The Numbers & “Heat Map”

Posted on January 12, 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	NEUTRAL	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the COVID-19 pandemic.
CORPORATE EARNINGS	NEUTRAL	In Q3, S&P 500 earnings were down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter. Companies will begin reporting Q4 earnings in the coming weeks.
EMPLOYMENT	NEGATIVE	The unemployment rate was stagnant in December at 6.7%. This is the first month since April in which the unemployment rate did not improve.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	POSITIVE	Congress passed its second major fiscal relief package of 2020, the most recent one amounting to $900 billion in stimulus. The bill currently provides for $600 in cash payments to American citizens, however, Congress is in negotiation to deliver an additional check for up to $2,000, as President Trump has requested.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve supported asset markets with unprecedented speed and magnitude in response to COVID-19.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	NEUTRAL	There are few, if any, looming geopolitical risks that could upset the economic recovery.
ECONOMIC RISKS	NEUTRAL	Although economic activity mostly remains below 2019’s levels, improvement has occurred across nearly every measure since the April nadir. With multiple vaccines in distribution, a second fiscal package in place, and interest rates low, 2021 is positioning to be a strong economic year.

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.

The Numbers & “Heat Map”

Posted on January 5, 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.

US ECONOMY
CONSUMER HEALTH	NEUTRAL	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the Coronavirus pandemic.
CORPORATE EARNINGS	NEUTRAL	In Q3, S&P 500 earnings were down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter.
EMPLOYMENT	NEGATIVE	In November, the unemployment rate declined to 6.7%. This continued the month-over-month improvements seen since April, when the metric was above 14%. However, the pace of hiring slowed greatly in November as coronavirus cases surged.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	POSITIVE	Congress passed its second major fiscal relief package of 2020, the most recent one amounting to $900 billion in stimulus. The bill currently provides for $600 in cash payments to American citizens, however, Congress is in negotiation to increase this quantity to $2,000, as President Trump has requested.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve supported asset markets with unprecedented speed and magnitude in response to COVID-19.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	NEUTRAL	There are few, if any, looming geopolitical risks that could upset the economic recovery.
ECONOMIC RISKS	NEUTRAL	Although economic activity mostly remains below 2019’s levels, improvement has occurred across nearly every measure since the April nadir. With multiple vaccines in distribution, a second fiscal package in place, and interest rates low, 2021 is positioning to be a strong economic year.

The Numbers & “Heat Map”

Posted on December 29, 2020 by The Weekly Commentary

THE NUMBERS

US ECONOMY
CONSUMER HEALTH	NEUTRAL	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the COVID-19 pandemic.
CORPORATE EARNINGS	NEUTRAL	In Q3, S&P 500 earnings were down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter.
EMPLOYMENT	NEGATIVE	In November, the unemployment rate declined to 6.7%. This continued the month-over-month improvements seen since April, when the metric was above 14%. However, the pace of hiring slowed greatly in November as COVID-19 cases surged.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	POSITIVE	Congress passed its second major fiscal relief package of 2020, the most recent one amounting to $900 billion in stimulus. President Trump, after a minor delay, signed the Stimulus Bill into law.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve supported asset markets with unprecedented speed and magnitude in response to COVID-19.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	NEUTRAL	There are few, if any, looming geopolitical risks that could upset the economic recovery.
ECONOMIC RISKS	NEUTRAL	Although economic activity mostly remains below 2019’s levels, improvement has occurred across nearly every measure since the April nadir. With multiple vaccines in distribution, a second fiscal package in place, and interest rates low, 2021 is positioning to be a strong economic year.

