Category Archives: The “Heat Map”

The Numbers & “Heat Map”

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THE NUMBERS
The 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

 Q1 2022 Real GDP shrunk at a 1.4% annual rate according to the first advance estimate. This is the first contraction since the beginning of the pandemic. The main factors that resulted in a decrease in GDP were a surge in imports and trade deficit highlighting that the U.S. is buying more goods from foreign countries. This may be an indication that the U.S. economy has recovered faster than other countries.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 9.2% — the lowest since Q4 2020 (3.8%). This estimate was revised upward from the previous forecast of 7.1% in April. So far, 97% of S&P500 companies have reported earnings — 77% reported a positive EPS surprise and 73% beat revenue expectations.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 428,000 in April compared to an estimated 398,000. The unemployment rate remained constant at 3.6%. Job growth was widespread, led by gains in leisure and hospitality, manufacturing, and transportation and warehousing.

INFLATION

NEGATIVE

 CPI rose 8.3% year-over-year in April 2022, compared to an estimated increase of 8.1%. Core CPI recorded a 6.2% increase, and PPI increased by 11%. Shelter, food, airline fares, and new vehicles were the largest contributors to the soar in CPI. The energy index fell for the first time in recent months — gasoline decreased by 6.1% while natural gas and electricity increased.

FISCAL POLICY

NEUTRAL

 After passing a $13.6 billion package to support Ukraine a few weeks ago, the House approved an additional $40 billion military and humanitarian package for Ukraine. The bill was passed with 368 votes against 57 votes. The total of the two packages ($53 billion) is the largest foreign aid moved through Congress in over 20 years.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps in March and 50 bps in May. Jay Powell projected a clear path for 2022 with as many as five additional rate hikes. The next decisions by the Fed will be data-driven based on future inflation numbers and estimated economic growth.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 Russia was able to avoid default so far by making the required payment on its debt however, the U.S. has imposed additional sanctions barring Russia from using U.S. banks to make debt payments. The next coupons worth $400 million will be due on June 23rd and 24th and Russia is trying to leverage resources outside the Western financial infrastructure to make these payments.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian- Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services. China is targeting June to end the Shanghai COVID-19 lockdown in hopes to revive its economy.

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 by

THE NUMBERS
The 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

 Q1 2022 Real GDP shrunk at a 1.4% annual rate according to the first advance estimate. This is the first contraction since the beginning of the pandemic. The main factors that resulted in a decrease in GDP were a surge in imports and trade deficit highlighting that the U.S. is buying more goods from foreign countries. This may be an indication that the U.S. economy has recovered faster than other countries.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 9.1% — the lowest since Q4 2020 (3.8%). This estimate was revised upward from the previous forecast of 7.1% in April. So far, 95% of S&P500 companies have reported earnings — 77% reported a positive EPS surprise and 73% beat revenue expectations.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 428,000 in April compared to an estimated 398,000. The unemployment rate remained constant at 3.6%. Job growth was widespread, led by gains in leisure and hospitality, manufacturing, and transportation and warehousing.

INFLATION

NEGATIVE

 CPI rose 8.3% year-over-year in April 2022, compared to an estimated increase of 8.1%. Core CPI recorded a 6.2% increase, and PPI increased by 11%. Shelter, food, airline fares, and new vehicles were the largest contributors to the soar in CPI. The energy index fell for the first time in recent months — gasoline decreased by 6.1% while natural gas and electricity increased.

FISCAL POLICY

NEUTRAL

 After passing a $13.6 billion package to support Ukraine a few weeks ago, the House approved an additional $40 billion military and humanitarian package for Ukraine. The bill was passed with 368 votes against 57 votes. The total of the two packages ($53 billion) is the largest foreign aid moved through Congress in over 20 years.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps in March and 50 bps in May. Jay Powell projected a clear path for 2022 with as many as five additional rate hikes. The next decisions by the Fed will be data-driven based on future inflation numbers and estimated economic growth.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 Russia was able to avoid default last week by making the required payment on its debt however, the markets are still assessing the probability of default in the coming months at 87%. This is primarily due to sanctions imposed by Western countries which are hindering the Russian economy and restricting capital flows in and out of Russia.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian- Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services. China is targeting June to end the Shanghai Covid-19 lockdown in hopes to revive its economy.

