Financial TimesIn this issue:

Backyard BBQ’s &Kick the CanTim CulletonVP Investment Information

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July 2016 Financial Times > alamocapital.com

Continued >

Backyard BBQ’s & Kick the CanTim CulletonVP Investment InformationAugust 2016Summer is a time for pool

parties, cookouts and fun in the sun. This time of year, we can all enjoy what it means to be an American, with a cold drink, watching the game, listening to the kids play outside. Here at Alamo Capital, the fun and games take a different form. Major global economic catalysts and a toxic political environ-ment have set in motion their own set of fireworks.

Much like the Wall Street crash of 1987 and the credit crisis of 2008, history points to the financial markets dislike of uncertainty. Financial experts and politi-cal pundits get their chance to shine and tell you how (they think) everything will shake out. Brexit, Puerto Rico, and the Federal Reserve’s monetary policy are 3 important topics that will keep the market in flux for the near term as we wait for the November election to keep us entertained.

BREXIT (“BRITISH-EXIT from the EU”)

The European Union (EU) was formed after World War II to foster trade and economic cooperation (and avoid another war). On June 23, 2016 a vote was held in the UK to decide whether

the UK should leave or remain in the EU. The vote to leave passed 52% to 48%. Thirty million people voted. Seventy-two percent of those of voting age turned out. The UK has two years to negotiate its withdrawal and continue to abide by the treaties and laws but not take part in any decision-making.

Many uncertainties remain. The UK could break up. Other EU counties could follow the BREXIT lead and head for the door. Or, none of that could happen. With leadership in question and the British pound on the decline, you could see the UK slide into recession.

What does this mean for the U.S.? It will take a while for the smoke to clear from this vote. My guess is the EU without the United Kingdom will be weaker but the relationship of the Brits and the Yanks will be stronger. There will be

fewer hurdles for treaties and exchange with one of our closest allies.

What does this mean for your portfolio? …Not much. The markets have digested the move and recovered.

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PUERTO RICO

The people who live in Puerto Rico are United States citizens who use the same greenbacks as you and I, can join the US Army, can’t vote for The President, and are in big debt. They can’t pay, to the tune of $72 Billion of those green-backs. The creditors want their money and Washington, DC isn’t willing to make anyone whole.

Lets back up. The mess Puerto Rico is in, isn’t entirely their fault. The US government used to give the island major tax breaks which helped their economy and drove a lot of business their way. (Even The Donald opened a golf course, which filed for bankruptcy in 2015 - maybe he got a wink, wink). Puerto Rico was able to borrow money thanks to the US tax-breaks. Congress let them issue debt that was tax-free to investors. This made it appealing to you and me. But they got ahead of them-selves and issued too much and here we are.

What does this mean for us? Well, if you own individual securities they are most likely trading lower. Insurance compa-nies have assisted in making coupon payments for those bonds with insur-ance. If you own mutual funds with Puerto Rico holdings, they are probably lower in value. That’s the bad news.

It is well known Puerto Rico cannot pay off its debts. A payment plan with its creditors will have to be worked out. A Fiscal Control Board will facilitate nego-tiations and provide accurate financial information as it becomes available.

Puerto Rico needs Congress to help, and when it comes to getting politicians to agree on lunch, let alone a Common-wealth’s financial future... This problem may be around for a while.

THE FED

When you refinanced your mortgage in 2015 you looked like a hero. When your broker called you this week to say he/she can help you reduce your monthly payments yet again, you probably scratched your head (and took off your cape). What that means? Treasuries are higher, interest rates are lower and searching for yield in the bond market is tougher.

The rate hikes from the Fed we expected have not come. The veritable can has been kicked down the road yet again, for good reason. The US Economy expanded 1.1% in the first quarter, the slowest pace in a year and futures contracts show the odds of a central bank increase this year are about 29%. The US inflation rate is 0.9% and it has been below the 2.0% target for more than 4 years.

Talk of a rate cut has surfaced. As I write this newsletter, the 10-year treasury is sitting at 1.50%. Negative interest rates have become reality overseas. So it is not out of the question that you may have to pay someone to hold your money.

US Municipals seem like a good spot to put your money at the moment. Volatility is low. There is a strong demand for the product from institutions and retail investors. Stable credits with specific revenue streams remain attractive. And the magic words…TAX-FREE (income).

My advice is to put faith in your portfolio, open a cold beverage, light the grill and enjoy the show for the next few months. If nothing else, you will be entertained.

July 2016 Newsletter > alamocapital.com