2019 Q2 In Review - Wagner Financial, Ventura, CA

Q2
2019
IN REVIEW

COMMENTARY
The U.S. economy is entering its 11th consecutive year of growth that began in July
2009, setting a new record for the length of an economic recovery and expansion.
Since World War II, the average expansion has lasted about five years, and the
previous record was the 10-year period that began in March 1991. Growth has
been accelerating over the past year-and-a-half, but as the economy heads into
record territory this month, there still lies uncertainty around global trade. This
has continued to dampen the benefits of fiscal support provided by the Tax Cuts
and Jobs Act of 2017 and may be discouraging productivity-enhancing capital
investment. We still believe self-interest is likely to bring the United States and
China back to the negotiating table, but until we see progress, trade tensions remain
the primary risk to the economy. We think the next several months are more likely to
lead to trade deals than an expansion of tariffs, as the election in 2020 approaches.
Consumer attitudes have been on an erratic journey of ups and downs since the
expansion began. Most often consumers tend to be confident about the future when
they are confident about the present. Consumer confidence generally moves in line
with economic variables such as interest rates, inflation and unemployment but
sometimes it diverges from them. The Conference Board’s Consumer Confidence
Index is a good example. After two consecutive months of economic improvement,
the index fell nearly 10 points in June to 121.5 from a revised 131.3 in May. That
was a sizeable move, hitting the lowest level since September 2017, and was in
contrast with the October 2018 reading of 137.9, which was the highest reading
since September 2000. What we have seen in the last few months is that consumer
attitude measures have been at high levels but are volatile, and that is expected
to continue for the near future given the current monetary and trade uncertainties.
According the Conference Board, “The escalation in trade and tariff tensions earlier
this month appears to have shaken consumers’ confidence. Although the index
remains at a high level, continued uncertainty could result in further volatility in
the index and, at some point, could even begin to diminish consumers’ confidence
in the expansion.” said Lynn Franco, Senior Director of Economic Indicators at The
Conference Board.
While trade-related tensions have had some impact on global growth, we believe the
repercussions have been small to date and that structural issues abroad have been
the main culprit in the global slowdown. Europe in particular still faces a variety of
political and economic challenges. The United Kingdom’s Brexit process, messy
from the start, continues to unravel; France is contending with the “yellow vest”
protests; Germany is battling weaker manufacturing; and Italy is struggling with the
difficult budget negotiations of an unsettled governing coalition. Trade concerns
also remain in play for Europe, with important trade discussions with the United
States on agriculture and autos still outstanding. These structural issues have
also impacted the monetary policy outlook, with the European Central Bank (ECB)
pushing back plans to raise rates and reduce the size of the ECB’s balance sheet.
TOTAL
RETURN
Q2
6%
4%
S&P 500 TOTAL RETURN
MSCI ACWI EX USA TOTAL RETURN
BARCLAYS US AGGREGATE TOTAL RETURN
3.47%
% Change
2%
0%
2.60%
0.78%
-2%
-4%
-6%
April 2019 May 2019 June 2019

ECONOMIC CHARTS & NOTES
2019
Q2
IN REVIEW
CONSUMER SENTIMENT The consumer sentiment reading was 100.0 in May,
the highest level since September 2018. Overall strength in consumer sentiment has
persisted despite negative global trade news. Retail sales increased for the third
straight month in May helping to ease fears of a sharp economic slowdown in Q2.
EMPLOYMENT The U.S. unemployment rate continued to trend lower in the
2nd quarter with the June reading at 3.7%. Nonfarm payrolls increased by 224K
in June well above expectations confirming strength in the job market.
3Mo Moving Avg Yr/Yr %
Consumer Sentiment
Unemployment Rate
NonFarm Payroll
6%
100
6%
350
3Mo Moving Avg Yr/Yr %
5%
4%
3%
95
90
85
80
75
Consumer Sentiment
Unemployment Rate %
5%
4%
3%
280
210
140
70
Monthly Employment Change
2%
Apr '17
Oct '17
Apr '18
Oct '18
Apr ' 19
70
2%
Apr '16
Oct '16
Apr '17
Oct '17
Apr ' 18
Oct '18
Apr '19
0
JOB OPENINGS & HIRES Both retail hires and job openings rebounded in April
following several months of declines. This shows that the economy continues to
grow as demand for workers remains healthy in a tight labor market.
CONSUMER PRICE INDEX (CPI) May's inflation reading of 1.8% marked
a decceleration from April's 2.0% CPI increase. Core CPI, excluding volatile food
and energy components, rose 2% and was held down by a sharp decline in
used car prices and auto insurance.
Retail Openings
Retail Hires
CPI Less Food/Energy
CPI All
1200
3.0
1000
2.5
Amount in Thousands
800
600
400
200
Y/Y %
2.0
1.5
1.0
0
Apr '18
Oct '18
Apr '19
0.5
Apr'16
Oct '16
Apr '17
Oct '17
Apr '18
Oct '18
Apr '19