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 by

THE NUMBERS
The 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

 Q1 2022 Real GDP shrunk at a 1.4% annual rate according to the first advance estimate. This is the first contraction since the beginning of the pandemic. The main factors that resulted in a decrease in GDP were a surge in imports and trade deficit highlighting that the U.S. is buying more goods from foreign countries. This may be an indication that the U.S. economy has recovered faster than other countries.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 9.1% — the lowest since Q4 2020 (3.8%). This estimate was revised upward from the previous forecast of 7.1% in April. So far, 91% of S&P500 companies have reported earnings — 77% reported a positive EPS surprise and 74% beat revenue expectations.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 428,000 in April compared to an estimated 398,000. The unemployment rate remained constant at 3.6%. Job growth was widespread, led by gains in leisure and hospitality, manufacturing, and transportation and warehousing.

INFLATION

NEGATIVE

 CPI rose 8.3% year-over-year in April 2022, compared to an estimated increase of 8.1%. Core CPI recorded a 6.2% increase, and PPI increased by 11%. Shelter, food, airline fares, and new vehicles were the largest contributors to the soar in CPI. The energy index fell for the first time in recent months — gasoline decreased by 6.1% while natural gas and electricity increased.

FISCAL POLICY

NEUTRAL

 After passing a $13.6 billion package to support Ukraine a few weeks ago, the House approved an additional $40 billion military and humanitarian package for Ukraine. The bill was passed with 368 votes against 57 votes. The total of the two packages ($53 billion) is the largest foreign aid moved through Congress in over 20 years.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps in March and 50 bps in May. Jay Powell projected a clear path for 2022 with as many as five additional rate hikes bringing short-term rates to 1.75- 2.00% by year end 2022. The next decisions by the Fed will be data-driven based on future inflation numbers and estimated economic growth.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 Russia was able to avoid default last week by making the required payment on its debt however, the markets are still assessing the probability of default in the coming months at 87%. This is primarily due to sanctions imposed by Western countries which are hindering the Russian economy and restricting capital flows in and out of Russia.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian- Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services. China is targeting June to end the Shanghai Covid-19 lockdown in hopes to revive its economy.

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 by

THE NUMBERS
The 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

 Q1 2022 Real GDP shrunk at a 1.4% annual rate according to the first advance estimate. This is the first contraction since the beginning of the pandemic. The main factors that resulted in a decrease in GDP were a surge in imports and trade deficit highlighting that the U.S. is buying more goods from foreign countries. This may be an indication that the U.S. economy has recovered faster than other countries.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 9.1% — the lowest since Q4 2020 (3.8%). This estimate was revised upward from the previous forecast of 7.1% in April. So far, 91% of S&P500 companies have reported earnings — 77% reported a positive EPS surprise and 74% beat revenue expectations.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 428,000 in April compared to an estimated 398,000. The unemployment rate remained constant at 3.6%. Job growth was widespread, led by gains in leisure and hospitality, manufacturing, and transportation and warehousing.

INFLATION

NEGATIVE

 CPI rose 8.3% year-over-year in April 2022, compared to an estimated increase of 8.1%. Core CPI recorded a 6.2% increase, and PPI increased by 11%. Shelter, food, airline fares, and new vehicles were the largest contributors to the soar in CPI. The energy index fell for the first time in recent months — gasoline decreased by 6.1% while natural gas and electricity increased.

FISCAL POLICY

NEUTRAL

 After passing a $13.6 billion package to support Ukraine a few weeks ago, the House approved an additional $40 billion military and humanitarian package for Ukraine. The bill was passed with 368 votes against 57 votes. The total of the two packages ($53 billion) is the largest foreign aid moved through Congress in more than 20 years.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps in March and 50 bps in May. Jay Powell projected a clear path for 2022 with as many as five additional rate hikes bringing short-term rates to 1.75- 2.00% by year end 2022. The next decisions by the Fed will be data-driven based on future inflation numbers and estimated economic growth.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 Russia was able to avoid default last week by making the required payment on its debt however, the markets are still assessing the probability of default in the coming months at 87%. This is primarily due to sanctions imposed by Western countries which are hindering the Russian economy and restricting capital flows in and out of Russia.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian- Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services. China is targeting June to end the Shanghai Covid-19 lockdown in hopes to revive its economy.

