Daily Archives: November 6, 2018

Valley National News

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We are pleased to welcome Christopher Popp, CPA, MST to the team as Senior Tax Accountant.

Chris is one of 10 licensed tax professionals at Valley National (8 CPAs and 2 EAs). He will work out of Valley National’s Bethlehem headquarters as part of the tax services team, preparing and reviewing returns as well as assisting clients with tax strategies and financial planning.

Chris is a Certified Public Accountant (CPA) with more than 25 years of experience. He has a bachelor’s degree in Accounting from Rutgers University and a master’s in Taxation from Seton Hall University. Chris is also a Pennsylvania licensed life insurance producer.

“Our one-stop service model allows clients to have the peace of mind that their financial goals are being managed by one trusted team and Chris is an excellent addition to that team,” said Matthew Petrozelli, Chief Executive Officer. “His knowledge about tax and accounting will be valuable for clients not only during tax preparation season but also year-round in planning for long-term goals.”

Chris resides in Wind Gap. He enjoys family time with his three daughters, reading, golf, soccer and gymnastics.

Chris can be reached at cpopp@valleynationalgroup.com or at 610-868-9000 x 115

VNFA In The Community

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As part of our Holiday Hope Chests collection, we are seeking gifts and complete gift boxes that have boy, girl and gender neutral themes. If you want to participate, please see the Gift Suggestion Sheet for ideas of items that are appropriate for each age group that the Volunteer Center has requests to fulfill.

All items must fit in a standard shoe box. You can deliver your items and complete hope chests to our Bethlehem office any time before November 30.

Read more about this program and contact us, or visit our Bethlehem office, if you are interested in participating.

Stay tuned for details about our VNFA Wrapping Party!

The Numbers & “Heat Map”

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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 confidence is near all time highs with recent tax reform providing further support. We are anticipating a strong holiday shopping season.

FED POLICIES

C-

In September, the Federal Reserve raised interest rates for the third time this year. Rising interest rates tend to reduce economic growth potential and can lead to repricing of income producing assets.

BUSINESS PROFITABILITY

A

Factset is reporting a blended earnings growth rate of 20% YoY for the 2nd quarter of 2018. Tax reform has played a major role, but the strength of the US consumer is boosting corporate profits as well. Q3 earnings season is now underway, and the results reported thus far suggest a continuation of that trend.

EMPLOYMENT

A+

The US economy added 134,000 new jobs in September and the unemployment rate ticked down to 3.7%; the lowest level since 1969. 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.

Did You Know… TAX TIPS

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At the end of last year, Congress passed the Tax Cuts and Jobs Act, the largest reform in the past 30 years.  Proactive year-end tax planning may help reduce your overall tax burden for 2018 or alert you to taxes due.

A few tips and items you may want to consider:

  1. Tax brackets have been reduced and the withholding tables have been adjusted. As a result, less tax is being withheld from each paycheck. We recommend that you review your current paystub to confirm if you are having adequate amounts withheld so that you have enough paid in to avoid underpayment penalties.
  2. The Tax Act also made a number of changes related to deductions. The standard deduction was increased to $24,000 for taxpayers filing jointly and $12,000 for single filers. In addition, some of the itemized deductions have been reduced or eliminated. Real Estate and State and Local taxes now have a $10,000 limit and miscellaneous deductions such as investment expenses and unreimbursed business expenses have been eliminated. As a result, you may no longer itemize your deductions. Personal exemptions for yourself and dependents have also been eliminated. We recommend reviewing your deductions to see how you will be impacted by these changes.
  3. Now is also a good time to review your taxable investment portfolio to understand the tax consequences of this year’s market activity. Now may be a good time to harvest unrealized losses or realize gains if you are in a low tax bracket as it could be taxed at 0%.
  4. If you are age 70 ½, subject to Required Minimum Distributions (RMD) from your IRA and are charitably inclined, you may still be able to take advantage of the Qualified Charitable Distribution rules in using some of your RMD for your charitable giving. Especially if you don’t itemize, this provides a tax benefit you would not have received.

The Markets This Week

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by Connor Darrell CFA, Assistant Vice President – Head of Investments
Global equity markets generated solid gains last week despite a selloff on Friday. Friday’s volatility was sparked by a stronger than expected jobs report, which showed wages increased at the highest rate since 2009 and stoked concerns of higher inflation and an acceleration of rate hikes. Bonds also sold off as yields crept higher on the news.

Markets continue to be sensitive to any data that suggests further interest rate hikes may be warranted, but overall, the health of the U.S. economy and the robustness of corporate earnings should continue to drive returns.

Where Do We Go from Here?
U.S. stocks sold off to the tune of about 7% in October, primarily as a result of rising interest rates, moderating global economic growth, and ongoing geopolitical uncertainties. As we discussed last week, part of the uncertainty permeating through markets from a geopolitical perspective is directly related to the mid-term elections. Of course, after Tuesday’s election results are finalized, any questions that markets may have about the composition of the U.S. legislative branch will be answered. Most analyses we have reviewed suggest that the Republicans have about an 80% chance of keeping control of the Senate, but that Democrats have a similar probability of taking control the House of Representatives. Ultimately, even if Democrats manage to gain control of both the Senate and the House, it is unlikely there will be any meaningful changes to federal policy. Most of the President’s policies have been enacted via executive order, and he will still maintain his veto power.

The one lingering concern will likely be the ultimate conclusion of the Mueller investigation and whether Democrats attempt to move forward with an attempt at impeachment. For obvious reasons, it is likely that markets would not react positively to such a development, but there are two reasons that we believe there is no cause for major worry at this time. First, this is likely to be a 2019 problem, rather than a 2018 one. Secondly, no matter what ultimately transpires, the markets are far more concerned about the economy and corporate earnings power than they are about disorder in Washington D.C.  For now, investors will be looking to the upcoming holiday season for some relief from the recent volatility. U.S. Consumer Confidence is at an 18-year high, and if that confidence translates into spending, then markets could find good reason for festive cheer.

“Your Financial Choices”

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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 will discuss Year-End Tax Planning – what do you need to know and what can you still do?

Laurie will take your calls at 610-758-8810 during the live show, or via yourfinancialchoices.com. Recordings of past shows are available to listen or download at both yourfinancialchoices.com and wdiy.org.