ECONOMIC CHARTS & NOTES
WAGES & SALERIES Average hourly earnings, which measures how
much businesses pay for labor, increased 6 cents to $27.90 in June. This left
the annual increases in wages at 3.1%, the same pace as in May and slightly
below the market expectation of 3.2%.
CONSUMER SPENDING U.S. consumer spending increased moderately in
May as consumers boosted purchases of motor vehicles, and spent more on
hotel accomodations and restaurants. This was supported by a 2.3% rise in May
personal income that was on par with April's increase.
Earnings (Private) Y/Y % Change
Earnings Y/Y % Change
Consumption
Disposable Income
4.0
4.0
Quarterly Year-over-Year
3.5
3.0
2.5
2.0
1.5
Year-over-year
3.5
3.0
2.5
2.0
1.5
1.0
0.5
1.0
'09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
0.0
Apr '16
Oct '16
Apr '17
Oct '17
Apr '18
Oct '18
Apr '19
US LEADING INDEX The Leading Economic Index for May remained at
111.8, unchanged from April. In the last 6 months the index has increased at
a much slower rate (0.3%) than in the previous 6 months (2.2%) due in part to
lower manufacturing New Orders and higher unemployment claims.
Leading Index for the United States
GDP U.S. Real GDP expanded 3.1% in the first quarter of 2019. Second quarter
economic growth is expected to slow to 1.0 -1.5%. A downward revision in Q2
GDP estimates is being attributed to global economic developments and the
impact of the ongoing trade war on business sentiment and activity.
GDP
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.5%
-2.0%
-2.5%
-3.0%
'05 '06 '07
'08 '09
'10
'11
'12
'13
'14
'15
'16
'17
'18
'19
% Growth
5%
4%
3%
2%
1%
0%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015
2016
2017
2018 2019

DON’T OVERREACT TO A YIELD CURVE INVERSION
2019
Q2
IN REVIEW
MARKETS HAVE CONTINUED TO RALLY AFTER PREVIOUS YIELD CURVE INVERSIONS
Two-year/10-year spread
MARKETS HAVE CONTINUED TO RALLY AFTER PREVIOUS
YEILD CURVE INVERSIONS
3.0
2.0
Recession
An inverted yield curve does not cause a recession, but is just another
sign of a late economic cycle. So instead of using it as a reason to panic,
investors should think of it as a gentle reminder to check that their
portfolios are well diversified and their core bond holdings limit excess
risk. During a late cycle it is especially critical to determine if the type of
bonds within one’s portfolio are providing diversification from equities
and the right level of balance.
1.0
0.0
–1.0
S&P 500
total return
3,200
1,600
+41%
return after
inversion
+43%
return after
inversion
+29%
return after
inversion
800
SOURCES: National Bureau of Economic Research, Standard & Poor’s, Thomson Reuters. As
of 5/31/19. S&P 500 chart shown on a logarithmic scale. Returns after inversion are the total
return from inversion until the S&P 500 pre-recession peak during each cycle.
400
200
1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018
CLOSING COMMENTS
The Federal Reserve has made it clear it will cut short-term rates if the economy falters or if inflation stays low. We think cutting short-term rates is unnecessary,
but we have to factor-in what the Fed is likely to do, not what it should do. We believe growth will remain positive over the remainder of 2019 and into 2020 but with
a guarded outlook. With labor markets robust and household balance sheets strong, the risk of a significant downturn is relatively small. Looking forward, we will be
especially focused on the economic data as it is reported along with the direction of business and consumer confidence. Understanding the noise from the trade
dispute, which is creating the greatest risk and threat to the outlook, will be critical.
The current strength of the economy will be balanced against trade tensions that pose a clear threat to the future expansion of the economy. With that being said, all
of us at Wagner Financial continue to feel confident about our current investment themes and positioning across all risk profiles. Please feel free to reach out to us
with any questions or concerns, we appreciate the opportunity to serve you and look forward to our Q3 In Review update.
Warm Regards,
Stephen H. Wagner, CFP ®
Chief Investment Officer
"We believe growth will remain positive over the remainder
of 2019 and into 2020 but with a guarded outlook."

