying off their bills for what’s happening with this virus event? This report will show that. Earnings drive stock prices and so we’ll be watching that carefully this week as first-quarter earnings season kicks into gear. People must have confidence that we’re moving forward, that we’re getting back to the future in the right way. What does that future look like? We’re starting to get data and information and plans from the government and the health authorities and others as to how they think this will roll out and how we will gradually open up doors as well as trying to prevent all of us have to go back to social distancing later in the year. So, we’re taking all these variables in. That’s kind of the checklist we’re looking at in order to get back to the future.

SBA Loan Process

When you combine all this stimulus package, it adds up to about a 10% GDP push. Last week what was good about it on the SBA side was that small loss administration loans started getting approved and started to speed up. On Good Friday, about half of the 334 billion loans submitted, about 168 billion of them were approved. The approval process going very well. A lot of people visited the E-Tran portal on the SBA website to start their process. They all kind of hit early in the week all at one time, which caused a little bit of issue with there, but they got the kinks out and have been moving ever since. The banks also had a little bit of clarification problem on what the promissory note should look like between the borrower and the bank early in the week, but midweek that started to smooth out and we started to see actual money get in companies’ hands. If you go to our website at this very moment, www.fiplanpartners.com, and click on the headlining banner for COVID-19 that’s up at the very top, you will see vlogs that Ashley, Jay McGowan, and others have done regarding opportunities for business owners, small businesses, unemployment, the CARES Act, and more to keep you educated and up to date.

A Meaningful Shift

We’ve seen the national average for gasoline drop to $1.88 per gallon. We want people to stay home, but if you must get out for essential reasons, gas is much cheaper. This is a meaningful shift in the consumer world. The price drop in oil is unique because it’s a demand shock. Historically speaking, what happens is when OPEC gets together, they agree upon a production number and trying to control the supply. Due to the recent crisis, demand is where the drop is coming from and that’s something that they have less control over. Over the weekend, OPEC, U.S. producers, and Russia came to an agreement to cut production by 9.7 million barrels a day which is a historic cut. They have never come anywhere close to agreeing to cut that much.[...]

Coronavirus-Related Distributions

Coronavirus-Related Distributions are distributions of up to $100,000, made from IRAs, employer-sponsored retirement plans, or a combination both, which are made in 2020 by an individual who has been impacted by the Coronavirus because they:

Have been diagnosed with COVID-19;

Have a spouse or dependent who has been diagnosed with COVID-19;

Experience adverse financial consequences as a result of being quarantined, furloughed, being laid off, or having work hours reduced because of the disease;

Are unable to work because they lack childcare as a result of the disease;

Own a business that has closed or operate under reduced hours because of the disease; or

Meet some other reason that the IRS decides to say it is okay.

It seems clear that the intent of Congress was to make this provision broadly available and the general consensus is that the IRS will also take this view.

There are a number of potential tax benefits associated with Coronavirus-Related Distributions. More specifically, these include:

Exempt From the 10% Penalty – Individuals under the age of 59 ½ may access retirement funds without the normal penalty that would otherwise apply.

Not Subject to Mandatory Withholding Requirements – Typically, eligible rollover distributions from employer-sponsored retirement plans are subject to mandatory Federal withholding of at least 20%, however, they are exempt from this requirement.

Eligible to be Repaid Over 3 Years– Beginning on the day after an individual receives a Coronavirus-Related Distribution, they have up to three years to roll all or any portion of the distribution back into a retirement account. Repayments can be made via a single rollover, or multiple partial rollovers made during the three-year period.

Income May Be Spread Over 3 Years – By default, the income from a Coronavirus-Related Distribution is split evenly over 2020, 2021, and 2022. A taxpayer can, however, elect to include all of the income from a Coronavirus-Related Distribution in their 2020 income. It may be beneficial if income is down this year.

Enhancements To Loans From Employer-Sponsored Retirement Plans

Many employer-sponsored retirement plans, such as 401(k)s and 403(b)s, offer participants the option of taking a loan of a portion of their retirement assets. 

