Category Archives: the numbers

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

POSITIVE

 U.S. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4. Early high-frequency data (shopping, travel, movie ticket sales) is showing some slowing. Holiday retails sales numbers will be important to gauge consumer behavior.

CORPORATE EARNINGS

POSITIVE

 Fourth quarter wrapped up and earnings are likely to be impacted by labor, supply shortages, price increases and wage inflation. As EPS estimates are ironed out each of these items will play a role, some greater than others. Watch for increases but at a muted pace.

EMPLOYMENT

POSITIVE

 Although December increase in payrolls did not meet expectations (199,000 jobs added versus 422,000 expected), the unemployment rate fell to 3.9% versus an expected 4.1%. Wages increased more than expected at 4.7% year-over-year. Strong recovery in leisure and hospitality which had the biggest gain by industry and accounted for more than 25% of all jobs added in December (55,000).

INFLATION

NEGATIVE

 CPI rose 7% year-over-year in December 2021, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Will inflation be transitory or permanent? Goldman Sachs capital market assumption forecast CPI at an average of 3.1% for 2022 suggesting a significant decrease in inflation from the current 7%.

FISCAL POLICY

NEUTRAL

 The Build Back Better Bill has been scaled back from $2.2 trillion to a $1.8 trillion version as Senator Manchin continues to hold back support. President Biden has mentioned the idea of breaking up the BBB Bill into smaller pieces to be able to pass fractions of it. The economy seems to be digesting a new world where fiscal policy is no longer considered an economic stimulus.

MONETARY POLICY

NEUTRAL

 Fed discussed a triple threat of tightening: raise interest rates, halt purchases, and reduce its balance sheet (reducing holdings of Treasurys and mortgage-backed securities). Gradual and steady reduction of liquidity will be key in preserving market performance (fast and sudden changes would most likely result in panic-driven sell offs). Expect three rate hikes in 2022 beginning in March.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

 The omicron COVID-19 variant has shown up in many parts of the world. This strain seems less virulent and more reactive to boosters so its impact it still yet to be calculated. A rebound in travel and leisure now seems unsure. Important to watch the Russia/Ukraine situation.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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
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. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4. Early high-frequency data (shopping, travel, movie ticket sales) is showing some slowing. Holiday retails sales numbers will be important to gauge consumer behavior.

CORPORATE EARNINGS

POSITIVE

 Fourth quarter wrapped up and earnings are likely to be impacted by labor, supply shortages, price increases and wage inflation. As EPS estimates are ironed out each of these items will play a role, some greater than others. Watch for increases but at a muted pace.

EMPLOYMENT

POSITIVE

 Although December increase in payrolls did not meet expectations (199,000 jobs added versus 422,000 expected), the unemployment rate fell to 3.9% versus an expected 4.1%. Wages increased more than expected at 4.7% year-over-year. Strong recovery in leisure and hospitality which had the biggest gain by industry and accounted for more than 25% of all jobs added in December (55,000).

INFLATION

NEGATIVE

 CPI rose 6.8% year-over-year in November, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Will inflation be transitory or permanent? Goldman Sachs capital market assumption forecast CPI at an average of 3.1% for 2022 suggesting a significant decrease in inflation from the current 6.8%. Updated inflation numbers for December to be released on January 12th.

FISCAL POLICY

NEUTRAL

 The Build Back Better Bill has been pushed into 2022 in a scaled back $1.8 trillion version as Senator Manchin continues to hold back support. The economy seems to be digesting a new world where fiscal policy is no longer considered an economic stimulus.

MONETARY POLICY

NEUTRAL

 Fed discussed a triple threat of tightening: raise interest rates, halt purchases, and reduce its balance sheet (reducing holdings of Treasurys and mortgage-backed securities). Gradual and steady reduction of liquidity will be key in preserving market performance (fast and sudden changes would most likely result in panic-driven sell offs). Expect three rate hikes in 2022 beginning in March.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

 The new omicron COVID-19 variant has shown up in many parts of the world. This strain seems less virulent and more reactive to boosters so its impact it still yet to be calculated. A rebound in travel and leisure now seems unsure. Important to watch the Russia/Ukraine situation.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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
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. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4. Early high-frequency data (shopping, travel, movie ticket sales) is showing some slowing. Holiday retails sales numbers will be important to gauge consumer behavior.

CORPORATE EARNINGS

POSITIVE

 Fourth quarter wrapped up and earnings are likely to be impacted by labor, supply shortages, price increases and wage inflation. As EPS estimates are ironed out each of these items will play a role, some greater than others. Watch for increases but at a muted pace.

