August 5, 2024 First: I and the Alphavest Team are sending dry, safe thoughts and wishes to our East Coasters battling Storm Debby.​ Next: Let’s lighten things up with a fun fact amidst the US continued tech sell off and Japan’s Nikkei logging the worst day since the 1987 Black Monday crash…. The stock market’s last all-time high was on July 16 (ahem, the day we warned investors)…..AND…. How many times has the market made a new all-time high in a recession? ZERO. (Exhale) Moving on. The rise in the unemployment rate last week joined the list of spooky factors for markets and investors. The pullback in the major market averages, led by tech, moves into its fourth week. The bearish narrative has shifted from fears of inflation and higher-for-longer interest rates to warnings that the economy is on the cusp of a recession because the Fed waited too long to lower rates…I think the recession concerns are overblown. I see a resilient economy with respectable GDP and moderating inflation. Could this decline in the market indexes be a buying opportunity?  If the recession concerns are not overblown (not my belief), then yes we are in the early stages of a bear market, and there could be more pain to come. Either way, Alphavest’s models are poised (see below) and your 3-6-10 allocation will ensure your lifestyle-spending needs will be met. You’ll appreciate what Alphavest’s Chief Investment Officer, Elizabeth Breaden has to share with you about this current market selloff, also below. Remember, we’re a call, text or email away—AND, we hope to see you at our 8/20 Mid-Year Update where time and in-person connection, great food and an open discussion will offer a deeper understanding on markets and your portfolio.  In the meanwhile, stay safe and dry to our east coast readers and clients–don’t let Debby or markets be a too much of a downer–AND, remember, we’ve got YOU MANAGED. Multi-asset class Outsourced Chief Investment Officer (OCIO)   Investment Strategist • Client Portfolio Manager • Public and private markets BA Northwestern University MBA/Finance Northwestern-Kellogg School of Mgt  Not all sharp moves in financial markets are driven by rapid changes in the economic outlook. Unexpected changes in the financial structure of the markets can also force repricing. No “Can (Yen)” do! Surprise BOJ rate hike causes Nikkei closure and instability with markets worldwide Last Wednesday, July 31, in a surprise move, the Bank of Japan hiked rates to 0.25%, Its highest rate since 2008. This marked the second hike this year, driven by a surge in Japan’s inflation. This surprise move has led to a drastic unwind in the Japanese Yen carry trade. The Japanese stock market crashed as a result. The US jobs report was definitely not behind this one! For context, in the US, Friday’s Nonfarm Payrolls report, which reported 114,000 jobs added in July, came in way below analyst expectations, pushing the unemployment rate to 4.3%. This triggered the so-called “Sahm” recession indicator, which signals the start of a recession when the three-month moving average of the national unemployment rate rises by 0.50 percentage points or more relative to its three-month average low during the previous 12 months. US markets are also purportedly reacting to higher than expected new jobless claims on Thursday, and a weaker than expected ISM Manufacturing release, against the backdrop of the Fed’s signposting future rate cuts. The fact that this move comes into the fourth week of pullback in the major market averages, led by Tech, where we have seen some relative softness in earnings as companies report lackluster AI spend results, indicates that after reaching an all-time high in July, the US stock market is perhaps more sensitive to news and catalysts. But the damage extends well beyond US markets. Is it plausible that all global markets including currencies, emerging markets and bitcoin, are reacting to a miss in the US jobs report? No. Here’s why: the Japan carry trade, using short-term borrowing to fund long term positions, was perceived to be stable and predictable. Japan’s short-term funding rates were the lowest globally, and they still are, but again, short-term Japanese rates were also perceived to be predictable and would remain near zero for some time. The cost of funding is therefore rising, so as a result there are massive liquidations of positions using this cheap funding. And in the last three trading days, or since the surprise Bank of Japan hike on July 31, the Japanese stock market has crashed by 20%, even bigger than the three worst three-day moves during the October 1987 crash! Outside of Japan, the yen carry trade is also behind the funding of many markets, and these have been strained as well. Unwinding global yen carry trades involves exiting positions in foreign markets, like the dollar, and bringing these funds home to Japan to close these funding positions. This causes massive buying of yen. Does this change the economic outlook? To quote the late MIT economist Rudi Dornbusch, “Economic expansions do not die of old age; they are murdered.” Such financial moves can potentially “murder” the economy into recession. The last such concern of a financial “murder” occurred in March 2023, around the failure of Silicon Valley Bank. The economy was able to avoid this murder. We would guess the U.S. economy can also withstand the current yen carry unwind. But there is a real risk it will not, and markets will remain chaotic, until this unwind is done. Other musings to consider…. Here’s a link to our last 3 For 3 sent July16, 2024 where we warned investors of tech over-concentration and reminded you that “we’ve got you managed” at the market high point. We’re touching base today to prove it. We don’t always get it right, but its key fpr Alphavest to communicate the effectiveness of our strategies so that you can quiet the noise and enjoy the “ride.” Alphavest began a heavy push in client portfolios mid-year 2023 to our high quality dividend models (Aristocrats and Equity Income) in an effort to diversify the risks of the Mag 7 and we continue to tactically manage market risk effectively in our Dynamic Core Equity model. Thru Friday’s close; the AV Dynamic Core Equity Model +14.06% (vs. S&P 500 +12.99% YTD) and our Aristocrats Model +16.42% (vs. DJIA +5.38% YTD) are both outperforming the S&P 500 YTD, and on a 1 YR basis, and our other equity models are in great standing, too. SEE BELOW. Events! JOIN US ‘

Text OR Call  866-MOALPHA (662-5742) Call Only 843-573-7277 [email protected]

As always, sending you a Perfect Day,

Advisory Services offered through Red Triangle, LLC DBA Alphavest

PS: Reach out to us to test drive a customized Morningstar Report! AND get your Alphavest Altruist LOGIN for easy to to understand account performance tracking! TEXT US TODAY.

Subscribe to this monthly update.

AND–if you enjoyed this 3 For 3, the greatest thank you is a comment here or forward it to a friend (and you’ll rack up some Alphavest Points!)