The CARES Act enhances plan loan rules in the following three ways:

Maximum Loan Amount is Increased to $100,000 – In general, the maximum amount that may be borrowed from an employer plan is $50,000. The CARES Act doubles this amount to $100,000 for affected individuals.

100% of the Vested Balance May Be Used – In general, once an individual has a vested plan balance that exceeds $20,000, they are only eligible to take a loan of up to 50% of that amount (up to the normal maximum of $50,000). The CARES Act amends this rule for affected individuals, allowing them to take a loan equal to 100% of their vested plan balance up to the $100,000 maximum amount.

 Delay of Payments – Any payments that would otherwise be owed on the plan loan from the date of enactment through the end of 2020 may be delayed for up to one year.

Required Minimum Distributions Are Waived In 2020

Section 2203 of the CARES Act amends IRC Section 401(a)(9) to suspend Required Minimum Distributions (RMDs) during 2020.

This applies to Traditional IRAs, SEP IRAs, and SIMPLE IRAs, as well as 401(k), 403(b), and Governmental 457(b) plans. Furthermore, the relief applies to both retirement account owners, themselves, as well as to beneficiaries taking stretch distributions. In one somewhat surprising twist, the CARES Act not only eliminates RMDs for 2020 but any RMD that otherwise needed to be taken in 2020. More specifically, individuals who turned 70 ½ in 2019, but did not take their first RMD in 2019 (and thus, would have normally been required to take such distribution by April 1st, 2020, as well as a second RMD for 2020 by the end of 2020) do not have to take either their 2019[...]

 

A Message To The Class of 2020

In this 18-minute video, Greg Powell of Fi Plan Partners gives a powerful speech to those graduating during these historic times.

Watch to learn how to navigate through this job market and how to make yourself stand out.

 

Greg Powell, CIMA®

President and CEO

Wealth Consultant

Email Greg Powell here

 

Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Economic forecasts set forth in this presentation may not develop as predicted.

No strategy can ensure success or protect against a loss.

Stock investing involves risk including potential loss of principal.

Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.

The post Graduate Uncertainty – A Message To The Class Of 2020 appeared first on Fi Plan Partners.

The post Graduate Uncertainty – A Message To The Class Of 2020 appeared first on Fi Plan Partners.

Building a Consistent Base

During this crisis and market downturn, we are watching the S&P 500 very closely to see where buyers are coming in to add support. The market is looking for the floor and then looking to build a wall and a ceiling around it. We are watching very closely for that 2344 market on the S&P 500. That was the low back in 2018-2019. We briefly crossed below that this year, but we bounced back above it. If we can put that in as a floor and not cross back below that level of 2344, that can create a very strong area for us to start to build and rally to get us through this. The only downside of that is that 2650 is a ceiling number that we have been watching for, but it hasn’t been able to get above that during this crisis. If we can build a floor, then maybe the next layer will be crossing that ceiling. We’re currently at around 2590 on the S&P500 so we’re closer to the ceiling than the floor. Building a consistent base gives the market the strength to power through and move higher. It’s very important, from a technical standpoint, to build a strong base so that these wild swings of 5% one day and 4% the other, start to get calmer and we can have a more rational market. In these kinds of market environments where we’ve had so much uncertainty, people are looking for what can give them confidence and information to show which direction this market may head next. In these types of situations, some things rely on fundamental analysis, which looks at corporate earnings as well as how a company’s being managed. Fundamentally, a lot of that is a guesstimate so people are really relying on some of the technical analysis to see where the confidence starts to come in. These levels are an indication of what people think will happen in the future. If you think things are going to get better, the market will create a floor and will start to rally. The fundamentals will soon follow after that. Times like these where the fundamentals are changing so much, you really have to look at the market and certain price levels to tell you what the general participant in the market thinks. That’s what’s very important. We don’t know what news is going to come out in the upcoming weeks. It could be positive about the mask, healthcare issues, a test for a new drug. Those kinds of things could turn the confidence level of the market fairly quickly.