EMPLOYMENT

POSITIVE

 Although December increase in payrolls did not meet expectations (199,000 jobs added versus 422,000 expected), the unemployment rate fell to 3.9% versus an expected 4.1%. Wages increased more than expected at 4.7% year-over-year. Strong recovery in leisure and hospitality which had the biggest gain by industry and accounted for more than 25% of all jobs added in December (55,000).

INFLATION

NEGATIVE

 CPI rose 6.8% year-over-year in November, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Will inflation be transitory or permanent? Goldman Sachs capital market assumption forecast CPI at an average of 3.1% for 2022 suggesting a significant decrease in inflation from the current 6.8%. Updated inflation numbers for December to be released on January 12th.

FISCAL POLICY

NEUTRAL

 The Build Back Better Bill has been pushed into 2022 in a scaled back $1.8T version as Senator Manchin continues to hold back support. The economy seems to be digesting a new world where fiscal policy is no longer considered an economic stimulus.

MONETARY POLICY

NEUTRAL

 Fed discussed a triple threat of tightening: raise interest rates, halt purchases, and reduce its balance sheet (reducing holdings of Treasurys and mortgage-backed securities). Gradual and steady reduction of liquidity will be key in preserving market performance (fast and sudden changes would most likely result in panic-driven sell offs). Expect three rate hikes in 2022 beginning in March.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

 The new omicron COVID-19 variant has shown up in many parts of the world. This strain seems less virulent and more reactive to boosters so its impact it still yet to be calculated. A rebound in travel and leisure now seems unsure. Important to watch the Russia/Ukraine situation.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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 Number & “Heat Map”

Posted on by

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

 U.S. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4. Early high-frequency data (shopping, travel, movie ticket sales) is showing some slowing. Holiday retails sales numbers will be important to gauge consumer behavior.

CORPORATE EARNINGS

POSITIVE

 Fourth quarter wrapped up and earnings are likely to be impacted by labor, supply shortages, price increases and wage inflation. As EPS estimates are ironed out each of these items will play a role, some greater than others. Watch for increases but at a muted pace.

EMPLOYMENT

POSITIVE

 Although December increase in payrolls did not meet expectations (199,000 jobs added versus 422,000 expected), the unemployment rate fell to 3.9% versus an expected 4.1%. Wages increased more than expected at 4.7% year-over-year. Strong recovery in leisure and hospitality which had the biggest gain by industry and accounted for more than 25% of all jobs added in December (55,000).

INFLATION

NEGATIVE

 CPI rose 6.8% year-over-year in November, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Will inflation be transitory or permanent? Goldman Sachs capital market assumption forecast CPI at an average of 3.1% for 2022 suggesting a significant decrease in inflation from the current 6.8%. Updated inflation numbers for December to be released on January 12th.

FISCAL POLICY

NEUTRAL

The Build Back Better Bill has been pushed into 2022 in a scaled back $1.8 trillion version as Senator Manchin continues to hold back support. The economy seems to be digesting a new world where fiscal policy is no longer considered an economic stimulus.

MONETARY POLICY

NEUTRAL

Fed discussed a triple threat of tightening: raise interest rates, halt purchases, and reduce its balance sheet (reducing holdings of Treasurys and mortgage-backed securities). Gradual and steady reduction of liquidity will be key in preserving market performance (fast and sudden changes would most likely result in panic-driven sell offs). Expect three rate hikes in 2022 beginning in March.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

The new omicron COVID-19 variant has shown up in many parts of the world. This strain seems less virulent and more reactive to boosters so its impact it still yet to be calculated. A rebound in travel and leisure now seems unsure. Important to watch the Russia/Ukraine situation.

ECONOMIC RISKS

NEUTRAL

Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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
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. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4. Early high-frequency data (shopping, travel, movie ticket sales) is showing some slowing. Holiday retails sales numbers will be important to gauge consumer behavior.

CORPORATE EARNINGS

POSITIVE

 Fourth quarter wrapped up and earnings are likely to be impacted by labor, supply shortages, price increases and wage inflation. As EPS estimates are ironed out each of these items will play a role, some greater than others. Watch for increases but at a muted pace.

EMPLOYMENT

POSITIVE

 The unemployment rate is down to 4.2%, as of November. The labor market is very tight at present as many employers, particularly in the Leisure and Logistics sectors, are struggling to fully staff because the labor participation rate remains below pre-COVID levels. The labor shortage is one of the causes of the global supply chain glut.

INFLATION

NEGATIVE

 CPI rose 6.8% year-over-year in November, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Will inflation be transitory or permanent? Powell may remove “transitory” from his testimony this week.