INVESTMENT
MANAGEMENT
PHILOSOPHY
The complex, ever-changing investment world of today
requires an investment process that is overseen by a team
of experienced investment professionals. Global capital
markets present investors with a host of challenges due to
the combination of an overwhelming amount of information
to analyze and the endless supply of conflicting opinions and
narratives surrounding financial markets. The time and expertise
required to perform in-depth investment research and to make
timely and informed portfolio management decisions requires
both a clear investment process and an experienced investment
team to implement the process.
An old adage states that there is accomplishment through
many advisors. We agree and embrace a variety of investment
perspectives through our investment committee. Our investment
philosophy is well grounded in global macro-economic analysis.
Investment ideas are carefully vetted through a process which
incorporates the diverse range of investment backgrounds
within our firm. This process of multifaceted analysis ensures
that only the strongest investment ideas survive. We are
committed to striking the right balance between risk and
return through managing global, multi-asset class investment
portfolios.
INDEPENDENCE &
CLIENT FOCUS
DIVERSIFICATION
TOP-DOWN, THEMATIC
APPROACH
PERFORMANCE WITH
LIQUIDITY
VARIED INVESTMENT
PERSPECTIVES
OPTIMIZATION OF
EXPENSES AND TAXES
INVESTMENT COMMITTEE
The Investment Committee meets formally each quarter, and more frequently if market conditions warrant, to discus
portfolios. There’s an art to striking the right balance between risk and return, pursuing that symmetry is the core o
STEPHEN WAGNER
VICTORIA DERBY BREEN
MARTHA LAFF
ANDREW MURTHA
Investment Advisor,
CFP ® , CPFA
Investment Advisor &
Financial Planner
Investment Advisor,
ChFC ® , CLU ® , CRPC ®
Financial Analyst,
MBA
30+ Years Experience*
40+ Years Experience*
30+ Years Experience*
20+ Years Experience*
* Financial services experience. Investment Advisory Services are offered through investment advisor representatives of Integrity

ASSESSMENT OF
GLOBAL
ECONOMIC &
INVESTMENT
ENVIRONMENT
THE INVESTMENT PROCESS
ASSESS & ANALYZE
THEMES
RESEARCH
INVESTMENT
VEHICLES TO FIND
EFFECTIVE
IMPLEMENTATION
Q2 INVESTMENT
COMMITTEE
GUEST SPEAKERS
2019
Q2
IN REVIEW
Peter J. Sackmann CFA, Equity Market Review – Global equity portfolio
manager with a B.A. from Yale University and holds the Chartered Financial
Analyst designation.
IDENTIFY
OPPORTUNITIES
STRATEGIC ASSET
ALLOCATION -
Geographies, Sectors,
Capitalizations
INVESTMENT
SELECTION -
Open/Closed
End Funds, ETFs,
Stocks & Bonds
Justin Barnum, Fixed Income Market Review – Justin is a bond analyst
focused on multi-sector strategies. He has 12 years of investment experience
and holds an MBA from the Paul Merage School of Business at the University
of California, Irvine.
s the state of the global economy and capital markets and to assess the current asset allocation and positioning of our
f our investment philosophy. We are fiduciaries and have our interests aligned with our clients as we invest alongside them.​
THOUGHTFUL
INDEPENDENT
FIDUCIARIES
Wagner Financial has
MARGARET MARAPAO
Investment Advisor,
CFP ®
CHRISTOPHER WAGNER
Investment Advisor,
CPFA
LAINE DICKISON
Investment Advisor &
Financial Planner
been committed to helping
individuals, families, and
businesses grow, preserve, and
10+ Years Experience*
10+ Years Experience*
5+ Years Experience*
distribute wealth since 1987.
Wealth Advisors, a Federally Registered Investment Advisor.

