Daily Archives: April 23, 2019

Valley National News

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Today we revealed our Just Press Pause room to the teaching staff at Paxinosa Elementary. The renovation was our VNFA team’s Volunteer Challenge project.

The school provided a classroom that remained under lock and key to maintain the gift as a surprise to teachers. Over about 10 weeks, our volunteers created plans, purchased items and visited the school to install everything. Thank you to Mission Plant Company for partnering with us to create the beautiful plantscape in the room, and a very special thank you to our Communities in Schools dynamic duo (Jeanine and Zenaida) and, of course, Principal Jones.

The Volunteer Challenge is an event for the Volunteer Center of the Lehigh Valley that connects the nonprofit and business communities through partnership on a special project. Each “team” is entered into a competition in the category of small, medium or large companies in which the public votes for the best project in each group. The paid votes serve as a fundraiser for the Volunteer Center. The competition culminates in an event where teams showcase their project story with their nonprofit partners. The event is open to the public and tickets can be purchased online at volunteerlv.org. Celebrating its 10th year, the Volunteer Challenge has impacted 93 community organizations with more than 150 projects completed by 64 Lehigh Valley companies.

Valley National’s team has competed for the past four years, completing projects for Third Street Alliance for Women & Children, Cancer Support Community of the Lehigh Valley, Second Harvest Food Bank, and now Paxinosa Elementary.

Voting opens tomorrow for the projects – VNFA is listed among the “medium” companies. Votes are $5 each and all proceeds go to funding Volunteer Center projects. Visit volunteerlv.org to vote and for more details.

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

Our consumer spending grade remains an A. Surveys of US consumers continue to indicate that the consumer is in a strong position, and the March retail sales figures reported last week surprised to the upside.

FED POLICIES

C+

(Upgraded from C-) Following its March meeting, the Federal Reserve signaled to markets that it may not hike interest rates during 2019, and plans to halt its balance sheet reductions. The Fed’s future actions will remain data dependent, but the contractionary policies that have dominated the last two years appear to be on pause.

BUSINESS PROFITABILITY

B-

(Downgraded from B+) Corporate earnings remain strong, but we anticipate earnings growth will taper off in 2019. According toFacset, the expected earnings growth rate for S&P 500 companies during 2019 is around 4%. This is below the long-term average for the current cycle.

EMPLOYMENT

A

The US economy added 196,000 new jobs in March, helping to alleviate concerns from an unexpectedly weak February report. Encouragingly, we have also observed some healthy wage growth, which is currently above the rate of inflation.

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…?

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Special Event Alert
Our Senior Vice President Laurie Siebert is co-hosting a free Estate Planning seminar at PBS39 (839 Sesame Street, Bethlehem) on Wednesday, May 8 at 10 a.m.

Laurie and Attorney Charles Stopp, principal at the Law Offices of Steckel and Stopp will cover a variety of topics and addresses common questions.

Registration is free, and seats can be reserved online at the PBS30 website or by contacting Mariella Miller at 610-984-8222.

The Markets This Week

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by Connor Darrell CFA, Assistant Vice President – Head of Investments
Global equity markets inched higher in the holiday shortened week (markets were closed on Friday in observance of Good Friday) amid a slew of economic data that surprised to the upside. March retail sales figures came in stronger than expected and showed a strong bounce back from a weaker than expected February. Additionally, jobless claims fell to their lowest level since 1969.  Bond yields crept higher throughout the week, with the 10-Year Treasury yield touching its highest level in over a month.  The move was likely fueled in part by the positive economic data triggering some optimism for economic growth.

As of the end of the week, about 15% of S&P 500 companies had reported Q1 earnings results, with 78% of them reporting positive EPS surprise. Even so, according to data collected by Factset, the blended earnings growth rate for those companies that have reported is -3.9%. The high incidence of positive surprise combined with the relatively uninspiring growth rate reflects how low expectations were coming into Q1 earnings season. We will continue watching as more companies report results and we get a fuller picture of corporate profitability during the beginning of 2019.

2019: The Year of the IPO
2019 is set up to be a particularly active year in the IPO (initial public offering) market. Before year’s end, disruptive companies like Uber, Airbnb, and WeWork are expected to join Lyft, Pinterest, and Zoom on the list of large tech firms making their public trading debuts this year (Pinterest and Zoom both debuted last week and Lyft completed its IPO back in March). Many investors have been clamoring to get into these trendy names, but others have been quick to point out that the flurry of activity may be a sign of overexuberance in markets. In any case, as with any investment, the general rule of thumb for investors interested in buying shares of a stock that recently debuted on an exchange is to do your research. The power of FOMO (fear of missing out) can be particularly fierce when it comes to high profile companies, especially as the financial news outlets are perpetuating stories of huge gains for early investors. But that’s just the thing, those huge gains that pundits like to talk about were available to only the earliest investors and have already been realized. Any new investment needs to be evaluated through the lens of the current price, as the price you pay for an investment is the single most important factor in determining success.

“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®.

Laurie will not be live on the air April 24. Tune into WDIY for a pre-recorded Your Financial Choices episode. Questions submitted via the website will be addressed during the next live show on May 1.

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