FISCAL POLICY

NEUTRAL

 The Build Back Better Bill has been pushed into 2022 in a scaled back $1.8 trillion version as Senator Manchin continues to hold back support. The economy seems to be digesting a new world where fiscal policy is no longer considered an economic stimulus.

MONETARY POLICY

POSITIVE

 By early 2022, all Fed bond purchases will halt. The Fed’s bond buying program works to keep interest rates low. Once tapering ends, rate hikes follow. Mid-June or sooner for rate hike?

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

 The new omicron COVID-19 variant has shown up in many parts of the world. This strain seems less virulent and more reactive to boosters so its impact it still yet to be calculated. A rebound in travel and leisure now seems unsure. Important to watch the Russia/Ukraine situation.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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
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. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4. Early high-frequency data (shopping, travel, movie ticket sales) is showing some slowing. Holiday retails sales numbers will be important to gauge consumer behavior.

CORPORATE EARNINGS

POSITIVE

 Huge year-over-year increases in corporate earnings are likely to decelerate in 2022 as CapEx begins to have an impact on income statements. The supply chain disruptions are waning but we may have to take omicron shutdowns into account.

EMPLOYMENT

POSITIVE

 The unemployment rate is down to 4.2%, as of November. The labor market is very tight at present as many employers, particularly in the Leisure and Logistics sectors, are struggling to fully staff because the labor participation rate remains below pre-COVID levels. The labor shortage is one of the causes of the global supply chain glut.

INFLATION

NEGATIVE

 CPI rose 6.8% year-over-year in November, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Will inflation be transitory or permanent? Powell may remove “transitory” from his testimony this week.

FISCAL POLICY

NEUTRAL

 The Build Back Better Bill has been pushed into 2022 in a scaled back $1.8 trillion version as Senator Manchin continues to hold back support. The economy seems to be digesting a new world where fiscal policy is no longer considered an economic stimulus.

MONETARY POLICY

POSITIVE

 By early 2022, all Fed bond purchases will halt. The Fed’s bond buying program works to keep interest rates low. Once tapering ends, rate hikes follow. Mid-June or sooner for rate hike?

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

 The new omicron COVID-19 variant has shown up in many parts of the world. This strain seems less virulent and more reactive to boosters so its impact it still yet to be calculated. A rebound in travel and leisure now seems unsure.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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
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. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4. Early high-frequency data (shopping, travel, movie ticket sales) is showing some slowing.

CORPORATE EARNINGS

POSITIVE

 Huge year-over-year increases in corporate earnings are likely to decelerate in 2022 as CapEx begins to have an impact on income statements. The supply chain disruptions are waning, but we may have to take omicron shutdowns into account.

EMPLOYMENT

POSITIVE

 The unemployment rate is down to 4.2%, as of November. The labor market is very tight at present as many employers, particularly in the Leisure and Logistics sectors, are struggling to fully staff because the labor participation rate remains below pre-COVID levels. The labor shortage is one of the causes of the global supply chain glut.

INFLATION

NEGATIVE

 CPI rose 6.8% year-over-year in November, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Will inflation be transitory or permanent?

FISCAL POLICY

NEUTRAL

 The Build Back Better Bill looks to be swamped and pushed into 2022 by Senator Manchin. If the Biden Administration cannot pull the team together now, think about post-mid-term elections. Fiscal stimulus is waning.

MONETARY POLICY

POSITIVE

 The FOMC meets this week. Watch for wording around “transitory inflation.” By early 2022, all Fed bond purchases will halt. The Fed’s bond-buying program works to keep interest rates low. Once tapering ends, rate hikes follow. Mid-June or sooner for rate hike?

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

 The new omicron COVID-19 variant has shown up in many parts of the world. This strain seems less virulent and more reactive to boosters so its impact it still yet to be calculated. President Biden threatened a 2022 Olympics boycott in China. Russia builds up its border with the Ukraine.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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
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. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4.

CORPORATE EARNINGS

POSITIVE

 Huge year-over-year increases in corporate earnings are likely to decelerate in 2022 as CapEx begins to have an impact on income statements. The supply chain disruptions have forced a significant surge in CapEx as companies improve delivery and shipping processes and raw materials costs continue to increase. However, this spending is still a tailwind for earnings.

EMPLOYMENT

POSITIVE

 The unemployment rate is down to 4.2%, as of November. The labor market is very tight at present as many employers, particularly in the Leisure and Logistics sectors, are struggling to fully staff because the labor participation rate remains below pre-COVID levels. The labor shortage is one of the causes of the global supply chain glut.

