Leveraging the News
Newsletter for Friends of Carlin Financial | Current Issue


Where's the Market?

Market Commentary: January 2019


Market Commentary from Ladenburg Thalmann Financial Services

Fourth Quarter 2018


2018 was expected to be a year of synchronized global growth and strong stock market returns but this did not come to fruition as headlines surrounding trade, a more hawkish Fed and specific country risks outweighed the positive economic data in the United States. Although there were a few economic data points that came in softer than prior readings (i.e. deceleration from Q2 to Q3 GDP growth), the data remains positive on an absolute basis. The labor market stands on solid footing with the unemployment rate at 3.7%, inflation (CPI) under control at 2.2%, and third quarter GDP growth up 3.4%. The Federal Reserve raised short term rates by 25 basis points four times in 2018 bringing the overall Fed Funds rate to a range of 2.25% to 2.5%. With concerns looming about global growth and the effect of fiscal stimulus such as tax reform fading, the Fed plans to take a more cautious approach in hiking rates with only two hikes forecasted in 2019. As global markets felt pain throughout most of 2018 and prices reset to close out the year, the economic landscape remains healthy and we would not be surprised to see some relief in diversified portfolios in the early parts of 2019.

Domestic Equities

U.S. stocks took investors on a roller coaster ride throughout 2018, closing the year with negative returns as the S&P 500 was down -4.38% year-to-date. Even more surprising, the 4th quarter of 2018 was one of the worst quarters for stocks since 2009 with the S&P 500 selling off sharply down -13.52%. Concerns of global growth, ongoing trade tension between the U.S. and China, fading fiscal stimulus and a hawkish Fed was enough to derail positive sentiment from strong Q3 earnings as companies within the S&P 500 posted earnings growth of 26% and sales growth of 8%. The Russell 2000 index and Russell Midcap index finished the year down -11.01% and -9.06% respectively. Although small sized companies experienced better performance than large sized companies through the first half of the year, this trend reversed due to the potential disproportionate negative impact on smaller companies from rising costs such as higher interest rates and wages. With strong economic data releases helping the bottom line of U.S. corporations, a more cautious Fed in 2019 and a reset in prices resulting in better valuations to end the year, we are still taking equity risk in our portfolios in the event fundamentals become the driving factor for stock market performance once again.

International Equities

International developed equities and emerging market equities returned -13.79% and -14.58% year to date, respectively, both lagging the S&P 500 by a wide margin despite the correction in U.S. stocks. Some of the major headwinds against equities, especially foreign equities, have been a stronger dollar, rising interest rates in the U.S., escalating trade tensions between the U.S. and China, looming political risks, and concerns over slowing global economic growth.

Global economic expansion became less synchronized as the year unfolded with activity moderating more than expected in some major economies. Among advanced economies, growth disappointed in the euro area and the United Kingdom, due to slower export growth and political uncertainty. Within emerging markets, energy exporters saw some improvement except for Argentina, Brazil, and Turkey due to country-specific factors, which soured investor sentiment. Some major emerging market economies, such as China and several Asian economies, have been tremendously challenged by the recently announced trade measures. Overall, while we acknowledge that the aforementioned headwinds could persist for an extended period of time and weigh on foreign equities, we believe a few negative forces could potentially be lifted in 2019 - the Federal Reserve may stop hiking rates after reaching the “neutral rate,” the U.S. dollar may stabilize or soften as the effects of fiscal stimulus wear off, the leaders from the two largest economies may make progress on trade deals, and the U.K. may see improved growth once the uncertainty surrounding Brexit dissipates. As a result, we believe that foreign equities have been oversold and are selling at a large discount, which may present buying opportunities.

Fixed Income

Fixed income sold off early in the year and never fully recovered, finishing only slightly positive despite a pickup in the fourth quarter as the market turned more defensive in the face of a severe stock market selloff. Following four Fed rate hikes, short-term rates increased to 2.48% while the 10-year U.S. Treasury yield ended the year at 2.68%, close to where it started the year despite reaching a high of 3.23% in November. As long term rates unexpectedly fell in the fourth quarter, the difference between long and short-term rates narrowed to as little as 0.10% during the year. When the two-year yield surpasses the 10-year yield, it has historically been a leading indicator of a recession in the next 12 months, but we do not expect this to happen in the near term. Monetary and fiscal policy imposed upside forces to interest rates, but natural economic forces such as demand for yield from both retirees and foreign investors from lower yielding countries, as well as a broad based flight to quality from risk assets helped to keep rates capped. We believe the projected path for interest rates remains slightly upward, but we anticipate fewer rate hikes in 2019 (as trade begins to impose a greater impact on economic growth and fiscal stimulus effects start to wane off.) Higher credit quality bonds outperformed low credit quality bonds, as investors sought security amidst the year-end selloff in risk assets. Heading into the next year, we believe fixed income securities will continue to benefit portfolios from a diversification perspective despite low returns.