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 by

THE NUMBERS
The 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

 Q1 2022 Real GDP shrunk at a 1.4% annual rate according to the first advance estimate. This is the first contraction since the beginning of the pandemic. The main factors that resulted in a decrease in GDP were a surge in imports and trade deficit highlighting that the U.S. is buying more goods from foreign countries. This may be an indication that the U.S. economy has recovered faster than other countries.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 9.1% — the lowest since Q4 2020 (3.8%). This estimate was revised upward from the previous forecast of 7.1% last week. So far, 87% of S&P500 companies have reported earnings — 79% reported a positive EPS surprise and 74% beat revenue expectations.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 428,000 in April compared to an estimated 398,000. The unemployment rate remained constant at 3.6%. Job growth was widespread, led by gains in leisure and hospitality, manufacturing, and transportation and warehousing.

INFLATION

NEGATIVE

 CPI rose 8.5% year-over-year in March 2022, the highest increase since 1982, driven by supply and demand mismatches and the additional strains on the global economy caused by the Russia- Ukraine conflict. Core CPI came in slightly below expectations (6.5% vs. 6.6%) while PPI hit the highest level on record (11.2%). Inflation concerns are clearly impacting the markets, the FED and consumer behavior.

FISCAL POLICY

NEUTRAL

 Congress passed a $1.5 trillion spending package expected to be signed into law next week. Republicans rejected any additional COVID-19 related aid, which was removed from the bill. A $13.6 billion aid package to help Ukraine saw strong bipartisan support. The Violence Against Women Act was reauthorized and Democrats pushed for a 6.7% increase in domestic spending.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps in March and 50 bps in May. Jay Powell projected a clear path for 2022 with as many as five additional rate hikes bringing short-term rates to 1.75- 2.00% by year end 2022. The next decisions by the Fed will be data-driven based on future inflation numbers and estimated economic growth.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 Russia was able to avoid default last week by making the required payment on its debt however, the markets are still assessing the probability of default in the coming months at 87%. This is primarily due to sanctions imposed by Western countries which are hindering the Russian economy and restricting capital flows in and out of Russia.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian- Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services. China’s zero-covid policy has placed Shanghai on lockdown and is increasing restrictions on other major cities including Beijing. This may result in additional supply chain issues and inflationary pressures.

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 by

THE NUMBERS
The 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

 Q1 2022 Real GDP shrunk at a 1.4% annual rate according to the first advance estimate. This is the first contraction since the beginning of the pandemic. The main factors that resulted in a decrease in GDP were a surge in imports and trade deficit highlighting that the U.S. is buying more goods from foreign countries. This may be an indication that the U.S. economy has recovered faster than other countries.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 7.1% — the lowest since Q4 2020 (3.8%). This estimate was revised upward from the previous forecast of 6.6% in April 2022. So far, 55% of S&P500 companies have reported earnings — 80% reported a positive EPS surprise and 72% beat revenue expectations.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 431,000 in March, and the unemployment rate edged down from 3.8% to 3.6%. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, retail trade, and manufacturing.

INFLATION

NEGATIVE

 CPI rose 8.5% year-over-year in March 2022, the highest increase since 1982, driven by supply and demand mismatches and the additional strains on the global economy caused by the Russia- Ukraine conflict. Core CPI came in slightly below expectations (6.5% vs. 6.6%) while PPI hit the highest level on record (11.2%). Inflation concerns are clearly impacting the markets, the FED and consumer behavior.

FISCAL POLICY

NEUTRAL

 Congress passed a $1.5 trillion spending package expected to be signed into law next week. Republicans rejected any additional COVID-19 related aid, which was removed from the bill. A $13.6 billion aid package to help Ukraine saw strong bipartisan support. The Violence Against Women Act was reauthorized and Democrats pushed for a 6.7% increase in domestic spending.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps in March and Jay Powell projected a clear path for 2022 with as many as six additional rate hikes bringing short-term rates to 1.75-2.00% by year end 2022. A 50 bps rate hike is expected at the next Fed meeting on 5/4/22.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 According to credit ratings agency S&P, Russia has defaulted on its foreign debt due on April 4th by offering to make payments in rubles and not dollars. Russia has 30 days to make a payment in dollars however, it is unlikely this will happen due to the current sanctions and restrictions on access to capital imposed by Western countries against Russia.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian- Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services. China’s zero-covid policy has placed Shanghai on lockdown and is increasing restrictions on other major cities including Beijing. This may result in additional supply chain issues and inflationary pressures.

