The Markets This Week

by Connor Darrell CFA, Assistant Vice President – Head of Investments
Markets tracked lower last week as investors began to ponder whether equity market valuations were justified after several weeks of gains. The odds of what many have referred to as a potential “V” shaped recovery look increasingly small, as many in the scientific community have continued to caution that economic activity will not be able to resume to pre-virus levels until after a vaccine is developed and globally distributed. Also weighing on investor sentiment has been the resurgence of tensions in the relationship between the United States and China. Last week, U.S. intelligence sources accused China of attempting to steal COVID-19 related research through cyberattacks. The Trump Administration has also not shied away from sharing its belief that the Chinese government acted deceitfully in covering up key details about the spread of the disease within mainland China. Trump himself has even gone so far as to say that there is a reasonable probability the origins of the virus can be traced to a laboratory in Wuhan.

The true origins of the virus are unlikely to be confirmed with certainty in the near-future, and it is possible that they are never irrefutably determined. However, the re-escalation of tensions within an already strained U.S./China relationship is a key concern moving forward for global investors. No matter the efficacy of accusatory claims made by leaders within both countries, it is clear that the emergence of the COVID-19 pandemic has fostered additional distrust between the U.S. and China that may ultimately prove to be permanent. The long-term consequences of that distrust are likely to pressure on recent globalization trends and could lead to a shift in global supply chains. In the near-term, it is likely to simply remain another potential source of volatility in markets.

Did You Know…?

News and information related to COVID-19 is being released and updated very rapidly. Our team has collected just a few of the latest links that we think may be most valuable to our clients.


March Tax Reminder!
We are approaching the one-month mark away from the tax deadline for filing 2019 individual returns. If our VNFA Team is preparing your 2019 tax return(s), please send us your tax documents as soon as possible – even if you are still waiting on certain items. You can deliver them to our office or post digital copies to your secure eVault Client Portal.

Visit our website at for checklists and resources to help you collect relevant information. If you have any questions, please contact our team at


We are pleased to announce the promotion of Elizabeth Wilson, CPA to the position of Chief Financial Officer.

Elizabeth joined the company as Corporate Controller in 2014, and was most recently Vice President, Finance & Tax Services. As part of the executive management team at VNFA, she oversees firm-wide financial operations as well as strategic and risk management, in addition to serving as Head of Tax Services.

VNFA Executive Management Team (left to right): Judianne Harris CMO, Matthew Petrozelli CEO, Elizabeth Wilson CFO

Elizabeth is a Certified Public Accountant with more than 15 years of experience in accounting and management. A graduate of Muhlenberg College in Allentown with a B.A. in Accounting and Business Administration, Elizabeth moved back to the Lehigh Valley from New York City to join the VNFA team. She was recognized in 2018 by the PICPA (Pennsylvania Institute of Certified Public Accountants) with the Young Leader Award; and in 2019 was named the Lehigh Valley Business CFO of the Year Rising Star.

The Markets This Week

by Connor Darrell CFA, Assistant Vice President – Head of Investments
Both equities and bonds managed to creep higher last week, with equities fueled by positive developments in global politics (Brexit and U.S./China trade negotiations) and bonds buoyed by a drop in short-term yields that was likely driven by weaker than expected retail sales data. The 0.3% decline in U.S. retail sales was the first monthly decline since February and was primarily a product of a decrease in so-called “noncore” spending, which includes auto sales, purchases at gas stations, and building materials stores. Moving forward, many will be watching this and other consumer data very closely in an effort to get a feel for whether the weakness in manufacturing has permeated to other areas of the economy. For now, this looks more like a blip rather than a sustained downward trend, and the U.S. consumer should continue to benefit from the healthiest labor market in decades.

Politics and the Market
As the political climate has continued to become more and more polarized in recent years, many Americans have had a hard time separating politics from investing. We believe the below chart from JPMorgan does an excellent job of helping to convey the importance of investing discipline during periods of difficult political transition.

The chart shows consumer confidence broken down by political affiliation and tells an interesting story. Beginning in 2008 at the onset of the Great Recession, it is clear and unsurprising that neither Republicans nor Democrats felt optimistic about the economy. But as the market and economy recovered during the Obama administration, optimism among Democrats increased at a significantly higher rate. Then, almost overnight in the beginning of 2017, optimism among Republicans skyrocketed and subsequently tapered off among Democrats. Based on the data, it is clear that many Republican-leaning investors may have missed out on the strong market gains during the Obama years, and that many Democrat-leaning investors may have missed out on the market rally that transpired during the Trump years.

With all the talk of concerns over the global economy and weakening manufacturing, the consumer remains pivotal in determining how much juice is left in this economic expansion. With that as a backdrop, one other intriguing aspect of the above chart is that at present, consumer confidence among Republican-leaning investors remains very high. Market sentiment and economic activity are quite sensitive to consumer perceptions of the future, and it certainly makes it more difficult for the economy to turn toward recession if roughly half the population believes things are still looking great.

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 U.S. 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.



Our consumer spending grade remains an A despite a recent decline in retail sales numbers. US consumer confidence remains high, but we will be watching this metric closely over the next couple of weeks and throughout earnings season. The consumer has been the bedrock of the US economy through much of the current expansion.



Our Fed Policies grade has been increased to A- after the Federal Reserve cut its interest rate target by 25 bps following its most recent meeting. This marks the second time the Fed has cut interest rates in the past few months, but Chairman Jerome Powell hinted that he does not expect “a more extensive series of rate cuts” moving forward.



As was largely expected by markets, corporate earnings growth has been weak thus far in Q3 as a result of the global slowdown and trade policy uncertainty. Throughout earnings season, we will be paying closer attention to management commentary and updates to forward guidance, which are likely to have a bigger impact on stock prices.



The US economy added 136,000 new jobs in September, below the consensus expectations of analysts. However, despite the lower than expected job creation, there was evidence of an acceleration of wage growth. The labor market continues to look quite healthy.



Inflation is often a sign of “tightening” in the economy and can be a signal that growth is peaking. Recent inflationary data has increased slightly, but inflation remains benign at this time, which bodes well for the extension of the economic cycle.




Following a re-escalation of the US/China trade dispute, we have raised our “international risks” metric back to a 7. Other key areas of focus for markets include the ongoing Brexit negotiations, rising economic nationalism around the globe, and escalating tensions in the Middle East.

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.


Meet the Team

Joanne Kurtz, Executive Administrative Assistant
Years at VNFA: 14 years (in March 2020)
I enjoy working with my colleagues because they make me feel supported, and they continuously motivate me to do my best.”

About Joanne: I am married to my wonderful husband and have two adult children. We like to take the time to enjoy the outdoors by visiting the Poconos and the beach. We also have an 11-year-old yellow Labrador retriever, and she is a joy to our whole family. I enjoy reading, exercising, cooking and eating healthy.  

What I enjoy most about my job is helping clients and helping our team. There are a variety of tasks that are involved which makes each day unique and enjoyable. Our team benefits from making sure procedures are carried through for great organization and communication which helps our clients meet their financial goals.