Alternative asset classes were not immune to the market volatility which hurt global equities in 2018. Oil prices plunged into a bear market following concerns of global growth and the possibility of excess supply, with WTI crude ending the quarter at $45.41 per barrel, falling from $73.25 per barrel at the end of the third quarter. Though risk-reducing alternatives were unable to provide positive returns to end the year, they provided valuable downside protection during a quarter that saw investors fleeing risky assets due to fears of rising rates and geopolitical tensions, as the Morningstar Diversified Alternative index was down -4.14% on the quarter while the S&P 500 was down -13.52%. Hedge fund-like alternatives will continue to play a key role in downside protection and reducing volatility within a portfolio by maintaining low correlation to equity and fixed income markets as the economy potentially slows.

Real Estate

Real estate slowed in 2018 as rising interest rates and increasing construction prices slowed the housing recovery. Recent data has been positive with residential start ups 3.2% in November, led by the jump in multi-family home start ups 22.4%. Existing home sales in November grew 1.9% to 5.32 million. However, affordability issues continue be a concern. Due to the Fed raising interest rates four times this year, the average 30-year mortgage rate increased to 4.84% for the week ending December 28th, compared to 4.23% as of January 5th 2018. The NAHB index, an index that tracks homebuilder optimism and a leading indicator for the housing market, fell to 56 from 60 in December, the lowest level since 2015. Coupled with record high job openings in the construction industry and two more planned Fed rate hikes in 2019, affordability concerns will continue be an issue in the new year.


This year was a challenging environment for multi-asset class portfolios as most asset classes posted negative returns. Diversification simply did not work as global equities were down significantly and even bonds, the safest of assets by historical standards, were of little help. 2019 should be an interesting year as many of the risks that derailed markets in 2018, such as trade negotiations, tough decisions by the Fed, and global growth concerns remain in place; however, these headwinds appear to be largely priced in. As we look forward to 2019, we believe a recession is still not an issue but changing the portfolio as the economy potentially slows is critical to risk management.

Although this market outlook has been prepared from public and private sources and data that LTAM believes to be reliable, LTAM makes no representation as to its accuracy or completeness. Any securities, indices, and other financial benchmarks shown are provided for illustrative purposes only, and reflect reinvestment of income, dividends, and other earnings. They do not reflect the deduction of advisory fees. Indexes are unmanaged and investors cannot invest directly in an index. Investors should bear in mind that past performance is no guarantee of future results and there can be no assurance that the Program will achieve comparable results. Investment products are subject to investment risk, including possible loss of the principle amount invested and should review the prospectus before investing. The information and views expressed are given as at the date of the writing and are subject to change. This information is not to be used or considered as an offer or the solicitation of an offer to sell or buy any securities mentioned herein. Ladenburg Thalmann Asset Management Inc. is a registered investment advisor and subsidiary of Ladenburg Thalmann Financial Services Inc. which is traded on the NYSE American: LTS.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

Where's the Market?

With all the external events that move the markets, here is a peek behind the numbers to help you make sense of it.


Have You Heard?

Arizona Tax Credits for 2017

The state of Arizona offers its taxpayers the opportunity to make contributions to schools and non-profit organizations that reduce the amount of tax owed to the state or increase the amount of the taxpayer’s refund, dollar-for-dollar. There are three main communities tax credit donations serve, and donors can contribute to any or all of them. To learn more about each, read on.  This summation is for informational purposes only.  Be sure to check with your tax professional to verify whether any of these strategies are beneficial in your particular situation.

Qualifying Charitable Organizations

This individual income tax credit is available for contributions to Qualifying Charitable Organizations that provide assistance to residents of Arizona who either receive Temporary Assistance of Needy Families (TANF) benefits, are low-income residents of Arizona or are chronically ill or physically disabled children residing in Arizona.

Starting with the 2013 tax year, taxpayers no longer have to itemize deductions to claim a credit for contributions to a Qualifying Charitable Organization or Qualifying Foster Care Charitable Organization.

Maximum Credit for Any Tax Year

Single or head of household: 
$400 (Qualifying Charitable Organization)
+ $500 (Qualifying Foster Care Organization)
= $900 Total

Married filing jointly: 
$800 (Qualifying Charitable Organization) 
+ $1,000 (Qualifying Foster Care Organization) 
= $1,800 Total

Beginning in 2016, the qualifying charitable organization and qualifying foster care organization donations are no longer linked, so you can take both credits for a new maximum of $900 ($1,800 for married filing jointly).