Market Watch

We’re talking about the energy sector this week because back in the 2008-2009 recession, the energy stocks came back up before the S&P 500 did. There’s some historical relevance for the energy sector stabilizing. Last week oil markets rallied 37% for its best weekly gain ever after President Trump said that the Saudis and Russians agreed to cut oil production by 15 million barrels. The energy sector has been under a lot of pressure and kind of had a double whammy of demand, shock, and a supply surge. The same week it had its best rally, it had his first significant bankruptcy announcement. It’s important because the energy sector has over 6.7 million American employees, which is 5% of the overall employment numbers. It’ll be good to see the energy sector stabilize. Having said that, over the weekend, tensions flared up with the Saudis and Russians so the production meeting has been pushed back but we will continue to watch that as it evolves. We are looking at what sectors will react favorably coming out of this downturn. The overall market will respond first before the overall economy does. A lot of times in the discussions people will blend market and economy together and the reality of it is, is that the markets will always lead when we are starting to go into recovery. There are sectors right now, much to everybody’s amazement, that are actually making money. The market typically starts to bottom 3-6 months before a financial crisis ends. What happens is, the market starts pricing at [...]

 

What did the Fed learn from the 2008 Financial Crisis that they are applying now for our benefit and COVID-19? We were very interested to see so we did some research. Did the federal reserve learn and improve? The answer is yes. There are 4 ways that the Federal Reserve is reacting to COVID-19 better than they did the Financial Crisis of 2008. Here are the 4 ways we see that they have made a difference:

 

They’re reacting faster. In the Financial Crisis, it was unknown what sort of inflationary impact it might have since it was such an unusual event. The Fed was learning as they went along with the rest of us, so there was a little bit of a delay in their response. With the Coronavirus, it’s a health-related pandemic but their response has been immediate.

The Feds response has been broader. During the Financial Crisis, they aimed at just the subprime mortgage issue, but it has been much broader this go around.

This time they have made it clear how important it is to keep people employed. That was not the case after 2008 and it took quite a while, almost 10 years, for the unemployment rate to get back to a low, normal rate. Looking at everything that the Treasury and the Fed are doing, it’s mainly aimed at employment which was not the case in 2008.

Quantitative Easing became a thing after 2008 and proved to work very well. This time, the Fed is using it on a much boarder spectrum.

 

In summary, the Fed is moving faster and more broadly. They’re making quantitative easing much broader and the most important thing is that they’re really aiming hard at keeping people employed through the SBA and the CARES Act. Those are the four ways that they have improved on that is being used to our benefit. There’s a saying that experience goes a long way and we are seeing that to be true with the Fed and how they are handling the pandemic today.

 

Ashley Page, JD, MBA

Senior Vice President

Wealth Consultant

Email Ashley Page here

 

Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Economic forecasts set forth in this presentation may not develop as predicted.

No strategy can ensure success or protect against a loss.

Stock investing involves risk including potential loss of principal.

Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.

The post Lessons Learned From The 2008 Financial Crisis appeared first on Fi Plan Partners.

The post Lessons Learned From The 2008 Financial Crisis appeared first on Fi Plan Partners.

The CARES Act for Individuals

In this video, Jay McGowan, Director of Financial Planning at Fi Plan Partners, goes over some essential information from the Coronavirus, Aid, Relief, and Economic Security Act and talks about how it affects individuals. Watch the video to learn about everything you see here plus much more! 

Cash Payments:

$1,200 to individuals earning less than $75,000, phases out at $99,000

$2,400 for married filing joint earning less than $150,000, phases out at $198,000

$500 per dependent child

Extra Unemployment:

Bill adds $600 per week from the Federal Government on to of the base amount the unemployed worked receives from their state

Boosted payments will last for 4 months

Adds 13 weeks of unemployment insurance – People currently nearing max will receive an extension and new filers receive a benefit for a longer period

Self-employed, freelancers and contractors typically can’t apply for unemployment, but can through the end of the year

Tax Returns:

Filing and payment deadlines for federal tax returns extended to July 15th

Student Loans:

Employers can provide up to $5,250 in tax-free student loan repayment benefits to employees. The employer can repay loans for employee and it’s not included as income to the employee.

