Our VNFA team is “gearing up” for another Community Bike Works SPIN-A-THON fundraiser. Teams of 4-8 riders will raise a minimum of $1,000 and tag-team cycle for 3 hours at LVHN Fitness on September 28. Learn more about the cause and how to participate or lend support at Community Bike Works’ crowdrise web page.
VOTE FOR US? VNFA is one of the nominees for the 2019 Lehigh Valley Business Reader Rankings Award in the category of Wealth Management. If you feel we are worthy, click here to vote. Plus, check out all the other worthy LV businesses in each category.
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 last week’s GDP provided further evidence of healthy consumer spending.
FED POLICIES
B+
We have increased our Fed Policies grade to a B+ after Jerome Powell commented that “a number” of Fed decision makers believe that the case for a rate cut in the near future has strengthened. Markets are expecting a rate cut this week.
BUSINESS PROFITABILITY
B-
As was anticipated, first quarter earnings revealed a tapering of growth. Expectations for Q2 earnings are also relatively low. However, this is largely a result of the fact that YoY comparisons are made relative to a historically strong 2018.
EMPLOYMENT
A
The US economy added 224,000 new jobs in June, beating consensus estimates by a wide margin. We continue to view the jobs market as 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 as the economic cycle continues to mature, this metric will deserve our ongoing attention.
OTHER CONCERNS
INTERNATIONAL RISKS
6
We have adjusted our international risks rating down one notch to a 6 following a recent cooling of rhetoric in the US/China trade negotiations. While new developments are still likely to create short-term volatility in markets, both sides have an incentive to reach a deal.
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.
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by Connor Darrell CFA,
Assistant Vice President – Head of InvestmentsThe S&P 500 led global equities forward last week as the market’s focus
began to turn once again toward monetary policy. In Europe, the ECB indicated
that it would reduce short-term interest rates in September in an effort to
stimulate the eurozone’s softening economy. Meanwhile, the Federal Reserve is
widely expected to take a similar course of action when it meets this week.
Also weighing on global equity returns was
mounting uncertainty surrounding the ongoing Brexit saga. Boris Johnson, who
has pledged to deliver on 2016’s Brexit referendum with or without a concrete
deal in place, won the race to become the next Prime Minister of the United
Kingdom.
All Eyes on the Fed At
this week’s meeting, the Federal Reserve is widely expected to cut short-term
interest rates by at least 25 bps. However, the bond market has had this
expectation baked into current prices for several weeks now, and any market
movements are likely to be driven by the forward outlook for monetary policy,
which will likely be discussed during the press conference on Thursday. At
present, markets are anticipating more than two rate cuts before the end of the
year.
Whether or not the market’s expectations
for monetary policy are met will be largely contingent upon the strength of
economic data between now and the end of the year. Last week, it was reported
that the U.S. economy expanded at a rate of 2.1% annualized, which was on the
upper range of consensus expectations. That growth was supported by very strong
consumer spending, which more than offset a slight decline in business
investment. Business investment has remained an area of weakness in recent GDP
figures around the world (primarily as a result of uncertainty surrounding
trade policy), but the strength of the consumer continues to help keep the U.S.
economy on a solid foundation. Furthermore, with face-to-face trade talks
resuming between the U.S. and China this week, there is some optimism that
progress can be made. Any meaningful progress on trade would likely improve
business confidence and could begin to push business investment trends back in
a positive direction.
Our HR Director, Ashley Santiago
has earned her SHRM-CP. This professional distinction, given by the Society of
Human Resources Management, requires an existing level of education and
experience, the completion of an intensive course and exam covering knowledge-
and competency-based questions.