Donation Deadline
April 17, 2018 (for 2017)

Credit/Deduction Distinctions
Any charitable contribution that is included in itemized deductions on your federal return must be removed from your Arizona itemized deductions if the contributions were claimed as an Arizona credit. Donations made to organizations not listed on the department’s published website are typically allowable as deductions. You cannot claim both a deduction and a credit for the same charitable contribution on your Arizona return.

NOTE TO DONOR: Many charities indicate on their websites if they are qualified for this credit. Annual reports are often available online as well so that you can see how the organization spends its money. If a charity’s website does not provide this information, you can call and ask for copy of its certification letter from the ADOR.


School Tax Credits 

There are three school tax credits available for individual taxpayers: one for contributions to public schools and two for contributions to Private School Tuition Organizations.

Public Schools

An individual may claim a credit for making contributions or paying fees to a public school for support of extracurricular activities or character education programs. These are school-sponsored activities that require enrolled students to pay a fee in order to participate. You are allowed to specify which programs you would like your contribution to support when making a donation.

Maximum Credit for Any Tax Year

Single or head of household: $200
Married filing jointly: $400

Donation Deadline
April 17, 2018 (for 2017)


Private School Tuition Organizations

The Original Individual Tax Credit Program allows Arizona taxpayers to make a contribution to a School Tuition Organization that will help to fund private school students’ tuition.

In 2012, the Overflow/PLUS/”Switcher” Individual Tax Credit Program was signed into law, allowing donors to claim an additional tax credit OVER AND ABOVE the Original. Donors must first meet the Original Program maximum in order to claim the Overflow tax credit. Overflow Tax Credit donation revenues may only be allocated to students that meet certain criteria as determined by Arizona state law.

Maximum Credit by Tax Year

Original Program
Single or head of household 2017: $546
Married filing jointly 2017: $1,092

Overflow/Plus/ Swicher Program
Single or head of household 2017: $543
Married filing jointly 2017: $1,085

Donation Deadline
April 17, 2018 (for 2017)

Information for Donors

What is a School Tuition Organization (STO)?
A school tuition organization is one that is tax exempt under Section 501(c)(3) of the Internal Revenue Code, allocates at least 90 percent of its annual contributions to scholarships or grants and makes its scholarships/grants available to students of more than one qualified school.

What is a qualified school?
A qualified school is a non-governmental preschool for disabled students, or a non-governmental primary or secondary school located in Arizona. The school cannot discriminate on the basis of race, color, disability, familial status or national origin. The primary school begins with kindergarten, and the secondary school ends with grade 12. Qualified schools must also require all teaching staff and personnel that have unsupervised contact with the students to be fingerprinted.


Military Family Relief Fund

This individual income tax credit is available for contributions to the Arizona Military Relief Fund, which was established by the Arizona Legislature in 2007 (Arizona statute 41-608.04) and is administered by the Arizona Department of Veterans’ Services (ADVS). The fund provides financial assistance to the families of currently deployed Service Members and post-9/11 Military and Veteran Families for hardships caused by the Service Member’s deployment to a combat zone.

Maximum Credit for Any Tax Year

Single or head of household: $200
Married filing jointly: $400

*Donations to the fund will only qualify for the credit if the total amount donated to the fund during the calendar year has not exceeded one million dollars. Donations made to the fund once the total donations for the calendar year reach one million dollars will not qualify for the credit. The determination of whether a donation will qualify for the credit is made on a first come, first served basis. The ADVS will provide you with a receipt that will let you know if your donation qualifies for the credit. The ADVS will also send a copy of that receipt to the Arizona Department of Revenue.

Donation Deadline
December 31

Additional Notes to Donors

There is no carry forward for this credit. You must claim and use this credit on the tax return filed for the taxable year for which you made your donation. This credit is available only to individuals and cannot be claimed as both a tax credit and an itemized deduction in the same taxable year. Before you claim this credit, you must have received a receipt from the ADVS showing all of the following:

  • Your full name and address
  • The last four digits of your social security number
  • The amount you donated
  • That your donation qualifies for the credit


This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

Have You Heard?

So many things—other than your investments—effect your finances. Discover some useful information here.


Something to Think About

Digital Estate Planning

Have you made plans or considered making plans for your electronic information and online accounts after you die? The term for this is “digital estate planning,” and for anyone who spends time online, it’s something that deserves serious thought. 

If you handle your household utility payments online, for example, how easy would it be for your family to figure out when the bills are due in the weeks after your death? If all notices for those accounts are sent to you via email, it’s something they may not consider right away and late fees--or even shut offs for non-payment--might occur. If you belong to an online community or have friends online, would anyone know to inform them of your death? Do you have any prepaid accounts or frequent flyer miles that will need to be transferred to someone else upon your death? Do you store photos and videos online and want your family to receive copies after you are gone?

