Daily Archives: November 26, 2019

VNFA NEWS

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Thanksgiving Holiday Office Hours
Our offices will be closed on Thursday, November 28, and closing early with the markets at 1 p.m. on Friday, November 29. All of us at VNFA are grateful for our family of clients and friends. Happy Thanksgiving!

The Markets This Week

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by Connor Darrell CFA, Assistant Vice President – Head of Investments
Markets were largely stagnant last week as investors continued to wait patiently for further developments in the U.S./China trade negotiations. On Friday, Chinese President Xi Jinping stated that the Chinese wish to reach a “phase one” deal with the United States that is based upon “mutual respect and understanding,” further reiterating that while he does not want the trade war to escalate further, he would push back on U.S. demands when deemed necessary. As the rhetoric from Washington continues to suggest that a phase one deal is “very close,” the U.S. Department of Commerce issued a 90-day extension for U.S. companies to continue doing business with China’s Huawei for the third time. Bond yields moved modestly lower during the week as the lack of material development in the trade discussions seemed to outweigh some positive economic signals, which included evidence of stabilization in global manufacturing activity.

Happy Thanksgiving
In honor of one of America’s favorite holidays, we wanted to share some fun facts (courtesy of JP Morgan Asset Management and WalletHub.com) about the Thanksgiving season:

  • This year, the average cost of a 10-person Thanksgiving dinner is $48.91, only $0.01 higher than last year. Why such a small increase? As a result of ample Turkey supply, the price of a 16-lb. turkey decreased by $0.91 compared to last year and is expected to cost about $20.80.
  • Each year, American spend an estimated $550 million on Thanksgiving turkeys. At a price of $1.30/pound, that’s over 423 million pounds of Turkey.
  • In 2018, Americans spent over $3.7 billion while shopping online during Thanksgiving Day.
  • Over 54 million Americans are expected to travel for this year’s holiday (the most since 2005). 89.4% of those travelers will drive to their destinations.
  • The average shopper spends $313 over the five-day thanksgiving shopping period (Thanksgiving Day thru Cyber Monday).
  • The NFL’s three-game Thanksgiving schedule pulled in nearly 79 million combined viewers last year.
  • The Thanksgiving football tradition dates back to 1876, when Yale defeated Princeton in a game played in Hoboken, NJ.
  • In a survey of what Americans are most thankful for, the most popular responses were Family (88%), Health (77%), and Personal Freedom (72%), with Wealth (32%) being one of the least popular choices.

Did You Know…?

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Next week is the 4th annual National Tax Security Awareness Week – December 2 through December 6. According to the IRS, this is the heaviest period of time when people are online and when phishing is most common. The five days, starting with Cyber Monday, will feature topics about basic security guidance.

  • Day 1: Protect personal and financial information online
  • Day 2: Learn to recognize phishing emails and phone scams
  • Day 3: Create strong passwords to protect online accounts
  • Day 4: Recognize clues of identity theft
  • Day 5: Tax professionals should review their safeguards

Read the IRS guidance around each of these topics and more about the resources that will be available to help protect taxpayers and tax pros against identity theft at irs.gov.

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

U.S. ECONOMIC HEAT MAP
The health of the U.S. 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 despite recent softening in retail sales numbers. US consumer confidence remains high, but we will be watching this metric closely over the next couple of weeks and throughout earnings season. The consumer has been the bedrock of the US economy through much of the current expansion.

FED POLICIES

A-

The Federal Reserve cut its interest rate target by an additional 25 bps last month. This was the third cut this year, but Chairman Jerome Powell signaled to markets that we this may be the last adjustment to the Fed’s policy target until there is a meaningful shift in the economic data (either positive or negative).

BUSINESS PROFITABILITY

B-

As was largely expected by markets, corporate earnings growth was weak during Q3 as a result of the global slowdown and trade policy uncertainty. However, according to Factset, 75% of S&P 500 companies reported a positive earnings surprise, meaning things were not quite as weak as many had feared.

EMPLOYMENT

A

The US economy added a healthy 128,000 new jobs in October. Furthermore, there were upward revisions to data from the September and August reports in addition to evidence of strong wage growth. Considering the slew of negative sentiment leading up to its release, this was one of the more uplifting release in recent memory.

INFLATION

A

Inflation is often a sign of “tightening” in the economy, and can be a signal that growth is peaking. Recent inflationary data has increased slightly, but inflation remains benign at this time, which bodes well for the extension of the economic cycle.

OTHER CONCERNS

INTERNATIONAL RISKS

7

Despite the US & China being close to a “Phase One” agreement, we are keeping our “international risks” metric at an elevated level of 7 for now. Other key areas of focus for markets include the ongoing Brexit negotiations, rising economic nationalism around the globe, and escalating tensions in the Middle East.

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.