Daily Archives: July 14, 2020

VNFA NEWS

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Meet Northeast Community Center – Team VNFA wants to raise awareness for our community partner.
In order to continue providing programs and services to the community, Northeast Community Center depends on donations, grants, and fundraising events. While monetary donations are most needed, they also greatly appreciate donations in forms of food, office supplies, paper products, etc.

Hygiene Products
For low-income families, hygiene products are often very difficult to obtain. They cannot be purchased with SNAP Benefits/food stamps and we find that when a family has limited money to spend and must make choices, this is one of the items that they choose to go without. Particularly, youth of the community are strongly impacted
DONATE NOW: neccbethlehem.org/get-involved/

RSVP NOW for our virtual community gathering to learn more.

The Markets This Week

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by Maurice (Mo) Spolan, Investment Research Analyst
Stocks were roughly flat last week as COVID-19 cases surged in each of the nation’s three most populous states: California, Florida and Texas. According MFS Investment Management, high-frequency data such as retail foot traffic and credit card spend suggest that consumers have pared back activity over the past couple of weeks. This is consistent with the fact that approximately 30 states have recently reversed reopening measures. In addition, the $600-per-week unemployment benefit is set to expire at July’s conclusion, layering on further uncertainty as to whether congress will pass more stimulus to keep the economy stabilized.

Economic activity recovered faster than expected during May and June, however, data appears to show such a recovery now slowing in July as consumers act with greater caution in light of surging case-loads. Economic uncertainty remains extremely high, while unfortunately, the outlook from a health perspective is a bit more concrete: the coronavirus will remain a major impact on society until a vaccine is widely disseminated or a highly effective treatment is concocted. The unpredictability associated with the ongoing economic and financial climate illustrate why adherence to one’s long-term savings objectives is almost always the best way to invest. 

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. 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

NEGATIVE

May’s retail sales and consumer spending rebounded at record clips month-over-month, following unprecedented declines in April. However, new coronavirus cases in the US are accelerating, which threatens to rescind the gains in consumer confidence.

CORPORATE EARNINGS

VERY NEGATIVE

 According to forecasts by Blackrock, U.S. corporate earnings are unlikely to intersect with the path that they would have taken, had COVID-19 never occurred, until the end of the decade. However, Blackrock now expects higher equity returns over the prospective ten years than they did in December 2019 because of lower interest rates.

EMPLOYMENT

VERY NEGATIVE

 Non-farm payroll increased by 4.8 million jobs in June, led by the Leisure & Hospitality sector, as the unemployment rate declined to 11.1%. However, the unemployment rate remains historically high and is still 7.6% higher than it was in February.

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

 The Federal Reserve has supported asset markets with unprecedented speed and magnitude in respond to COVID-19. Monetary stimulus is perhaps the primary reason why equity markets have rallied over the three past months.

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 impacts from COVID-19 were as swift and pronounced as any shock in modern times. Robust monetary and fiscal stimulus stabilized the system, and several measures of the economy improved in May and June. However, economic activity remains well-below that in 2019, and uncertainty remains very high.

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.

Quote of the Week

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“Financial planning is like navigation. If you know where you are and where you want to go, navigation isn’t such a great problem. It’s when you don’t know the two points that it’s difficult.” – Venita VanCaspel

“Your Financial Choices”

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Tune in Wednesday, 6 PM for “Your Financial Choices” show on WDIY: Retirement Account Rules Under the CARES Act

Laurie has returned to the studio which means she can take your questions live on the air at 610-758-8810, or address those submitted via  yourfinancialchoices.com. Recordings of past shows are available to listen or download at both yourfinancialchoices.com and wdiy.org.