The Numbers & “Heat Map”

Posted on December 22, 2020 by The Weekly Commentary

THE NUMBERS

US ECONOMY
CONSUMER HEALTH	NEUTRAL	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the Coronavirus pandemic.
CORPORATE EARNINGS	NEUTRAL	In Q3, S&P 500 earnings were down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter.
EMPLOYMENT	NEGATIVE	In November, the unemployment rate declined to 6.7%. This continued the month-over-month improvements seen since April, when the metric was above 14%. However, the pace of hiring slowed greatly in November as coronavirus cases surged.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	POSITIVE	Congress has passed a $900 billion stimulus package, following months of negotiation.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve supported asset markets with unprecedented speed and magnitude in response to COVID-19.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	NEUTRAL	There are few, if any, looming geopolitical risks that could upset the economic recovery.
ECONOMIC RISKS	NEUTRAL	Although economic activity mostly remains below 2019’s levels, improvement has occurred across nearly every measure since the April nadir. With a vaccine on the horizon, a fiscal package probable, and interest rates low, 2021 is positioning to be a strong economic year.

The Numbers & “Heat Map”

Posted on December 15, 2020 by The Weekly Commentary

THE NUMBERS

US ECONOMY
CONSUMER HEALTH	NEUTRAL	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the COVID-19 pandemic.
CORPORATE EARNINGS	NEUTRAL	As more than 90% of S&P 500 constituents have reported Q3 results, the index’s earnings are down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter.
EMPLOYMENT	NEGATIVE	In November, the unemployment rate declined to 6.7%. This continued the month-over-month improvements seen since April, when the metric was above 14%. However, the pace of hiring slowed greatly in November as COVID-19 cases surged.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	POSITIVE	A second major COVID-19 stimulus bill is likely to be passed over the coming months.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve supported asset markets with unprecedented speed and magnitude in response to COVID-19.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	NEUTRAL	There are few, if any, looming geopolitical risks that could upset the economic recovery.
ECONOMIC RISKS	NEUTRAL	Although economic activity mostly remains below 2019’s levels, improvement has occurred across nearly every measure since the April nadir. With a vaccine on the horizon, a fiscal package probable, and interest rates low, 2021 is positioning to be a strong economic year.

The Numbers & “Heat Map”

Posted on December 8, 2020 by The Weekly Commentary

THE NUMBERS

US ECONOMY
CONSUMER HEALTH	NEUTRAL	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the COVID-19 pandemic.
CORPORATE EARNINGS	NEUTRAL	As more than 90% of S&P 500 constituents have reported Q3 results, the index’s earnings are down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter.
EMPLOYMENT	NEGATIVE	In November, the unemployment rate declined to 6.7%. This continued the month-over-month improvements seen since April, when the metric was above 14%. However, the pace of hiring slowed greatly in November as COVID-19 cases surged.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	POSITIVE	A second major COVID-19 stimulus bill is likely to be passed over the coming months.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve supported asset markets with unprecedented speed and magnitude in response to COVID-19.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	NEUTRAL	There are few, if any, looming geopolitical risks that could upset the economic recovery.
ECONOMIC RISKS	NEUTRAL	Although economic activity mostly remains below 2019’s levels, improvement has occurred across nearly every measure since the April nadir. With a vaccine on the horizon, a fiscal package probable, and interest rates low, 2021 is positioning to be a strong economic year.

The Numbers & “Heat Map”

Posted on December 1, 2020 by The Weekly Commentary

THE NUMBERS

US ECONOMY
CONSUMER HEALTH	NEGATIVE	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the COVID-19 pandemic.
CORPORATE EARNINGS	NEGATIVE	As more than 90% of S&P 500 constituents have reported Q3 results, the index’s earnings are down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter.
EMPLOYMENT	NEGATIVE	As of October’s end, the U.S. unemployment rate stood at 6.9%, well below where most expected the metric to be at this point some months ago. The unemployment rate has consistently declined since peaking above 14% in April.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	VERY POSITIVE	A second major COVID-19 stimulus bill is likely to be passed over the coming months.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve supported asset markets with unprecedented speed and magnitude in response to COVID-19.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	VERY NEGATIVE	The relationship between the US and China, the world’s two largest economies, was already weakened by the trade war but has deteriorated further as a result of COVID-19.
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; however, economic activity remains well- below that in 2019, and uncertainty remains high.

