Today is #GivingTuesday!
Join us today for our WRAPPING PARTY, 11 a.m. to 1 p.m. at our Bethlehem headquarters.
If you cannot stop by, you can still support the Volunteer Center’s effort to create 7,500 Holiday Hope Chests by donating to the #GivingTuesday campaign.
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.
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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- |
The Federal Reserve is expected to raise interest rates one more time before the end of the year. Rising interest rates tend to reduce economic growth potential and can lead to repricing of income producing assets. |
|
BUSINESS PROFITABILITY |
B+ |
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. |
|
EMPLOYMENT |
A+ |
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 |
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 |
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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.
“Sometimes a new beginning is even better than a happy ending.” – Unknown
by Connor Darrell CFA, Assistant Vice President – Head of Investments
The abbreviated week brought no respite for equity investors as global markets slid lower. U.S. stocks sold off the most, with the S&P 500 losing 3.77%. Losses were largely broad based but were a bit larger in the energy and technology sectors. However, we continue to see strong evidence that the U.S. economy remains on firm footing. A report issued by Adobe Analytics – which tracks transactions for 80 of the top 100 U.S. e-commerce retailers – suggested that Black Friday online spending was 23.6% higher than last year, providing further evidence of the strength of U.S. consumers. We continue to anticipate a very strong holiday shopping season.
Despite Agreement, Brexit Negotiations Remain a Factor
After more than 20 months of negotiating, the 27 member nations (excluding Great Britain) of the European Union approved the terms of Britain’s withdrawal. The terms of the deal will now need to be reviewed and approved by British Parliament, which is scheduled to vote on December 11. However, according to the Eurasia Group, a political risk consultancy based in New York, there is a high probability that the agreement will be voted down, potentially forcing Prime Minister Theresa May into a difficult position. The official “break” date, where the UK will no longer be considered a member of the EU is March 29, 2019, and if no agreement has been approved by that date, there could be considerable ramifications for both European and British businesses. It is likely that these ramifications (which include higher costs and supply chain disruptions) will be large enough to incentivize leaders from both sides to continue working toward a final agreement, but the uncertainty surrounding a potential “no-deal” Brexit remains prominent and has been a significant contributor to the underperformance in European equities so far this year.
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 Odds and Ends – Financial planning tidbits.
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.