Criminals are continuing to use the
COVID-19 Economic Impact Payments as cover for schemes to steal personal
information and money.
Watch out for Economic Impact Payment
scams, fake at-home test kits, cures, vaccine, pills and advice for COVID-19, fake
shops and websites selling large qualities of medical supplies, fake charities soliciting
donations, and fraudulent investment information about companies working on a vaccine.
Finally, be alert about possible phishing schemes utilizing e-mails, letters, texts
and links using keywords such as “CoronaVirus” “COVID-19” and “Stimulus” in
varying ways. Read
today’s IRS press release for more details and guidance.
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. Interest Rates: Federal Reserve, Mortgage Bankers Association
MARKET HEAT MAP
The health of the economy is a key driver of long-term returns in the stock market. Below, we assess the key economic conditions that we believe are of particular importance to investors.
US ECONOMY
CONSUMER HEALTH
VERY NEGATIVE
Social distancing has slackened in recent weeks as states reopen, Americans appear increasingly comfortable with travel and large gatherings occur via demonstrations. The extent to which these events will impact the spread of COVID-19, and thereby economic activity, will be discerned over the coming weeks.
CORPORATE EARNINGS
VERY NEGATIVE
Coming into the year, analysts were expecting mid to single digit earnings growth, but the spread of COVID-19 is likely to have a substantial impact on near-term earnings forecasts. However, earnings could bounce back quickly once the pandemic has run its course.
EMPLOYMENT
VERY NEGATIVE
2.5 million jobs were added in April, in large part driven by the return of furloughed workers. The figure represents the greatest monthly increase in jobs since at least 1939, and a stark divergence from economic consensus which expected further unemployment. Nonetheless, the jobless rate remains historically high at 13.3%.
INFLATION
POSITIVE
The deflationary environment created by COVID-19 should provide additional room for robust stimulus from both fiscal and monetary policy initiatives. However, we will be watching closely in the intermediate term for second and third order effects leading to a return of inflationary pressure.
FISCAL POLICY
VERY POSITIVE
The US Government has passed a series of fiscal measures to combat the economic impacts of the COVID-19 pandemic. The largest of these measures, known as the CARES Act, provides approximately $2.2 trillion of support for businesses and families that are impacted by business closures and unemployment.
MONETARY POLICY
VERY POSITIVE
In response to the threat of COVID-19, the Federal Reserve has implemented two emergency rate cuts and has moved its target interest rate back to zero. Additionally, it has announced its intention to conduct further asset purchases to support markets. We believe that the Fed is doing all it can to support the economy and markets.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS
VERY NEGATIVE
Western opposition to China’s National Security Law, legislation that reduces Hong Kong’s autonomy, has amplified the discord already present between the US and China as a result of COVID-19. In addition, demonstrations across the US evidence considerable domestic unrest.
ECONOMIC RISKS
VERY NEGATIVE
The economic impacts of the COVID-19 pandemic are likely to be substantial. However, we believe that the eventual economic recovery (which will be aided by historically large economic stimulus) may occur more swiftly than from previous economic shocks.
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.
Tune in Wednesday for another new “Your Financial Choices” show on WDIY:JOBS & LABOR – where are we and what should you know?
Laurie will be recording the show Tuesday to air at
the normal time, Wednesday, 6-7 p.m. She will answer questions that have been
submitted via yourfinancialchoices.com.
Live episodes of “Your Financial Choices” are
postponed until further notice as Laurie and her guests are working from home
in response to guidance around the COVID-19 pandemic. WDIY will continue to
broadcast prerecorded local shows as well as available NPR programming. Please
continue to support local radio!
We Are Hiring! Our VNFA team is seeking an experienced individual to take over as our Head of Investments.This position is responsible for coordinating and managing the activities of the investment team, which oversees the development and implementation of the investment strategies employed in the management of client portfolios. https://valleynationalgroup.com/about-vnfa/join-our-team/
by
Connor Darrell CFA, Assistant Vice President – Head of Investments Global equities advanced considerably from week-ago
levels as the “great reopening” continued in earnest. Consumer activity has
begun to show signs of picking up, and images of large crowds celebrating the
holiday weekend in several popular vacation destinations provided visual proof.