The Numbers & “Heat Map”

Posted on November 24, 2020 by The Weekly Commentary

THE NUMBERS

US ECONOMY
CONSUMER HEALTH	NEGATIVE	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the COVID-19 pandemic.
CORPORATE EARNINGS	NEGATIVE	As more than 90% of S&P 500 constituents have reported Q3 results, the index’s earnings are down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter.
EMPLOYMENT	NEGATIVE	As of October’s end, the U.S. unemployment rate stood at 6.9%, well below where most expected the metric to be at this point some months ago. The unemployment rate has consistently declined since peaking above 14% in April.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	VERY POSITIVE	A second major COVID-19 stimulus bill is likely to be passed over the coming months.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve has supported asset markets with unprecedented speed and magnitude in response to COVID-19.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	VERY NEGATIVE	The relationship between the US and China, the world’s two largest economies, was already weakened by the trade war but has deteriorated further as a result of COVID-19.
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; however, economic activity remains well- below that in 2019, and uncertainty remains high.

The Numbers & “Heat Map”

Posted on November 17, 2020 by The Weekly Commentary

THE NUMBERS

US ECONOMY
CONSUMER HEALTH	NEGATIVE	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its output lost to the COVID-19 pandemic.
CORPORATE EARNINGS	NEGATIVE	With 90% of S&P 500 constituents having reported Q3 results, earnings are down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter.
EMPLOYMENT	NEGATIVE	As of October’s end, the U.S. unemployment rate stood at 6.9%, well below where most expected the metric to be at this point some months ago. The unemployment rate has consistently declined since peaking above 14% in April.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	VERY POSITIVE	A second major COVID-19 stimulus bill is likely to be passed over the coming months.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve has supported asset markets with unprecedented speed and magnitude in response to COVID-19.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	VERY NEGATIVE	The relationship between the US and China, the world’s two largest economies, was already weakened by the trade war but has deteriorated further as a result of COVID-19.
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; however, economic activity remains well- below that in 2019, and uncertainty remains high.

The Numbers & “Heat Map”

Posted on November 10, 2020 by The Weekly Commentary

THE NUMBERS

US ECONOMY
CONSUMER HEALTH	NEGATIVE	GDP increased at a 33.1% annualized pace in Q3. The U.S. economy has now recovered about 2/3 of its lost output owed to the COVID-19 pandemic.
CORPORATE EARNINGS	VERY NEGATIVE	With 90% of S&P 500 constituents having reported Q3 results, earnings are down 7-8% from the year-ago period. This compares to Q2 2020, in which S&P 500 earnings were down by 1/3 from the comparable 2019 quarter.
EMPLOYMENT	VERY NEGATIVE	As of October’s end, the U.S. unemployment rate stood at 6.9%, well below where most expected the metric to be at this point some months ago. However, with Covid-19 cases surging, the risk of a lockdown is elevated, which would likely cause an increase in the jobless rate.
INFLATION	POSITIVE	The Fed plans to allow inflation to temporarily overshoot its 2% target such that the long-term average is 2%. Inflation has been tame since the Great Financial Crisis, less than 2%.
FISCAL POLICY	VERY POSITIVE	A second major COVID-19 stimulus bill is likely to be passed over the coming months.
MONETARY POLICY	VERY POSITIVE	The Federal Reserve has supported asset markets with unprecedented speed and magnitude in response to Covid-19. The Fed is prioritizing a recovery in economic output over the curtailing of potential inflation, which is an accommodative stance.
GLOBAL CONSIDERATIONS
GEOPOLITICAL RISKS	VERY NEGATIVE	The relationship between the US and China, the world’s two largest economies, was already weakened by the trade war but has deteriorated further as a result of COVID-19.
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 economic metrics improved in Q3 over Q2, however, economic activity remains well-below that in 2019.

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The Weekly Commentary

Observations of the current state of the stock and bond markets

Category Archives: The “Heat Map”

The Numbers & “Heat Map”

The Numbers & “Heat Map”

The Numbers & “Heat Map”

The Numbers & “Heat Map”

The Numbers & “Heat Map”

The Numbers & “Heat Map”

The Numbers & “Heat Map”

The Numbers & “Heat Map”

The Numbers & “Heat Map”

The Numbers & “Heat Map”