Heads Up!

by Timothy G. Roof, CFP®, Vice President
If you currently own a variable rate home equity line of credit you may want to consider other options.  Many variable rate lines of credit are based off a widely published interest rate, such as the prime rate.  The prime rate is currently 4.75%, so borrowing against your home is becoming more expensive.  The Federal Reserve expects to raise interest rates two more times in 2018 and may continue to raise interest rates beyond 2018.  This means your cost of borrowing will increase.  Additionally, recent tax reform may affect the deductibility of mortgage interest paid on these loans.

The good news is you have options.  You could consider locking in your interest rate with a fixed term home equity loan to pay off your line of credit, or pay off your loan if you have funds available to do so.  Please contact us if this pertains to you so we may discuss your situation.

Valley National News

Our Financial Advisors are passionate about getting involved and making a difference in our Lehigh Valley community. Just a few bits of exciting news include…

Our CEO has been selected to present his ideas at “90 Ideas in 90 Minutes” on June 14 at DeSales University. Click here to read more about this LV Business event, and learn more about Matt.

Senior Vice President Laurie Siebert is featured in the Pennsylvania CPA Journal’s Federal Tax Reform Guide. Her article covers Tax Reform’s Effect on Charitable Giving. Click here to access the guide, and more.

Check out the May issue of Lehigh Valley Style for a great photo of our financial advisors on page 82 – The Face of One-Stop Financial Planning!

MORE NEWS is available on our website. Or by following us on social media (Facebook, Twitter, LinkedIn).

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 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 remain healthy as individuals with lower tax rates spend their windfalls.



The Federal Reserve increased the Fed Funds Rate by 0.25% in March, 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 has gotten off to a strong start as well.



The unemployment rate currently stands at 4.1%, the lowest reading since 2000. March’s headline jobs growth number was slightly below expectations, but there is substantial evidence that the prospects for those seeking work are very favorable.



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 David Givler, Senior Associate
If you are employed full time by a government organization (federal, state, local, or tribal) or a not-for-profit organization tax-exempt under Section 501(c)(3) of the IRS Code you may eligible for student loan forgiveness. The Public Student Loan Forgiveness Program (PSLF) works to absolve student loans after certain criteria is met.

First, your loans must have been received under the William D. Ford Federal Direct Loan Program (Direct Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans). Loans under the older Federal Family Education Loan Program may be able to qualify through consolidation, but careful research and consideration should be made before doing this as there are specific rules to follow.

Second, you must make 120 months of qualifying monthly payments. Qualifying monthly payments are: (1) payments made after October 1st, 2007, (2) paid under a qualifying repayment plan, (3) for the full amount due as shown on your bill, (4) paid no later than 15 days after due date, and (5) made while employed full-time by a qualifying employer. Payments made while your loans are in-school status, grace period, deferment, or forbearance do not count toward the required 120 payments.

To apply, you must first complete the Employment Certification for Public Service Loan Forgiveness form whenever you change employers. After making 120 months of qualified payments you must submit the PSLF application.

For further information regarding where to send the forms, how many qualified payments you might have made, your loan details, contact information, and other helpful resources please visit the Federal Student Aid website.

“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 and her guest, Attorney Dennis Pappas from the Law Offices of Vasiliadis Pappas Associates discuss:

“Long-Term Care Planning”

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
Last week brought with it a slew of positive new developments, both economically and geo-politically. Q1 GDP growth exceeded estimates, corporate earnings continued their positive momentum, and small steps were taken toward officially declaring an end to the Korean War (at long last). Despite all of the good news however, both equities (as measured by the S&P 500) and bonds (as measured by the Bloomberg Barclays US Agg) finished flat for the week. Bond markets have faced headwinds all year from increasing interest rates, but we continue to emphasize that rising interest rates do not necessarily mean doom and gloom for bond investors. While shifting interest rates will cause some volatility in bond prices, investors who plan to continue holding bonds until maturity will not be harmed by the interim price movements, and those who hold shorter term bonds in their portfolios will be well positioned to reinvest as rates creep higher. Additionally, rising interest rates will be welcomed by savers and those who are looking to cash as a respite from volatile equity markets.  There are winners and losers under every scenario.

We are presently in the midst of one of the strongest earnings seasons in recent memory, but the stock market has barely budged. The lack of movement suggests that most of what we are seeing was already reflected in stock prices, and that the market is beginning to acknowledge that 2017’s huge gains left us with a much shorter climb for 2018 and beyond. Put simply, the forward outlook is quite a bit different than it was just 6-12 months ago.

A Return to “Normal”
2018 is likely to become the year of mean reversion. The Federal Reserve has made it abundantly clear that it intends to begin increasing interest rates at a steadier pace. The term that bankers use is “normalize,” and it really is a fitting term for what is going on in the economy and in the markets. Volatility in the stock market, CDs paying more than 0.5%, and a central bank balance sheet that doesn’t contain trillions of dollars of bonds are all “normal.”

After a decade of abnormal, a return to normal is going to take some getting used to.