Monthly Archives: November 2019

From the Pros… VIDEO

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2019 Year-End Tax Planning Topics
Six of our VNFA CPA professionals offer insights on important considerations in tax planning for year-end 2019, going into 2020.
WATCH NOW

RELATED VIDEOS

Tax-Savvy Charitable Giving
Senior Vice President Rod Young, CPA/PFS, CFP® offers ideas for maximizing your tax planning to incorporate charitable giving within the updated tax law landscape. WATCH NOW

Capital Gains/Losses & Dividends
Rod Young, CPA/PFS, CFP® discusses the importance of tax planning with regard to capital gains and losses, as well as dividends. WATCH NOW

Required Minimum Distributions
Laurie A. Siebert, CPA, CFP®, AEP® discusses the importance of tax planning around Required Minimum Distributions. WATCH NOW

Qualified Charitable Distributions
Vice President Timothy G. Roof, CFP explains the basics of Qualified Charitable Distributions (QCDs). WATCH NOW

529 Plans: PA State Tax Benefits
Vice President Jaclyn Cornelius, EA, CFP®, offers some insights and options Pennsylvania taxpayers may want to know about 529 plan contributions and deductions. WATCH NOW

“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®.

This week, Laurie will discuss: “Holiday discussions – family and money.”

Laurie will take your questions live on the air at 610-758-8810 or in advance via yourfinancialchoices.com/contactlaurie.

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

VNFA NEWS

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We want to hear from you!
Our team is preparing for tax preparation season, and diving into conversations about related tax planning. As part of our commitment to our clients and our community, we want to provide information and ideas that are useful and interesting to you. So, let us know what topics or questions you would like our professional team to address in articles or video over the coming months. Contact us with your ideas.

The Markets This Week

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by Connor Darrell CFA, Assistant Vice President – Head of Investments
Fading fears of a global recession helped push risk assets higher while traditional safe-haven assets such as bonds underperformed. U.S. equity indices achieved new all-time highs as several signs of improvement in global economic conditions eased investors’ concerns. Markets cheered marked improvements in both non-manufacturing and manufacturing PMIs, which help to evaluate the confidence of business leaders. There were also encouraging signs from European consumer data, where retail sales rose 3.1% year-over-year. The reassuring data led to an increase in longer term bond yields and a steepening of the yield curve, resulting in negative returns for the major bond indices.

With Q3 earnings season close to wrapping up, FactSet Research is reporting a blended earnings growth rate of -2.4% year-over-year. With revenues rising 3%, the decline in corporate profits helps to underpin the impacts that rising costs have had on businesses coping with the fallout from the U.S./China trade dispute. Despite the decline, the overall numbers have actually exceeded analyst expectations, and many companies have seen their stock prices rise following earnings releases; yet another sign that things may not be quite as bad as many investors may have thought.

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 a recent decline 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 following last week. 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 poitive or negative).

BUSINESS PROFITABILITY

B-

As was largely expected by markets, corporate earnings growth has been weak thus far in Q3 as a result of the global slowdown and trade policy uncertainty. Throughout earnings season, we will be paying closer attention to management commentary and updates to forward guidance, which are likely to have a bigger impact on stock prices.

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.

Did You Know…?

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by Jessica Goedtel, CFP®, Assistant Vice President / Financial Advisor
The IRS has just released their 2020 contribution and benefit limits. Here’s what you need to know:

  • The maximum 401(k) contribution has increased to $19,500, from $19,000. Catch-up contributions for those age 50 and older have also been increased to $6,500 (from $6,000 in 2018 & 2019).
  • The annual IRA contribution amount has not been increased and remains at $6,000 (plus $1,000 for catch-up contributions).

The income brackets for IRA and Roth IRA contributions have also been updated for the 2020 tax year; more information can be found on the official IRS press release at irs.gov.

This is a great time to review your current retirement savings strategies to make sure you are taking full advantage of your tax deferral options.

“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®.

This week, Laurie will discuss: “Capital Blue Cross – Medicare Options.”

Laurie will take your questions live on the air at 610-758-8810 or in advance via yourfinancialchoices.com/contactlaurie.

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

VNFA NEWS

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In the Community
Our team supports programming through the Volunteer Center of the Lehigh Valley. Last week, our CEO was Honorary Chair for the Spirit of Volunteerism celebration, recognizing companies, organizations and individuals for their community impact.

Now, we are collecting shoe boxes and gifts for children across the region to receive Holiday Hope Chests. Described as “happiness in a shoe box,” these small gifts are often the only present many children receive. This year, nonprofits are requesting more than 10,000 boxes. That means there are 10,000 children who are in need.

Our team’s humble contribution usually amounts to somewhere between 20 and 30 boxes. But every box makes a difference. If you are so inclined, please look for the collection box in our front lobby where you can drop off items to help us do more. Visit volunteerlv.org to see the list of nonprofits requesting shoeboxes and the suggested gift list.

The Markets This Week

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by Connor Darrell CFA, Assistant Vice President – Head of Investments
Equity markets climbed higher last week, bolstered by healthier than expected corporate earnings and a strong October jobs report which also contained upward revisions to prior data. In addition to the stronger than expected job growth, Friday’s employment summary also revealed a healthy increase in hourly earnings of 3%, which is handily higher than the current rate of inflation and an excellent development for the U.S. consumer. 

The Federal Reserve implemented a widely anticipated quarter point rate cut on Wednesday and bond yields trickled lower as a result, which led to positive returns for bond investors. In his comments following the Fed announcement, Chairman Jerome Powell signaled to markets that the economic fundamentals would need to deteriorate significantly before the Fed would move to cut rates further, and we may now be entering the first period of steady policy rates for quite some time.

First Look at Q3 GDP Yields Positive Signs
According to advance estimates of Q3 US GDP figures released last week, real GDP grew at a rate of 1.9% during the quarter, which was faster than the consensus forecast of 1.6%. Given the Q3 data looks a bit lower than what was observed last quarter, the data provided further confirmation that the U.S. economy is slowing down but is not stalling in a way that many have begun to fear. Consumption growth was once again the primary driver of growth in GDP, with business investment and net exports offsetting some of the contributions from consumption for the second straight quarter, which illuminates some of the impacts of the U.S./China trade dispute. As the U.S. and China continue to inch closer to a “Phase One” trade deal, sentiment surrounding business decisions may have the opportunity to recover, but the length of the economic expansion will be largely driven by the consumer, which continues to benefit from wage growth and a historically healthy labor market.