proud to sponsor the PICPA Lehigh Valley Chapter’s Virtual 5k Run/Walk
supporting the Pennsylvania CPA Foundation. Follow #PICPA5K to watch the
journey through Oct. 25: https://www.picpa.org/chapters/lehigh-valley
Today – October 20 – is the Valley National Financial Advisors “Local” Challenge. Snap a picture at your favorite local establishment and post it with #PICPA5K and #TeamVNFA for chances to win gift certificates to Aardvark Sports Shop in Downtown Bethlehem.
Henderson, Vice President / Head of Investments
As we move closer to
year end, our four major uncertainties continue to drag on and on without an
end in sight before the Presidential Election. Polls keep pointing to a clear
Joe Biden win, but we saw the same polling data pointing to a Hillary win in
2016 which leaves us very skeptical of polls. Each time a vaccine for COVID-19
moves closer to release, cases spike as they have around the world this week
with many countries including France, Italy and the UK showing very large one-day
and one-week increases in virus outbreaks. Last week wrapped up testimonies for
Amy Coney Barret and it looks as though a full vote in the U.S. Senate is
possible this week. With the SCOTUS drama behind us, Washington can
revisit the stimulus package that Treasury Secretary Steven Mnuchin and House
Speaker Nancey Pelosi have been playing volleyball with
lately. Thankfully, the hearings for the SCOTUS appointment have been
congenial when compared to previous hearings and this has put a nice damper on
related protests and social unrest. We continue to see positive earnings
releases and clear EPS beats versus Wall Street estimates. That tells us
the recession is behind us and most analyst underestimated the pace at which
U.S. companies will recover from the recession in the 1st and 2nd
quarter. Further, company balance sheets remain healthy and borrowing
rates and levels remain very favorable for Investment Grade and High Yield
the increase in COVID-19 infections could prompt government authorities to
usher in new curbs on openings for such venues as bars, restaurants, and movie
theatres. The consumer remains key for a healthy and robust
recovery. Online shopping, working from home, and virtual conferences/meetings
continue to be the norm for everyday life around the world. Last week’s
Amazon Prime Day(s) was reported to set a new record for sales; but the online
retailer was hesitant to release actual numbers. One number released was the
$3.5 billion in sales for third-party sellers on Prime Day. This really
shows the extended power of Amazon and how it helps small businesses around the
country. The third-party business of Amazon is fueled by its dominant
cloud services provider: Amazon Web Services (AWS).
FED remains on the sidelines with its full offering of weapons to fuel the
economy and add critical liquidity to the markets. This one constant
variable in a world of unknowns certainly adds a needed level of stability, which
is clearly pushing the markets higher year-to-date. As of October 15,
2020, the Dow Jones Industrial Average was flat at -0.16%, but the S&P 500
Index was up +7.8% and the NASDAQ was up +30.6% for the same period; reminding
us of the importance of diversification and exposure across the broader
you heard of IRMAA – the income related monthly adjustment amount for Medicare
premiums if your income is over certain thresholds on prior year tax returns?
can apply to Social Security to reduce the premium adjustment if you have had
an intervening change in your financial circumstances by filing SSA-44. If you
are a high-income (individuals who earn more than $87,000 single or $174,000
joint, including tax-exempt income) Medicare beneficiary who is paying a
surcharge on your premiums and your income has changed due to a “life-changing
event,” you can request a reduction with The Social Security Administration.
Life-changing events include:
marriage, a divorce or the death of a spouse.
or reducing work.
of an income-producing property for reasons beyond your control.
major change in or termination of your employer’s pension plan.
financial settlement with an employer (due to a company reorganization or
bankruptcy, for example) that inflated your income one year but does not
reflect your current financial situation.
– You will be required to provide evidence of the life-changing event in your application, as well as a copy of your most recent income tax return.
-The Social Security Administration uses income reported two years ago to determine beneficiary premiums. So, the income reported on your 2018 tax return is what you will be comparing to show a significant change. READ MORE AT AARP.COM
“Compassion is an action word with no boundaries.” – Prince
in Wednesday, 6 PM for “Your Financial Choices” show on WDIY 88.1FM. Laurie will be joined by Eric R.
Strauss, Attorney at Worth, Magee & Fisher to discuss: Fearless Estate
Laurie and her guest can take your questions live on the air at
610-758-8810, or address those submitted via yourfinancialchoices.com.
Recordings of past shows are available to listen or download at both yourfinancialchoices.com and wdiy.org.