All loan and interest payments can be deferred through September 30th, without penalty to the borrower, for all federal student loans

Borrowers who have defaulted on their federal student loans will get a temporary reprieve from having their wages, Social Security benefits and tax refunds garnished by the federal government. This break will last for a minimum of 60 days, beginning March 13.

Charitable Donations:

Allows taxpayers to take an above-the-line tax deduction for charitable contributions of up to $300 for the tax year beginning in 2020.

the percentage and excess carryover restrictions on charitable and other “qualified contributions” (e.g. a contribution to a corporation, trust, a state, or an organization of war veterans, etc.) are disregarded (some exclusions).

Retirement Account Special Treatment:

10% early withdrawal penalty from qualified retirement accounts is waived for distributions of up to $100,000 if withdrawal from a retirement account is for a coronavirus-related distribution.

“coronavirus-related distribution” is defined as a distribution made to an individual:

(1) who is diagnosed with COVID-19,

(2) whose spouse or dependent is diagnosed with COVID-19, or

(3) who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, having work hours reduced, being unable to work due to lack of child care due to COVID-19, closing or reducing hours of a business owned or operated by the individual due to COVID-19, or other factors as determined by the Treasury Secretary.

the time period in which to pay the income tax attributable to a coronavirus related distribution is extended to allow for payments of this tax over three years. Taxpayers may re-contribute the funds withdrawn for a coronavirus-related distribution within three years without regard to that year’s cap on contributions

Retirement plan loan limitations increased to the lesser of $100,000 or 100% of participant’s vested account balance and delay the start of those loan payments for one year.

waives the required minimum distribution rules for certain defined contribution plans and IRAs for the calendar year 2020.

Disaster Relief Payments:

An employer may make “qualified disaster relief payments” to employees that are tax-free to the employee but deductible to the employer. These generally include any amount paid to or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living or funeral expenses incurred as a result of a “qualified disaster” to the extent it is not covered by insurance or is otherwise reimbursable. It appears that shelter in place orders meet the definition of a qualified disaster. Payments made [...]

Everything You Need To Know About SBA Loans

On Saturday, March 21st, Alabama’s application was granted by the SBA to extend disaster loans to small businesses affected by COVID-19. As a result, businesses in Alabama are now eligible to apply for these disaster loans that can be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid due to the economic impacts of COVID-19. The SBA has approved a one-year deferment on the payments and the loans will bear interest at 3.75% (2.75% for non-profits) for a term of up to 30 years.

Here are the highlights:

– Loans are up to $2 million and will bear interest at 3.75% or 2.75% for non-profits

– If your business has business interruption insurance, the proceeds of that insurance would be subtracted from the eligible $2 million ceiling

– Loan terms can be up to 30 years. However, the law restricts businesses with credit elsewhere to a 7-year term

To file you will need:

– 3 years of the most recent federal income tax returns

– An interim profit and loss statement

– A current schedule of liabilities

– For each owner having a 20% or more interest or a general partner, a personal financial statement within 90 days of the loan application

– The borrower will need to offer collateral if available

– The borrower will need to show the sales level and net income of the business for a few months prior to the COVID-19 pandemic and what level looks like after the pandemic

– You can apply one of three ways: online, in-person at SBA disaster center or by U.S. Mail

Small business owners in all states may apply for an Economic Injury Disaster Loan Advance of up to $10,000. Funds will be made available within three days of a successful application. This loan advance will not have to be repaid.

Contact Fi Plan Partners for more information on how we can assist you in this process.

 

Jay McGowan, CFP®, CPA, PFS

Senior Vice President

Director of Financial Planning

Email Jay McGowan Here

 

Ashley Page, JD, MBA

Senior Vice President

Wealth Consultant

Email Ashley Page here

 

 

Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Economic forecasts set forth in this presentation may not develop as predicted.

No strategy can ensure success or protect against a loss.

Stock investing involves risk including potential loss of principal.

Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and a registered investment advisor.

The post SBA Loans & The Pandemic appeared first on Fi Plan Partners.

The post SBA Loans & The Pandemic appeared first on Fi Plan Partners.