The Numbers & “Heat Map”

Posted on May 11, 2021 by The Weekly Commentary

THE NUMBERS
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.

US ECONOMY
CONSUMER HEALTH	POSITIVE	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 mid year.
CORPORATE EARNINGS	POSITIVE	S&P 500 Q1 sales and earnings growth have come in at 9% and 45%, respectively, representing extremely strong results.
EMPLOYMENT	POSITIVE	The unemployment rate increased to 6.1% in April, from 6% in March.
INFLATION	POSITIVE	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%.
FISCAL POLICY	POSITIVE	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.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve continues to indicate that the monetary environment will remain very accommodative for the foreseeable future.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	NEUTRAL	There are few, if any, looming geopolitical risks that could upset the economic recovery.
ECONOMIC RISKS	NEUTRAL	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.

Valley National Financial Advisors, and its family of companies, has been in the Lehigh Valley since 1985. The company is independent and locally owned. As a respected and trusted organization, our relationships with many clients and their families transcend generations. We have the expertise to provide clients with financial strategies to effectively manage their existing assets and to provide for the eventual transfer of their wealth.

Our one-stop service model includes: Financial Planning – Investment Management – Estate Planning – Retirement Planning – Education Planning – Tax Planning & Preparation – Insurance Planning – Trust Services, offered as a Trust Representative Office of National Advisors Trust Company, FSB – ExecutiveEdgeTM, Personal Financial Planning for Corporate Leaders. Our services are provided by a team of objective professionals and managed by one contact person – your personal financial advisor.

Valley National Financial Advisors is proud home of the Lehigh Valley’s most CFP® – Certified Financial Planner Professionals^TM. Among other honors, Valley National has been voted Best Financial Planner in the Lehigh Valley seven times by the readers of Lehigh Valley Magazine, and ranked among FA Magazine’s Top RIAs and AdvisorOne’s Top Wealth Managers.

For more than years, our firm has been devoted to helping our clients to achieve their hopes, dreams and aspirations. This requires a delicate balance between the science of financial planning and the art of understanding the feelings and emotions of our clients and their families.

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