Valley National News

Your Valley National eVault Client Portal? There’s an APP for that!

Introducing the Valley National Client Access APP available for free download on Apple and Android devices. The APP allows you to access and view your eVault Client Portal with the same login you have been using on your computer.

APP ACCESS DETAILS

  1. Devices must have at least iOS 10.0 or Android 6.0 operating systems.
  2. Search Valley National Client Access in the App Store or Google Play Store.
  3. Click the icon after download to open the login screen.

We have created an accompanying video tour explaining the basic functions and features. WATCH THE VIDEO HERE.

If you do not have a personal portal set up, please inquire with your service team.

The Number & “Heat Map”

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 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 SPENDING

A+

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

FED POLICIES

C-

The Federal Reserve held pat following its most recent meeting, but it remains probable that two more rate hikes will be implemented before year-end. Rising interest rates tend to reduce economic growth potential and can lead to repricing of income producing assets.

BUSINESS PROFITABILITY

A

Just over 90% of S&P 500 companies have now reported Q2 earnings, and Factset is reporting a blended earnings growth rate of 24.6% YoY.

EMPLOYMENT

A+

The US economy added 157,000 new jobs in July, and the unemployment rate dropped back below 4%. The job market remains very healthy.

INFLATION

B

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.

OTHER CONCERNS

INTERNATIONAL RISKS

5

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.

The Markets This Week

by Connor Darrell, Head of Investments
Economic turmoil in Turkey weighed down markets last week, as the nation’s leadership has come under criticism for failing to properly manage its growing debt burden and plummeting currency. There are now increasing concerns that Turkey’s financial instability could lead to higher default rates on loans from European banks, which could have ripple effects throughout global markets. Turkey’s problems were exacerbated by escalating diplomatic and economic tensions with the United States, which have led to threats of further retaliatory action in response to Turkey’s detainment of a U.S. pastor on charges of espionage.

The uncertainty led to a selloff in the S&P 500 on Friday that erased the week’s gains. International markets were hit a bit harder.  Elsewhere, the U.S. bond market pushed higher as investors sought the relative safety of U.S. Treasuries.

Turkish Turmoil Worth Watching, But Long-Term Impacts Negligible
The fears of “contagion” emanating from the turmoil in Turkey have been brewing for several months now, but are ultimately unlikely to have a lasting, meaningful impact on the U.S. economy. The primary concern from a global perspective is that Turkish borrowers will find it much more difficult to repay their debts as the currency continues to decline. However, the reality is that while some pain could certainly be felt by rising default rates in Turkey, the Turkish economy is not large enough for an isolated crisis to have a sustained impact on a global scale. Turkish stocks make up only about 0.7% of a market cap weighted Emerging Markets Index, which is itself only a small fraction of global equity markets. U.S. investors are thus very unlikely to have meaningful exposure to Turkish assets (if any at all). There is an old market adage suggesting that “when the U.S. sneezes, the world catches a cold.” Fortunately, the adage does not apply to the Turkish economy.

The problems in Turkey do however serve as a reminder of the importance of sound economic policy. Many economists believe that the Turkish government should bare much of the blame for its current predicament, as it has exerted pressure on the nation’s central bank to prevent it from raising interest rates; a move that many believe could help to stave off inflation and stabilize the currency. The role that central banks now play in maintaining global financial stability has grown considerably over the past decade or so and is particularly relevant here in the United States as the Federal Reserve moves forward with its tightening process.

“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 welcomes Associate Financial Advisor David Givler to discuss: “Education Benefits – 529s, AOTC, Savings Bonds, 529 distributions and FASFA, loans.”

Laurie and her guest will take your calls on this or other topics at 610-758-8810 during the live show, or anytime online via yourfinancialchoice.com.

Recordings of past shows are available to listen or download at both yourfinancialchoices.com and wdiy.org.

Valley National News

We are pleased to be participating again in the Community Bike Works second annual Spin-a-Thon!

Our team is ready to take on the competition to support bike mentoring programs. The event will be on Saturday, September 22 at Lehigh Valley Health Network Fitness in Allentown. Until then, we are joining in the fundraising effort.

We invite you to learn more about this unique event on the crowdrise website and, of course, the programs it supports at communitybikeworks.org.

The Numbers & “Heat Map”

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 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 SPENDING

A+

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

FED POLICIES

C-

Following its June meeting, the Federal Reserve implemented the second rate hike of 2018, and suggested that two more hikes should be expected before year-end. Rising interest rates tend to reduce economic growth potential and can lead to repricing of income producing assets.

BUSINESS PROFITABILITY

A

Just over 50% of S&P 500 companies have now reported Q2 earnings, and Factset is reporting a blended earnings growth rate of 21.3% YoY.

EMPLOYMENT

A+

The US economy added 213,000 new jobs in June, and the labor force participation rate is now on the rise. Jobs are available for those who want them.

INFLATION

B

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.

OTHER CONCERNS

INTERNATIONAL RISKS

5

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.

The Markets This Week

by Connor Darrell, Head of Investments
A relatively quiet week in terms of market returns was highlighted by a major milestone in market history. On Thursday, Apple became the first company ever to achieve a market valuation of $1 trillion. The story of Apple’s rise from a startup company headquartered in its founder’s garage to $1 trillion tech behemoth is one of the greatest narratives in the history of capitalism, and that story understandably dominated headlines. But more pertinent to everyday investors, the U.S. economy added 157,000 new jobs in July and the unemployment rate ticked back down below 4%. Wage growth, which has been closely watched by the Federal Reserve, remained subdued.

International equities (as measured by the MSCI EAFE index) traded down 1.45% for the week, while U.S. equity markets (as measured by the S&P 500) produced a 0.8% gain. Interest rates moved higher to start the week, with the 10-year treasury briefly pushing back above 3% on Wednesday before dropping lower and finishing the week largely unchanged.

Mega Cap Stocks Dominate the Index
Apple’s trillion-dollar milestone highlights another phenomenon that we have discussed in the past; that the world’s largest companies have an outsized impact on index returns. In the first 6 months of 2018, the top 5 largest companies in the S&P 500 contributed over 80% of the index’s 2.7% gain. Indexing is a popular and low cost means of capturing market returns, but as the biggest companies continue to get bigger, index investors would be well served by reviewing the concentrations that exist within their index of choice. The strongest argument in favor of indexing stems from how notoriously difficult it is for stock pickers to consistently beat the market.  There exists a natural and inexpensive means of achieving diversification within an index fund, and by purchasing a fund that tracks the index, an investor is not exposed to the risks of choosing the wrong stocks. However, as the biggest companies continue to capture a larger share of market cap weighted indexes, that diversification benefit begins to fade.