VNFA In the Community… Last week our team revealed our completed Volunteer Challenge project to the surprised teaching staff at Paxinosa Elementary in Easton. The “Just Press Pause” room is a space for these professionals working in the designated Trauma Sensitive School to recharge, reset and reduce stress. See the before and after video narrated by Paxinosa’s Principal Jones. WATCH NOW
Voting for the Volunteer Challenge is now open!
All of the Challenge projects will be featured and shared with the public at an
event on May 8 at Steelstacks. READ MORE and access the voting link at volunteerlv.org.
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+
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-
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.
Executive Compensation Series
Our ExecutiveEdge financial advisors, Rod Young and Jackie Cornelius, introduce a video series covering some common benefits and planning considerations for corporate leaders. WATCH NOW
by Connor Darrell CFA, Assistant
Vice President – Head of Investments U.S.
equities posted small gains for the week, but they were enough to enable the
S&P 500 to reach new all-time highs on Tuesday and again on Friday. Markets
were bolstered by a stronger than expected first quarter GDP reading, which
indicated that the U.S. economy grew at an annual rate of 3.2% despite the
government shutdown and harsh winter weather. However, many economists have
noted that the strong reading got a big boost from very favorable net export
numbers, which can be quite volatile. It would be unsurprising to see a
material shift downward during Q2 if import/export activity exhibits a
reversion to the mean. However, at the very least, investors should take the Q1
GDP data as a signal that growth is not stalling, which is a far cry from the
concerns that dominated sentiment in 2018.
The Market Recovery Is Complete After reaching new all-time highs last week, the market has completed its recovery from the volatility experienced during the end of 2018. While there are a variety of factors that helped to push markets back to all-time highs, the most significant was that the economy remained resilient. The fears of a protracted slow-down that dominated Q4 2018 never truly manifested in the way that many anticipated, and the GDP data from last week has helped to confirm that these fears may have been overblown. The chart below shows the quarterly US GDP readings dating back to the 1960’s. Recent economic growth in the U.S. has remained robust and has now pushed beyond the historical average rate of 2.8%. While growth in the U.S. is unlikely to remain at the current level forever (for reasons touched upon above), we are not yet seeing signs of the recession many had feared was on the horizon just a quarter ago.
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: “Accessing retirement funds – when and how?” Questions can be submitted live on air by calling 610-755-8810 or sent in online anytime at yourfinancialchoices.com/contact-laurie