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 by

THE NUMBERS
The 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

 U.S. Real GDP growth for Q4 2021 increased at an annual rate of 7.0% compared to 2.3% in Q3 (according to second estimate). Real GDP increased by 5.7% in 2021 versus a decrease of -3.4% in 2020. For Q1 2022, estimates show GDP growing at 1.5% at an annual rate while the expected growth rate for 2022 is 3.0% year-over-year.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 6.6% – the lowest since Q4 2020 (3.8%). This estimate was revised upward from the previous forecast of 4.5% in March 2022. So far, 20% of S&P500 companies have reported earnings – 79% reported a positive EPS surprise and 69% beat revenue expectations.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 431,000 in March, and the unemployment rate edged down from 3.8% to 3.6%. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, retail trade, and manufacturing.

INFLATION

NEGATIVE

 CPI rose 8.5% year-over-year in March 2022, the highest increase since 1982, driven by supply and demand mismatches and the additional strains on the global economy caused by the Russia- Ukraine conflict. Core CPI came in slightly below expectations (6.5% vs. 6.6%) while PPI hit the highest level on record (11.2%). Inflation concerns are clearly impacting the markets, the FED and consumer behavior.

FISCAL POLICY

NEUTRAL

 Congress passed a $1.5 trillion spending package expected to be signed into law next week. Republicans rejected any additional COVID-19 related aid, which was removed from the bill. $13.6 billion aid package to help Ukraine saw strong bipartisan support. The Violence Against Women Act was reauthorized and Democrats pushed for a 6.7% increase in domestic spending.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps in March and Jay Powell projected a clear path for 2022 with as many as six additional rate hikes bringing short-term rates to 1.75-2.00% by year end 2022. The probability of a 50 bps rate hike in May is now estimated at 91%.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 According to credit ratings agency S&P, Russia has defaulted on its foreign debt due on April 4th by offering to make payments in rubles and not dollars. Russia has 30 days to make a payment in dollars however, it is unlikely this will happen due to the current sanctions and restrictions on access to capital imposed by Western countries against Russia.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian- Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services. China’s zero-covid policy has placed Shanghai on lockdown and is increasing restrictions on other major cities including Beijing. This may result in additional supply chain issues and inflationary pressures.

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 by

THE NUMBERS
The 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

 U.S. Real GDP growth for Q4 2021 increased at an annual rate of 7.0% compared to 2.3% in Q3 (according to second estimate). Real GDP increased by 5.7% in 2021 versus a decrease of -3.4% in 2020. For Q1 2022, estimates show GDP growing at 1.5% at an annual rate while the expected growth rate for 2022 is 3.0% year-over-year.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 4.5% – the lowest since Q4 2020 (3.8%). This estimate was revised upward from the previous forecast of 4.7% in March 2022. So far, 7% of S&P500 companies have reported earnings – 77% reported a positive EPS surprise and 80% beat revenue expectations.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 431,000 in March, and the unemployment rate edged down from 3.8% to 3.6%. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, retail trade, and manufacturing.

INFLATION

NEGATIVE

 CPI rose 8.5% year-over-year in March 2022, the highest increase since 1982, driven by supply and demand mismatches and the additional strains on the global economy caused by the Russia- Ukraine conflict. Core CPI came in slightly below expectations (6.5% vs. 6.6%) while PPI hit the highest level on record (11.2%). Inflation concerns are clearly impacting the markets, the FED and consumer behavior.

FISCAL POLICY

NEUTRAL

 Congress passed a $1.5 trillion spending package expected to be signed into law next week. Republicans rejected any additional COVID-19 related aid, which was removed from the bill. $13.6 billion aid package to help Ukraine saw strong bipartisan support. The Violence Against Women Act was reauthorized and Democrats pushed for a 6.7% increase in domestic spending.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps in March and Jay Powell projected a clear path for 2022 with as many as six additional rate hikes bringing short-term rates to 1.75-2.00% by year end 2022. The probability of a 50 bps rate hike in May is now estimated at 91%.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 According to credit ratings agency S&P, Russia has defaulted on its foreign debt due on April 4th by offering to make payments in rubles and not dollars. Russia has 30 days to make a payment in dollars however, it is unlikely this will happen due to the current sanctions and restrictions on access to capital imposed by Western countries against Russia.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian- Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services.