Some online accounts can simply be closed or allowed to lapse, but other accounts might be important and, in the event of your death, it’s possible that you will have electronic documents or other information that need to be disseminated, deleted, archived, memorialized or even destroyed. Digital estate planning gives you time to consider these things ahead of time and put instructions in place so that your family or executor will know how to access critical information in the event of your death and handle your information or other online assets appropriately.

Keep in mind that, for some accounts, the terms of service you agreed to when the account was created will determine what happens to your information when you die. Your email account, for example, will be handled very differently depending on which company you have the account with. Apple will close your account and won’t share the contents with anyone, regardless of your wishes. With a Google Gmail account, you can choose to designate another person to handle your account after a set period of inactivity. Outlook will share all your information with anyone who can provide them with appropriate documentation. 

If it matters to you what happens to a particular account--and the information in it--after you are gone, it’s a good idea to find out what the terms of service are for that account and, if they are not in line with your wishes, consider changing providers now. 

Tips for digital estate planning:
  • First, make a list that includes each account, including login and password information. When making this list, don’t forget to include password protected files and documents. You will also want to list every device or computer that your information can be accessed from: phones, laptops, tablets, desktops, etc. Remember to include flash drives, compact discs, and other storage devices.

If you have a lot of online accounts and the idea of making a comprehensive list overwhelms you, just concentrate on the critical accounts--the utility payment accounts, the accounts with important documents, the paid subscriptions, and anything else that will require someone else’s attention. 

  • Decide how the information in each account should be handled, and who, if anyone, should be given access to it. 
  • Find a safe place to keep this information. You don’t want to make yourself vulnerable to identity theft or other types of cybercrime. 
  • Choose someone you trust to act as “Digital Executor” upon your death, and make sure he or she knows where to find this information when you die, even if you don’t make the information readily available to that person now (and for security’s sake, you shouldn’t). 
  • If you have any online assets with financial value, such as a monetized YouTube channel, an eBay store, or one of the myriad other income streams available on the internet, make sure to talk to your estate planning attorney to determine what, if anything, needs to be included in your will. 

Once you’ve made a digital estate plan, it’s a good idea to review it regularly--at least once a year--and make sure the information is current. You may also want to ensure that the terms of service haven’t changed in cases where it’s important to you how an account is handled after your death.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

Something to Think About

Take a look to see some innovative strategies for your nest egg.


Carlin Cares

Adopt-A-Family 2017

It has been my pleasure to be involved in some way with a mentoring program, Mentoring Tucson’s Kids, since arriving in Tucson. As a matter of fact, many of you have met my Partner, Meg, over the years (who by the way is now 36!!). Looking for a way to stay in the spirit of this magical season, I asked if there were a way that we could help them. Here is our opportunity.

A single mom has had her 4 sons involved with mentors since they were little. They are now all teens, doing well in school and college bound. In the past few months, their mom has developed a medical condition that has kept her out of work and there is no definite date as to when she’ll be able to return nor whether it will at her full capacity. So, the two older boys have taken over the management of the family. Jose has taken a leave from PCC and is working in a restaurant management program to support the family. Chris has postponed his entering PCC and is keeping the household going – cooking, cleaning, laundry and getting his younger brothers off to school and their activities. They are quite a tight family, and everyone is pitching in.

When I asked Chris to give me a list of what they need, his response brought tears to my eyes. After offering them anything – clothes, games, decorations, music, electronics, etc… - he said what they need most is food. After nudging a bit more, he agreed to ask his family what they might like, and he did let me know the items below.

For food –

Any dry goods or canned items
Fry’s gift cards
Cash (and I’ll buy gift cards)



Anthony (age 14)

sweat pants (medium)
sweaters/sweatshirts (medium)

Aaron (age 15)

jeans (size 38)
Sweaters/sweatshirts (XL)

Jose (age 19)

Black jeans for work (size 38)

Chris (age 18)

“Nothing for me – I would just like the food!!” (direct quote - via text)

What I’d like to add is that I am sure they would love anything that you can give. Gift cards for other stores, gently used items and whatever you think teenage boys might like. As for mom, gifts to lift her spirits through this unexpected and challenging time.

Please open your hearts and help this family who are helping themselves as best they can. All gifts can be dropped off at my office. If it’s food, cash or Fry’s gift cards , I will be delivering them as I receive them.

Questions? Give me a call – 520-878-9262 (office)

Very heartfelt thanks,


This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.

Carlin Cares

We’re committed to lending a hand to those less fortunate. Maybe you’d care to help us.