Team VNFA is pleased to once again partner with
WDIY 88.1 FM during this membership drive to help Second Harvest Food Bank of
the Lehigh Valley and Northeast Pennsylvania. For every $100 WDIY
receives in donations during the membership drive, Valley National Financial
Advisors will fund 21 meals to individuals and families in our community. Last
year, the partnership resulted in almost 12,000 meals. The Membership Drive began
yesterday, October 12, 2020. READ MORE
Henderson, Vice President / Head of Investments
September in the books and the fourth quarter on everyone’s mind, the markets
looked to the renewed stimulus talks and posted some of the best weekly returns
in months. For the week ending October 9, 2020, Dow Jones Industrial
Average increased +3.3%, the S&P 500 improved by +3.7% and the NASDAQ was
up +4.6%. These weekly returns moved all three broad markets indices into
positive territory for the full year of 2020; with the Dow at +0.2%, S&P
500, +7.6% and the NASDAQ up a stunning +29.1%. While equity returns have
given investors something to smile about, bonds continue to offer nominal
returns even in the face of a steepening yield curve. The two-year U. S
Treasury Note moved two basis points higher in the week to 0.16% and the 10-year
U.S. Treasury Note rose eight basis points to 0.79%. Low rates continue to push
down mortgage rates which are fueling a strong rebound in new home sales. According
to Freddie Mac, the average 30-year fixed rate mortgage for the week ending
October 9, 2020 was a record low of 2.87%. With such low rates, buyer demand
remains robust with first-time buyers coming into the market. The demand is
particularly strong in more affordable regions of the country such as the
Midwest. The binding theme on all three markets – equities, bonds and real
estate – is the Fed’s unwavering goal of keeping rates lower for longer and
maintaining a near Zero Interest Rate Policy (ZIRP).
We continue to have concerns around a COVID-19 fall
resurgence in cases. Concurrently, there is global cooperation on finding a
vaccine and hopes remain that the FDA will approve one this year, with global
populations actually being vaccinated by Q3 2021. Uncertainty remains
around the Presidential Election, and although national polls show Joe Biden
ahead over President Trump, these same pollsters and pundits had Hillary Clinton
ahead by nearly the same margin in 2016. The markets seem to be pricing in a
mixed or balanced government after the election rather than a “blue” or “red”
wave. A mixed government typically keeps a lid on drastic policy changes
by either party regardless of who is in the White House. This week watch for a
fight over media camera time between the SCOTUS’ Amy Coney Barret hearings,
renewed stimulus talks among Speaker Pelosi and Treasury Secretary Mnuchin, and
the back and forth between President Trump and former Vice President
Staying the course and maintaining a disciplined
investment policy with a keen eye towards diversification and risk management
remains our policy at Valley National Financial Advisors. While major
uncertainty remains in macro terms, forces exist within the economy (Fed,
mortgage rates, market liquidity) that continue to fuel positive returns in the
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.
MARKET HEAT MAP
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.
|GDP declined at an annualized rate of 32.9% in Q2, the fourth-largest fall in the last 100 years. In mirror opposition, Q3 GDP is expected to represent the greatest quarter-over-quarter increase in history, coming in somewhere between 25-35% on an annualized basis.
|S&P 500 earnings fell by around 1/3 in Q2, the sharpest year-over-year decline since 2008. However, some companies in certain sectors have reported strong results, such as in Retail and Cloud Computing. Q3 earnings season kicks off this week, led by the major U.S. money-center banks.
|The unemployment rate declined to 7.9% in September, from a peak of 14.7% in April. While the rebound is material, the jobless rate remains well above the historical average.
|Core inflation has come in at 1.7% over the last twelve months. The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
|At this point, it appears as though a second major Coronavirus stimulus bill will not be passed until after the Presidential Election.
|The Federal Reserve has supported asset markets with unprecedented speed and magnitude in response to COVID-19.
|The relationship between the US and China, the world’s two largest economies, was already weakened by the trade war but has deteriorated further as a result of COVID-19.
|The impacts from COVID-19 were as swift and pronounced as any shock in modern times. Robust monetary and fiscal stimulus stabilized the system; however, economic activity remains well- below that in 2019, and uncertainty remains high.
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.
October is Financial Planning Month, which serves as a useful, annual checkpoint to make sure you are on track to meet your long-term financial goals. You can use this time to learn about all of your options and prioritize your goals going into the New Year. Learn more about Financial Planning at plannersearch.org/ .
Team VNFA can help! Explore the Financial Planning section of our website: valleynationalgroup.com/financial-planning/
“You are young at any age if you’re planning for tomorrow.” – Anonymous