Heads Up!

by Thomas M. Riddle, CPA, CFP®, Founder & Chairman of the Board

Your account values may go lower, but history tells us in time they will bounce back and provide an attractive rate of return. There is no guarantee, but we know several things for sure. The recent drop is normal. The abnormal market was the 2017 market which only went up, up, up……

The consumer, the economy, and business profits are quite strong. It is highly unlikely the U.S. will encounter a recession in the foreseeable future. I recommend trying not to listen too much to the media’s description of the stock markets ups and downs. The media tends to distort conditions in order to grab your attention and keep you coming back for updates.

Hope this helps. Just remember the first sentence.

The Number & “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 excluding dividends. Interest Rates: Federal Reserve, Freddie Mac


The health of the US economy is a key driver of long-term returns in the stock market. Below, we grade 5 key economic conditions that we believe are of particular importance to investors.



Consumer spending is expected to strengthen as individuals with lower tax rates spend their windfalls.



The Federal Reserve increased the Fed Funds Rate by 0.25% last week, and is expected to implement at least 2 more hikes this year. Rising interest rates tend to reduce economic growth potential and can lead to repricing of income producing assets.



4th quarter earnings season was stellar, with S&P profits growing at a fast pace. Q1 2018 earnings season starts in just a few short weeks.



The unemployment rate currently stands at 4.1%, the lowest reading since 2000. The economy added 313,000 new jobs in February, a very strong number.



Inflation is often a sign of “tightening” in the economy, and can be a signal that growth is peaking. The inflation rate remains benign at this time, but we see the potential for an increase moving forward. This metric deserves our attention.




The above ratings assume no international crisis. On a scale of 1 to 10 with 10 being the highest level of crisis, we rate these international risks collectively as a 5. These risks deserve our ongoing attention.

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.

Did You Know…?

by Laurie A. Siebert, CPA, CFP®, AEP®, Senior Vice President

Medicare is issuing new cards over the next 12 months in the hopes of protecting your identity and providing more security. Scammers have already found ways to take advantage of the confusion. Medicare will not contact you so beware of anyone who says they are Medicare or requesting sensitive information or payment of any kind. Understand that you will receive your new card in the mail so keep your address updated with Medicare. Other than that, there is nothing for you to do. Because the new cards will be issued over 12 months, you may receive your new card at a different time than your spouse, neighbor or friend. Know that it is coming and there is nothing you have to do but be patient and avoid scammers. Destroy your old card once the new card is received. Medicare has a notice on their website about the new cards – https://www.medicare.gov/Pubs/pdf/12002-New-Medicare-Card-flyer.pdf

“Your Financial Choices”

The show airs on WDIY Wednesday evenings, from 6-7 p.m. The show is hosted by Valley National’s Laurie Siebert CPA, CFP®, AEP®. This week Laurie will discuss:

“Listener’s tax questions & multi-state issues”

Laurie will take your calls on this or other topics. This show will be broadcast at the regular time WDIY is broadcast on FM 88.1 for reception in most of the Lehigh Valley; and, it is broadcast on FM 93.9 in the Easton and Phillipsburg area– or listen to it online from anywhere on the internet. For more information, including how to listen to the show online, check the show’s website www.yourfinancialchoices.com and visit www.wdiy.org.

The Markets This Week

by Connor Darrell, Head of Investments

2018 started out with a bang, with the S&P 500 index up 7.45% over the first 26 days of January.  Since then, a flurry of speculation surrounding tariffs, trade wars, and the Fed has pushed markets into a period of consolidation.  So where do we go from here?

That question is never easy to answer without the aid of a functional crystal ball, but based on the key data we track on a regular basis (see this week’s “Heat Map” for more details), we see little that would seem to portend a recession in the near future.  As markets have zigged and zagged over the past several weeks, we have been expressing to clients that from an economic standpoint, nothing much has changed.  Corporate earnings still look healthy, global growth is picking up, and new data from just over a week ago suggests that consumers are more confident now than at any point over the past 14 years.

All of this bodes well for the foundational support the markets need to continue their expansion, but it’s important to keep everything in context.  The reality is that the current bull market just celebrated its 9th birthday, and we are likely closer to the summit than we are to the base of the mountain.  Investors are recognizing this and beginning to acknowledge that the next 5-10 years are likely to look very different than the last 5-10 years.  Given that reality, markets will likely be very sensitive to new news and speculation (like rumors about trade wars), which can lead to volatility.

A Note on Tariffs and ‘Trade Wars’
The biggest piece of economic news last week was far and away the Trump Administration’s announcement that it plans to impose approximately $50-$60 Billion worth of tariffs on Chinese imported goods in response to China’s history of strong-arming foreign companies who wish to do business there.  Global markets sold off in response to the announcement on Thursday, and that sell pressure carried over into Friday.  At this juncture, we do not see a need to change course in response to the news.  Ultimately, that trade wars have negative consequences is one of the few things that economists seem to unanimously agree upon, and both the United States and China benefit from a healthy economic relationship.  These realities provide an incentive for both sides to keep things from escalating too far.  As always, we will provide updates to our outlook if things change.