The Numbers & “Heat Map”

Posted on September 14, 2021 by The Weekly Commentary

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	POSITIVE	July retail sales declined 1.1% vs. June 2021 but are 15.8% higher than July 2020.
CORPORATE EARNINGS	POSITIVE	S&P 500 Q2 sales and earnings grew an astonishing 25% and 89%, respectively, when compared to the heavily depressed figures in Q2 2020.
EMPLOYMENT	POSITIVE	The unemployment rate is down to 5.2%. In August, new job creation was disappointing, but jobless claims were as low as they have been since March 2020.
INFLATION	NEUTRAL	Inflation remained at 5.4% year-over-year in July, the same reading as in June. Fed Chairman Jay Powell believes that the high inflation is transitory and will decelerate as global supply chain bottlenecks resolve.
FISCAL POLICY	POSITIVE	The Senate passed a $1 trillion infrastructure package. The bill is expected to be voted on by The House by the end of this year.
MONETARY POLICY	POSITIVE	The Federal Reserve has indicated that it does not plan to increase interest rates until 2023.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	NEUTRAL	Although the Taliban’s control in Afghanistan is concerning, it is unlikely to have a meaningful global economic impact.
ECONOMIC RISKS	NEUTRAL	2021 is shaping up as one of the strongest economic years on record. The primary risk at present is that of persistent inflation which begets higher interest rates.

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.

Valley National Financial Advisors, and its family of companies, has been in the Lehigh Valley since 1985. The company is independent and locally owned. As a respected and trusted organization, our relationships with many clients and their families transcend generations. We have the expertise to provide clients with financial strategies to effectively manage their existing assets and to provide for the eventual transfer of their wealth.

Our one-stop service model includes: Financial Planning – Investment Management – Estate Planning – Retirement Planning – Education Planning – Tax Planning & Preparation – Insurance Planning – Trust Services, offered as a Trust Representative Office of National Advisors Trust Company, FSB – ExecutiveEdgeTM, Personal Financial Planning for Corporate Leaders. Our services are provided by a team of objective professionals and managed by one contact person – your personal financial advisor.

Valley National Financial Advisors is proud home of the Lehigh Valley’s most CFP® – Certified Financial Planner Professionals^TM. Among other honors, Valley National has been voted Best Financial Planner in the Lehigh Valley seven times by the readers of Lehigh Valley Magazine, and ranked among FA Magazine’s Top RIAs and AdvisorOne’s Top Wealth Managers.

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