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 by

THE NUMBERS
The 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

 U.S. Real GDP growth for Q4 2021 increased at an annual rate of 7.0% compared to 2.3% in Q3 (according to second estimate). The acceleration was driven primarily by private inventory investment. Real GDP increased by 5.7% in 2021 versus a decrease of -3.4% in 2020. For Q1 2022, estimate show GDP growing at 1.7% at an annual rate.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 4.5% – the lowest since Q4 2020 (3.8%). This estimate was revised downward from the previous forecast of 5.7% in December 2021. So far, 14 out of 20 companies reported a positive EPS surprise and 16 beat revenue expectations. Sixty- seven S&P500 companies issued negative EPS guidance and 29 companies issue positive EPS guidance.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 431,000 in March, and the unemployment rate edged down from 3.8% to 3.6%. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, retail trade, and manufacturing.

INFLATION

NEGATIVE

 CPI rose 7.9% year-over-year in February 2022, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Inflation concerns are clearly impacting the markets, the FED and consumer behavior. CPI for March will be released on April 12th.

FISCAL POLICY

NEUTRAL

 Congress passed a $1.5 trillion spending package expected to be signed into law next week. Republicans rejected any additional COVID-19 related aid, which was removed from the bill. $13.6 billion aid package to help Ukraine saw strong bipartisan support. The Violence Against Women Act was reauthorized and Democrats pushed for a 6.7% increase in domestic spending.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps last week and Jay Powell projected a clear path for 2022 with as many as six additional rate hikes bringing short-term rates to 1.75-2.00% by year end 2022. Reduction of the Fed’s balance sheet was not mentioned.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 According to credit ratings agency S&P, Russia has defaulted on its foreign debt due on April 4th by offering to make payments in rubles and not dollars. Russia has 30 days to make a payment in dollars however, it is unlikely this will happen due to the current sanctions and restrictions on access to capital imposed by Western countries against Russia.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian- Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services.

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 by

THE NUMBERS
The 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

 U.S. Real GDP growth for Q4 2021 increased at an annual rate of 7.0% compared to 2.3% in Q3 (according to second estimate). The acceleration was driven primarily by private inventory investment. Real GDP increased by 5.7% in 2021 versus a decrease of -3.4% in 2020. For Q1 2022, estimate show GDP growing at 1.7% at an annual rate.

CORPORATE EARNINGS

NEUTRAL

 For Q1 2022 the estimated earnings growth rate is 4.8% – the lowest since Q4 2020 (3.8%). This estimate was revised downward from the previous forecast of 5.7% in December 2021. So far, 12 out of 17 companies reported a positive EPS surprise and 14 beat revenue expectations. Sixty- seven S&P500 companies issued negative EPS guidance and 29 companies issue positive EPS guidance.

EMPLOYMENT

POSITIVE

 Total nonfarm payroll employment rose by 431,000 in March, and the unemployment rate edged down from 3.8% to 3.6%. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, retail trade, and manufacturing.

INFLATION

NEGATIVE

 CPI rose 7.9% year-over-year in February 2022, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Inflation concerns are clearly impacting the markets, the FED and consumer behavior. CPI for March will be released on April 12th.

FISCAL POLICY

NEUTRAL

 Congress passed a $1.5 trillion spending package expected to be signed into law next week. Republicans rejected any additional COVID-19 related aid, which was removed from the bill. $13.6 billion aid package to help Ukraine saw strong bipartisan support. The Violence Against Women Act was reauthorized and Democrats pushed for a 6.7% increase in domestic spending.

MONETARY POLICY

NEUTRAL

 The Fed raised rates by the expected 25 bps last week and Jay Powell projected a clear path for 2022 with as many as six additional rate hikes bringing short-term rates to 1.75-2.00% by year end 2022. Reduction of the Fed’s balance sheet was not mentioned.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEGATIVE

 The conflict between Russia and Ukraine keeps worsening as negotiations are not leading to any results and attacks by Russia do not cease. Russia has been able to avoid defaulting on their debt and recently made a $447 million payment however, experts think a default on the next payment of $2.2 billion due April 4th is likely.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions in the U.S. are waning but the rising cost of oil due to the Russian-Ukraine war is likely to cause additional inflationary pressures not only on gasoline prices but also on many other goods and services.

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.