THE IMPACT OF
SOUND FINANCIAL
PLANNING
Recent Vanguard research 1 shows that an experienced
wealth management team not only adds peace of mind,
but also may add about 3 percentage points of value in
net portfolio returns over time. What does this mean? Your
team has the ability and the time to evaluate your portfolio
investments, meet with you to discuss objectives, and
help get you through tough markets. All of these factored
together potentially add value to your net returns (returns
after taxes and fees) over time. But the most interesting part
of this research, is that it shows that financial planning and
financial coaching was the greater majority of the added net
3% in net portfolio returns.
It’s important to realize how valuable making sound financial
planning decisions are, and the value that is added by your
financial planning team. As investors, emotions can be our
own worst enemy, especially when the markets are volatile,
and guidance from a “behavioral coach” can save us from
panic selling and abandoning long-term financial plans.
Numerous studies demonstrate that advisors can have a
huge impact on investor finances, but it’s hard to say if these
findings have been recognized and understood by everyday
investors.
VICKI'S VIEW
It is a safe bet that retirement in the future
will cost significantly more than it does today.
Costs for everything from health care, to
utilities, to groceries are rising. In addition,
people are living longer, healthier lives.
Fortunately, many employers now offer
company-sponsored retirement savings plans
that provide employees with one solution to
the retirement problem.
According to financial experts, you’ll need
between 60% and 80% of your final working
year’s salary each year during retirement, plus
a cost of living increase. During my 40 years
of experience helping clients plan and save
for retirement I have found it important to add
a wish list component to the income targets.
With more time available during retirement it
is important to plan for the means to enjoy
it. Therefore, I suggest thinking of the 60% to
80% range as covering core expenses only.
Increase your income goal to include travel,
hobbies, and chosen leisure activities.
PLANNING FOR RETIREMENT COSTS
invest that money, choosing from your plan’s
different investment options.
With traditional plans, the money you
contribute to your account is deducted from
your pay before income taxes are taken out.
For example, if you earn $500 each paycheck
and you contribute 5% ($25), you are taxed
on only $475. You don’t owe income taxes
on your contributions or their earnings until
you withdraw them from the plan. Employers
may also offer a second type of plan: the
Roth 401(k) plan. With a Roth plan, your
contributions are after tax, but qualified
distributions are tax free. We can help you
determine your best option.
Another benefit of most retirement savings
plans is the employer match on part or all
of the contributions you make to the plan. If
your company offers matching, it’s like getting
bonus money on top of your salary. We always
encourage you to take full advantage of the
employer match.
To help in this
effort this is a
new section in our
quarterly review
to focus on the
financial planning
aspect of wealth
management.
Enjoy!
You determine how much money you want
deducted from your paycheck to be deposited
and invested in your plan. In 2019, the IRS
generally allows employees to contribute a
maximum of $19,000. You also decide how to
So contact your HR person to find out if you
employer sponsors a retirement plan and we
can help you determine the right type of plan,
how much to save, and what to invest in.