INFLATION

NEUTRAL

 CPI rose 6.8% year-over-year in November, the highest increase since 1982, driven by the global supply chain backlog and continued consumer pent up demand. Will inflation be transitory or permanent? Powell may remove “transitory” from his testimony this week.

FISCAL POLICY

POSITIVE

 A $1.2 trillion infrastructure bill was passed by Congress. A $1.75 trillion spending bill passed by Congress also went to Senate for revisions.

MONETARY POLICY

POSITIVE

 The FOMC meets this week. Watch for wording around “transitory inflation.” By early 2022, all Fed bond purchases will halt. The Fed’s bond buying program works to keep interest rates low. Once tapering ends, rate hikes follow. Mid-June or sooner for rate hike?

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

The new omicron COVID-19 variant has shown up in many parts of the world. This strain seems

less virulent and more reactive to boosters so its impact it still yet to be calculated. President Biden threatened a 2022 Olympics boycott in China. Russia builds up its border with the Ukraine.

ECONOMIC RISKS

NEUTRAL

Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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
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. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4.

CORPORATE EARNINGS

POSITIVE

 Huge year-over-year increases in corporate earnings are likely to decelerate in 2022 as CapEx begins to have an impact on income statements. The supply chain disruptions have forced a significant surge in CapEx as companies improve delivery and shipping processes and raw materials costs continue to increase. However, this spending is still a tailwind for earnings.

EMPLOYMENT

POSITIVE

 The unemployment rate is down to 4.6%, as of October. The labor market is very tight at present as many employers, particularly in the Leisure and Logistics sectors, are struggling to fully staff because the labor participation rate remains below pre-COVID levels. The labor shortage is one of the causes of the global supply chain glut.

INFLATION

NEUTRAL

 CPI rose 6.2% year-over-year in October, the highest increase since 1990, driven by the global supply chain backlog. Will inflation be transitory or permanent?

FISCAL POLICY

POSITIVE

 A $1.2 trillion infrastructure bill was passed by Congress. A $1.75 trillion spending bill passed by Congress also went to Senate for revisions.

MONETARY POLICY

POSITIVE

 The Fed will begin bond tapering by November’s end. By mid-2022, all Fed bond purchases will halt. The Fed’s bond buying program works to keep interest rates low. Inflation concerns are persisting, and some are calling for faster tapering and high rates.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

 The new omicron COVID-19 variant has shown up in many parts of the world. This strain seems less virulent and more reactive to boosters so its impact it still yet to be calculated. President Biden threatened a 2022 Olympics boycott in China.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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
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. GDP growth decelerated to a 2% annualized pace in Q3. The slowdown was driven primarily by supply chain constraints. Economists expect a modest acceleration in Q4.

CORPORATE EARNINGS

POSITIVE

 With 95% of S&P 500 companies having reported Q3 results, sales and earnings are up 17.5% and 39%, respectively. However, company commentary suggests that the supply chain has been and will continue to be problematic in the coming quarters.

EMPLOYMENT

POSITIVE

 The unemployment rate is down to 4.6%, as of October. The labor market is very tight at present as many employers, particularly in the Leisure and Logistics sectors, are struggling to fully staff because the labor participation rate remains below pre-COVID levels. The labor shortage is one of the causes of the global supply chain glut.

INFLATION

NEUTRAL

 CPI rose 6.2% year-over-year in October, the highest increase since 1990, driven by the global supply chain backlog. Will inflation be transitory or permanent?

FISCAL POLICY

POSITIVE

 A $1.2 trillion infrastructure bill was passed by Congress. A $1.75 trillion spending bill passed by Congress also went to Senate for revisions.

MONETARY POLICY

POSITIVE

 The Fed will begin bond tapering by November’s end. By mid-2022, all Fed bond purchases will halt. The Fed’s bond buying program works to keep interest rates low. Inflation concerns are persisting, and some are calling for faster tapering and high rates.

GLOBAL CONSIDERATIONS

GEOPOLITICAL RISKS

NEUTRAL

 A new COVID-19 variant, omicron, was discovered in South Africa and countries around the world immediately reacted by closing borders to foreigners. While still new and unknown, this needs to be closely watch for potential long-term impact globally and risks of new “lockdowns,” which could severely impact economic recoveries.

ECONOMIC RISKS

NEUTRAL

 Supply chain disruptions are hampering the economy; however, demand remains very strong. While global logistics are operating far below normal efficacy, it appears the supply chain is slowly improving and may reach normalcy by mid-to-late-2022.

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.