Welcome Back! We are emerging stronger and our offices are reopening. All our office spaces are now available for in-person meetings. Masks are no longer required for fully vaccinated individuals in our offices. Appointments to visit the office are no longer required, but contactless arrangements are still available.

As we all navigate our new normal, we will continue to follow CDC guidance and respect personal safety and preferences. If you wish for our team to wear masks on a visit to our offices, just ask. We ask in return that you reschedule your appointment if you or anyone in your household is not feeling well in any way. We will continue to maintain safe social distances whenever possible in shared spaces and follow rigorous cleaning protocols.

If you have any questions about our current practices or policies, please do not hesitate to ask. We are thrilled to be taking this first step with you. Let’s emerge stronger together!

Current Market Observations

by William Henderson, Vice President / Head of Investments
The markets notched another week of gains across all three broad market indices last week. For the week that ended May 28, 2021, the Dow Jones Industrial Average added +0.9%, the S&P 500 Index added +1.2% and the NASDAQ posted +2.1%; all solid gains for a relatively quiet week of trading in front of the Memorial Day Holiday. For the second week in a row, growth stocks easily outperformed their value counterparts; however, on a year-to-date basis, value still leads the pack. For the full year of 2021, returns on all market indices remain very healthy. Year-to-date, the Dow Jones Industrial Average has returned +13.8%, the S&P 500 Index +12.6% and the NASDAQ +7.0%. Bonds were relatively unchanged for the week, with the 10-year U.S. Treasury Bond remaining at 1.62% as of May 28, 2021.  

While Fed officials stressed last week that inflationary pressures should prove temporary, consumers continue to worry about real inflationary indications. Supply chain pressures, semi-conductor chip shortages, and housing price increases continue to worry consumers. For example, according to the S&P CoreLogic Case-Shiller Index, average home prices in major metropolitan areas rose 13.2% in the year ended in March 2021, up from a 12.0% annual rate the prior month representing the highest growth rate since December 2005. Conversely, we saw forward indications that housing may be cooling off. Last week, the National Association of Realtors reported that April 2021 pending new homes sales fell 4.4%, month over month (see chart below from YCharts); which was significantly below expectations. 

Regardless of what Fed officials are saying, the consumer certainly is seeing the impacts of inflation. For example, the Core PCE Price Index, or Personal Consumption Index, which measures the prices paid by consumers for goods and services, moved higher last week by 3.1%. (See the chart below from YCharts). This measure is a very good indicator of inflation trends as it removes food and energy, two categories where prices tend to swing up and down more dramatically.   

Certainly, there are issues that concern consumers and investors such as inflation, supply shortages and variants of the COVID-19, but a return to normal activities and relaxing of travel and gathering restrictions seems to be impacting the markets’ upward trajectory. The consumer, with the help of stimulus funds and an easy Federal Reserve Bank, will continue to propel the economic recovery throughout 2021 and well into 2022.   

The Numbers & “Heat Map”

Sources: Index Returns: Morningstar Workstation. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Three, five and ten year returns are annualized. Interest Rates: Federal Reserve, Mortgage Bankers Association.

The health of the economy is a key driver of long-term returns in the stock market. Below, we assess the key economic conditions that we believe are of particular importance to investors.




The economy expanded at a 6.4% annualized pace in Q1. At the current rate, U.S. GDP will return to pre-COVID levels by midyear.



S&P 500 Q1 sales and earnings growth were very strong.



The unemployment rate increased to 6.1% in April, from 6% in March.



Inflation was 4.5% in April. The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has generally been tame since the Great Financial Crisis, less than 2%.



President Biden recently unveiled a stimulus package directed towards infrastructure that would total more than $2 trillion over eight years. President Biden is also considering a significant capital gains tax increase.



The Federal Reserve continues to indicate that the monetary environment will remain very accommodative for the foreseeable future.




There are few, if any, looming geopolitical risks that could upset the economic recovery.



With multiple vaccines in distribution and highly accommodative fiscal and monetary policies in place, 2021 may be one of the strongest economic years on record.

The “Heat Map” is a subjective analysis based upon metrics that VNFA’s investment committee believes are important to financial markets and the economy. The “Heat Map” is designed for informational purposes only and is not intended for use as a basis for investment decisions.