LAINE'S LEDGER
STARTING YOUNG LEADS TO SUCCESS
When you’re in your 20’s or 30’s, it’s easy
to think you have all kinds of time to get
your financial life together. You could
easily live another 50 or 60 years, right?
What difference will it make if you put off
investing for a while?
Unfortunately, waiting can make a world
of difference. Let's look at an example to
illustrate what you’ll miss out on if you wait:
Let’s say you invest $500 per month
starting at age 25 and don’t stop until
you’re 60-years-old. If you managed an 8
percent return during that time, you would
have more than $1 million dollars in that
account alone. Now let’s say you waited
until you were 35 to get started. By the time
you reached 60-years-old, you would only
have $475,513 in your account. Those first
ten years you missed out on would cost
you more than $625,000 in returns – even
though you only skipped $60,000 and ten
years of deposits!
This is the magic of compound interest, a
phenomenon Albert Einstein once lauded as
the eighth wonder of the world. Compound
interest is the type of interest you accrue
when the interest you earn on your savings
or investments begins to compound on
itself. So if you want to be financially
independent in the future, then start saving
and investing smart now. If you don’t, you’ll
miss out on gains you can never get back.
MARGARET'S
MESSAGE
EDUCATION PLANNING,
THE ONE-THIRD MODEL
For most people, planning to pay
for your child’s education expense is
a daunting task. Unfortunately, this will
likely be one of the largest expenses that
your family has and it requires planning
for. This likely comes as no surprise to you,
but the costs for both public and private
universities are continuing to rise, and
at faster rates than inflation. The total
average estimated cost of tuition, room
and board for a public college is $20,770
and for a private college it is $46,950. This
is according to the College Board’s pricing
trends for 2017-2018.
These numbers can be overwhelming
and discouraging so I want to suggest an
approach to help mitigate the stress of
education planning: the One-Third Model.
This model divides the cost of college into
three parts. Save one-third of expected
college costs. Pay one-third of college
costs from current income, financial aid, or
grants. Borrow one-third of college costs
through a combination of student and
parent loans.
With this plan in place it is easier to tackle
the first part: saving for college costs. The
most efficient college savings vehicle is
a 529 plan. A 529 Plan allows you to save
and invest money that can be withdrawn for
qualified education expenses, tax-free, when
your child is ready for college. So much like
retirement, the key is to start early so that
your savings have more time to grow. With
our help, you can determine the amount
that is right for your family to save and
alleviate the stress of your child’s education
expenses.

CHRIS'S CORNER
HAVE YOU HAD THE CALSAVERS
CONVERSATION YET?
What is CalSavers?
In 2016, Senate Bill 1234 was passed, requiring the state to develop a workplace
retirement savings program, known as CalSavers, for private sector workers whose
employers do not offer a retirement plan. State law protects employers from any
liability or fiduciary responsibilities to the plan.
Who is required to implement the CalSavers program?
Employers with five or more employees who do not provide a retirement plan for
their workers must register for CalSavers and facilitate employee contributions to
Individual Retirement Accounts.
How will the program work for my employees?
Employees can customize their account and choose alternative savings rates
and investments.
The default savings rate is 5% and an automatic increase feature that will
increase their contributions by 1% each year, until it reaches 8%.
Contributions to their account will occur automatically from each paycheck.
The first $1,000 of contributions will be invested into the CalSavers Money
Market Fund
Depending on their investment options, the fees will range from 0.825% to
0.92%. This means they will pay between 83 cents and 92 cents per year for
every $100 in their account.
An asset-based fee will be applied to their account to cover administrative
expenses and the operating expenses of the underlying investment funds.
Employees can opt out or back into the program at any time. If they leave their
job, they can take the money with them or leave it in the account.
How much work will be required of employers?
Employers are required to manage all employee census data and submit their
employee contributions each pay period. You will need to assign this ongoing
administrative task to someone in your organization and make sure they get
trained — or do it yourself.
When do employers have to register for the CalSavers program?
Employers can start the program as soon as July of 2019. However, the final
deadlines for employers to implement the program are as follows:
Size of Business Deadline
Over 100 employees ...............................June 30, 2020
Over 50 employees ................................June 30, 2021
5 or more employees ...............................June 30, 2022
How we can help?
We can help you make the best decision for your business
and your employees. Take the time to consider other available
retirement plan solutions that can provide your employees
with more benefits and value. Consider the following:
Employee contributions are limited with the CalSavers
program. It only allows a maximum contribution of $6,000
in 2019, compared to $19,000 for a 401(k) or $13,000 for a
SIMPLE IRA or SIMPLE 401(k).
The CalSavers program does not allow for employers to
make contributions on behalf of their employees. In a
competitive labor market, this limits your flexibility and
takes away your ability to offer an attractive retirement
plan benefit to employees you are trying to recruit.
The CalSavers managers will pick the investment options,
which may be different from what you and a financial
advisor might choose.
While there is no cost to employers for participating in the
CalSavers program, it does not offer the employer any tax
credits, which you can get by offering a 401(k) plan. For
example, starting a 401(k) plan currently allows employers
a $500 tax credit in each of the first 3 years.
Are you worried about the extra work and time commitment
necessary to sponsor a workplace retirement plan such as
a 401(k)? We can help you review retirement plan providers
who can provide very cost effective solutions that can help
minimize your administrative burdens and fiduciary risk.
CHRISTOPHER WAGNER
Certified Plan
Fiduciary Advisor