However, while encouraging from an economic activity standpoint, the images
have created a sense of unease for many leaders and have highlighted how
difficult it will be to achieve a measured reopening.
The market
rebound has continued to remain resilient in the face of a variety of
geopolitical challenges. With each passing day, the durability of the US-China
trade deal faces tougher tests as the relationship and trust between the two
superpowers continues to erode. Not only has the origins of the virus created a
growing sense of mistrust, but news that China will impose new national
security restrictions in an attempt to suppress ongoing protests in the city of
Hong Kong sparked a slew of international condemnation last week. U.S.
Secretary of State Mike Pompeo stated that the city of Hong Kong no longer
possesses autonomy from the central Chinese government, an issue that could
further jeopardize ongoing trade discussions.
Domestically,
geopolitical concerns have increased in recent weeks as well, with footage of
civil unrest in cities across the country going viral. The relative stability
of financial markets compared to the mounting tensions both at home and abroad
have underscored the contrast between “Wall St” and “Main St”, and have caused
many to continue questioning the strength of the market’s recovery. From an
investment standpoint, this dynamic continues to underscore the divergences
that can occur between financial markets and geopolitics and serves as further
evidence of the difficulty of market timing.
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. Interest Rates: Federal Reserve, Mortgage Bankers Association
MARKET HEAT MAP
The health of the economy is a key driver of long-term returns in the stock market. Below, we assess the key economic conditions that we believe are of particular importance to investors.
US ECONOMY
CONSUMER HEALTH
VERY NEGATIVE
The consumer was the bedrock of the US economy through much of the previous decade. However, our Consumer Health grade remains VERY NEGATIVE as a result of the unprecedented social distancing and quarantining efforts currently being employed to fight the spread of COVID-
19.
CORPORATE EARNINGS
VERY NEGATIVE
Coming into the year, analysts were expecting mid to single digit earnings growth, but the spread of COVID-19 is likely to have a substantial impact on near-term earnings forecasts.
However, earnings could bounce back quickly once the pandemic has run its course.
EMPLOYMENT
VERY NEGATIVE
April’s nonfarm payrolls report was historically ugly. We expect continued stress in the labor market due to the suppression of economic activity necessary to combat the spread of COVID- 19.
INFLATION
POSITIVE
The deflationary environment created by COVID-19 should provide additional room for robust
stimulus from both fiscal and monetary policy initiatives. However, we will be watching closely
in the intermediate term for second and third order effects leading to a return of inflationary pressure.
FISCAL POLICY
VERY POSITIVE
The US Government has passed a series of fiscal measures to combat the economic impacts of
the COVID-19 pandemic. The largest of these measures, known as the CARES Act, provides approximately $2.2 trillion of support for businesses and families that are impacted by business
closures and unemployment.
MONETARY POLICY
VERY POSITIVE
In response to the threat of COVID-19, the Federal Reserve has implemented two emergency
rate cuts and has moved its target interest rate back to zero. Additionally, it has announced its intention to conduct further asset purchases to support markets. We believe that the Fed is doing all it can to support the economy and markets.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS
VERY NEGATIVE
With COVID-19 being declared a global pandemic, our geopolitical risks rating is VERY NEGATIVE.
However, we think it is important for investors to disentangle the public health concerns over the near-term from the expectations for markets over the long-term. The pandemic will ultimately prove to be transitory in nature.
ECONOMIC RISKS
VERY NEGATIVE
The economic impacts of the COVID-19 pandemic are likely to be substantial. However, we believe that the eventual economic recovery (which will be aided by historically large economic stimulus) may occur more swiftly than from previous economic shocks.
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.
Laurie will be recording the show Tuesday to air at the normal time, Wednesday, 6-7 p.m. She will answer questions that have been submitted via yourfinancialchoices.com and discuss:
Live episodes of “Your Financial Choices” are postponed until further notice as Laurie and her guests are working from home in response to guidance around the COVID-19 pandemic. WDIY will continue to broadcast prerecorded local shows as well as available NPR programming. Please continue to support local radio!
