Last week, our team got to deliver special gifts to both the Volunteer Center of the Lehigh Valley and Second Harvest Food Bank of Lehigh Valley and Northeast Pennsylvania.
On Thursday, Senior Vice President Laurie Siebert and CEO Matt Petrozelli dropped off a check to purchase 12,865 meals through Second Harvest thanks to our partnership with WDIY 88.1 FM. During their Fall Pledge Drive, for every $100 raised VNFA donated funds directly to Second Harvest to provide 21 meals for families in need.
On Friday, a small group from our Bethlehem office delivered more than 40 Holiday Hope Chests to the Volunteer Center to be distributed to local children this holiday season through participating non-profits. The program provided 35 local organization with 7,500 wrapped and filled shoe boxes for underprivileged children.
All of us at Valley National would like to extend our sincerest thanks to all of our clients and friends who helped us make these contributions by supporting our community initiatives. We look forward to continuing to make a difference with you in 2019!
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
US ECONOMIC HEAT MAP
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 confidence is near all time highs with recent tax reform providing further support. We are anticipating a strong holiday shopping season.
Despite recent comments from Fed Chairman Jerome Powell that rates are getting closer to “neutral”, we expect the Federal Reserve to raise interest rates one more time at its December meeting. Rising interest rates tend to reduce economic growth potential and can lead to repricing of income producing assets.
We have downgraded our Business Profitability grade to B+. Corporate earnings remain strong, but we anticipate earnings growth will taper off in 2019. We are also beginning to see a higher number of companies reducing forward earnings guidance, a sign that earnings growth may have reached its peak in 2018.
The US economy added 255,000 new jobs in October, significantly more than the consensus forecast. For six months now, there have been more job openings available in the economy than there are unemployed workers to fill them.
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.
Estate Planning Series
Senior Vice President Laurie Siebert reveals her five-step approach to estate planning. This 6-part series includes discussion about goals, asset inventory, heirs, taxes and execution of an estate plan. WATCH THE VIDEO SERIES
by Jaclyn Cornelius CFP®, EA, Vice President In line with the giving season, many of us think about giving to our children, grandchildren, nieces and nephews and possibly even to our extended family or friends’529 plans as holiday gifts. A 529 Plan is a college savings plan that offers federal tax benefits such as five-year gift tax averaging and tax-free qualified distributions (as long as the plan satisfies a few basic requirements). Some states offer state income tax incentives as well. 529 plans may also be used to save and invest for K-12 tuition in addition to college costs. You can invest in any state 529 plan, not just your own state’s 529 plan and use the dollars invested to pay for college costs at any qualified college nationwide.
If you are a Pennsylvania resident, you can receive an income tax deduction for contributions made to any 529 Plan (limits apply). If you are a New York resident, you can receive a state income tax deduction if you contribute to a New York qualified 529 plan (limits apply). An independent company (Morningstar) recently released their analyst ratings for 2018 which provided reviews of over 60 of the largest 529 Plans. End of year is a good time to discuss the idea of reviewing your existing 529 Plans and giving levels (or discussing with your financial advisor if establishing one makes sense for your situation).
by Connor Darrell CFA, Assistant Vice President – Head of Investments It was a strong bounce back week for equity markets, with the S&P 500 producing its largest weekly gain since December of 2011. Markets rallied strongly on Wednesday following comments made by Fed Chairman Jerome Powell in which he seemed to infer that the federal funds rate is much closer to the Fed’s target than was previously thought. Markets were also bolstered by strong online sales sentiment from the Black Friday shopping period and optimism that the G-20 summit would provide an opportunity for progress toward a trade deal with China.
On a far more somber note, both the NYSE and NASDAQ stock exchanges have announced that they will be closed on Wednesday December 5th to mourn the loss of President George H.W. Bush. Traditionally, the NYSE and NASDAQ stock markets have both closed for a day of national mourning following the death of a former president. The last such closure occurred on January 2, 2007, following the passing of former president Gerald Ford.
The Importance of Remaining Invested After a smooth 2017 where S&P 500 returns were positive every single month of the year (the first time this has occurred since the index was formed), the U.S. equity market has experienced two separate corrections in 2018. Corrections are a normal market phenomenon but can be a very stressful time for investors. It is human nature to feel the need to “do something” during periods of market volatility, but the data suggests that the impacts can be significant. The chart here shows the impact of exiting the market immediately following a -2% market move or worse, and the effect of remaining uninvested for a variety of time periods. The data is based upon the past 25 years of S&P 500 returns.
When we attempt to time the markets to protect gains or avoid losses, it can be easy to forget that we technically have to get that timing decision correct two separate times (once to get out, and once to get back in again). The evidence suggesting that this is a risky endeavor is overwhelming, and it can cause us to miss out on opportunities to grow and compound our wealth. The S&P 500 returned almost 5% last week, further reiterating the importance of staying invested. Any investors who sold their equities during the November selloff would have missed out on last week’s rebound and would now face a difficult decision about when to get back in.
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 welcomes back Tim Roof, CFP® and Connor Darrel, CFA from Valley National Financial Advisors to discuss the markets: The Year in Review and What’s Ahead
Laurie will take your questions live on the air at 610-758-8810 or online through yourfinancialchoices.com. Recordings of past shows are also available to listen or download at both yourfinancialchoices.com and wdiy.org.
VIDEO: Your Financial Choices November Recap
Spend a few minutes with Laurie Siebert to review her top takeaways from November and a preview of this month’s show topics lined up for Your Financial Choices radio on WDIY 88.1FM. WATCH NOW