HUB OF SERVICES
Our team of experienced financial advisors and industry
professionals have the structural flexibility to help clients
plan their customized portfolio and financial life options
for a truly comprehensive wealth management
solution. We pride ourselves on simplifying complex
situations, transparency, accountability,
and maintaining a commitment to
your success.
BUSINESS PLANNING
• Employer Sponsored Retirement Plan
Recommendations and Analysis
• Business Valuations
• Succession Planning
• Buy-Sell Agreements and Funding
• Executive Compensation Planning
• Employee Retention Planning
INVESTMENT
MANAGEMENT
• Asset Allocation & Rebalancing
• Evaluating Portfolio Performance
• Risk Management and Assessment
• Portfolio Stress Testing
• Social Impact Investing
• Equity Valuation and Reports
PERSONAL
FINANCIAL PLANNING
ESTATE PLANNING
• Charitable Giving Strategies
• Trust Planning
• Trust Administration Services
• Ownership and Transfer of Property
• Generation Skipping Transfer Tax
Strategies
• Beneficiary and Guardianship
Planning
FAMILY SERVICES
• Planning for Marriage, Divorce, and Births
• Multi-Generational Goal Tracking
• Education and College Planning
• Risk Analysis and Planning
• Planning for Incapacity
• Cash Flow Analysis
• Retirement Income Planning
• Social Security Analysis
• Income Tax Planning
• Probability Of Success Anlaysis
• Account Aggregation Software
VISIT WAGNERFINANCIAL.COM FOR MORE
INFORMATION ON AVAILABLE SERVICES

196 S Fir Street, Suite 140, Ventura, CA 93001
www.wagnerfinancial.com | (805) 339-0760
Data / statistics cited are provided by the Federal Reserve Bank of St. Louis.
The S&P 500 Index or the Standard & Poor's 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The
S&P 500 is a float-weighted index, meaning company market capitalizations are adjusted by the number of shares available for public trading. Investors
cannot invest directly in an index. Note: Investors cannot invest directly in an index. These unmanaged indices do not reflect management fees and
transaction costs that are associated with most investments.
The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 Developed Markets (DM) countries* – excluding the United
States. With 1,012 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in each country.
The Barclays Capital U.S. Aggregate Bond Index is the most common index used to track the performance of investment grade bonds in the U.S.
Vanguard research study; Source: Francis M. Kinniry Jr., Colleen M. Jaconetti, Michael A. DiJoseph, and Yan Zilbering, 2014. Putting a value on your value:
Quantifying Vanguard Advisor’s Alpha. Valley Forge, Pa.: The Vanguard Group.
Wagner Financial, Inc. is a Registered Investment Adviser. This material is solely for informational purposes. Advisory services are only offered to clients
or prospective clients where Wagner Financial, Inc. and its representatives are properly licensed or exempt from licensure. Past performance is no
guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Wagner Financial, Inc. unless a
client service agreement is in place.