Financial Blog

Financial Blog

Market Viewpoints – Fall 2021

Keith Bonjour, Portfolio Manager
Keith Bonjour, CFP® Vice President, Portfolio Manager

After a strong start to the quarter, stocks pulled back from their recent highs in September. The US economy remains on solid footing, however there are several topics that are concerning markets. The first has to do with the US debt ceiling and both parties being far away from any compromise to allow the debt ceiling to increase risking a potential US default on its debt obligations. The infrastructure bill discussions continue to drag on without any breakthrough on the total size of the package. Inflation also continues to worry the market while supply disruptions continue to increase with container ships and rail backups along with energy prices continuing to rise. Last, but not least, China has continued its crackdown on many different areas in its economy such as real estate, online education, online gaming, and technology. China has also tried to reduce its energy consumption, especially coal, which is causing energy shortages and adding further strain on already frail global supply chains.

The debt ceiling debate is intensifying with US Treasury Secretary, Janet Yellen, warning that the US would be unable to pay its bills without the debt ceiling raised by October 18th. The issue is becoming very political and the potential risk of a US debt downgrade is looming large over markets. Hopes are that an agreement can be reached soon to avoid unnecessary stress on financial markets. Infrastructure discussions continue without any new breakthroughs to end the quarter. Congress was trying to pass two separate bills, but progressives continue to try to force the bills to be linked together. Progressive and moderate Democrats remain divided on the overall price tag of the bills. Expectations are that a compromise will be reached sometime during the month of October.

Inflation concerns continue to be an issue with the Fed’s stance that inflation will be transitory starting to come under question. Global supply chains continue to be fractured for a variety of reasons such as not enough workers, bottlenecks, Covid shutdowns, and lack of excess inventory. These factors are proving to take longer to unwind then the Fed had initially projected and shipping costs continue to increase. Interest rates have also started to rise from their extremely low levels with the Fed indicating they will begin tapering (reducing) their monthly bond purchases by the end of the year. Tapering does not mean tightening, though, so the Fed will remain very accommodative well into 2022. We will be watching for any indication from the Fed of when the first rate hikes will begin with expectations currently split between the first hikes happening at the end of 2022 or early 2023 according to the Fed’s most recent dot plot.

The Chinese government is also making headlines for their strong regulatory crackdown on many areas of their economy such as online gaming, private education, real estate, and the large technology companies. This has increased the risk for publicly traded stocks in China due to the growing risk of further government intervention. China is also dealing with trying to reduce energy consumption and carbon emissions, which is further slowing their manufacturing and adding to supply chain issues.

The fourth quarter is usually a strong period for stocks; however, we maintain our view to be mindful of the risks facing the market for the remainder of the year. We continue to recommend staying the course with your investment objective, and we will rebalance as year-end approaches to bring portfolios in line with our recommended allocations. We also recommend determining any short-term cash needs that you may have over the next six months as we continue to maintain appropriate cash levels for clients needing distributions. Creating this cash can help protect against an increase in volatility and short-term moves in the market. We recommend maintaining a more long-term focus on investment goals and objectives with an understanding that short-term headline risks rarely have a long-term effect on markets.

In the Community – Fall 2021

Our Non-Profit Community Spotlight

Giving in the Best Way Possible

The Quad Cities Community Foundation

Quad Cities Community Foundation Logo

The Quad Cities Community Foundation is the place where you and your trusted advisor go to fulfill your charitable giving in the most effective way possible. With a 57-year history in the Quad Cities region and a staff of gift planning, investment, and grantmaking professionals, the Community Foundation’s deep knowledge of community needs and opportunities allows it to connect you with the organizations and causes you care about. 

When you trust the Community Foundation with your generosity, you gain access to a range of tailored philanthropic services designed to help you meet your own goals for today and for the future. Whether you want to gift to an existing fund or establish one of your own, the Community Foundation makes the process easy and rewarding. Its team of experts is here to assist you with philanthropic guidance, legacy giving, gift and estate planning, family philanthropy, individualized grantmaking support, scholarships, donor-advised funds, and more.

And by partnering with the financial expertise at Northwest Bank & Trust’s Investment Management Group, the Community Foundation stewards your charitable investment for today’s needs and tomorrow’s opportunities in the Quad Cities and beyond.

To learn how the Community Foundation can help you give to support the community and causes you care most about, contact Anne Calder, vice president of development, at AnneCalder@qccommunityfoundation.org or (563) 326-2840.

Upcoming Events from our Nonprofit Partners

Ridgecrest Foundation Annual Dinner | Friday, November 5, 2021 at 5:30 p.m. | The Outing Club
Ridgecrest Foundation
Join Ridgecrest Village for their annual dinner at the Outing Club, where there will be a cocktail hour starting at 5:30, followed by a presentation and entertainment. All proceeds benefit the Koning Fund, which helps assist residents living at Ridgecrest who qualify and need assistance with their maintenance fees. Contact Carrie for more information and tickets at cdreifurst@ridgecrestvillage.org or 563-288-3431.

Scott Community College Glass HeartsGlass Hearts Fundraiser | Sale ends November 11, 2021
Scott Community College Foundation
Help support the Veteran students at Scott Community College by purchasing an exclusive red, white, & blue hand crafted glass heart made by Hot Glass this year only. Hearts can be picked up or shipped to your home. Visit https://qtego.net/qlink/scc/items to get your heart now!

Wild Kratts ExhibitWild Kratts®: Creature Power Exhibit | Open now through January 8, 2022
Family Museum
Get ready for an extraordinary adventure! Step into the world of Wild Kratts® to explore the secret lives of amazing creatures in this hands-on exhibit. Immerse yourself in animal habitats from around the globe, discover incredible creature powers and go on a mission to foil the villains’ nefarious plans.

HDC Nut Sale

 

 

28th Annual Boosters Organization/Bob Ott Memorial Nut and Candy Sale | Order Now!
Handicapped Development Center
Ordering is now open for HDC’s Annual Nut & Candy Sale! Visit their website at https://handicappeddevelopment.org/nut-candy-sale/ for a list of items and printable order form, or email Mary Egger at maryegger@hdcmail.org to place your order.

#GivingTuesday | Tuesday, November 30, 2021
Ridgecrest Foundation
#GivingTuesday is a global generosity movement unleashing the power of radical generosity. To participate, visit www.ridgecrestvillage.org and include #GivingTuesday when you donate! The funds raised from this event will go to the Life Enrichment fund.

Preplanning Your Funeral

“It’s your funeral”

An old phrase, often said with a slow shrug to someone acting unwisely, was “It’s your funeral”, conveying that they would have to suffer the consequences of their ill-conceived act. 

What if we flip that a bit and recognize one day, it really will be your funeral. What would you prefer? How do you want your family and friends to gather to remember you? Let’s consider the benefits of preplanning your funeral. (For convenience, funerals, final arrangements, memorial services, etc., are all referred to as a funeral.) 

What are the benefits of preplanning?

Preplanning your funeral can include prepaying, which means that the cost of your funeral cannot increase. By preplanning you can protect your family from being among those that overspend on a funeral due to the emotional impact of a loved one’s death, a lack of understanding about the options available, or simply the sense of urgency in planning the funeral in a compressed timeframe. 

Preplanning gives you time to research and contact multiple providers. Decide what is best for you and your family, taking into consideration the price points of the services offered. “Funeral Rules” established by the FTC require that consumers be provided with accurate, itemized price information and other disclosures about funeral goods and services. The Rules also prohibit certain acts by funeral providers, such as saying that embalming or outer vaults are required. There may be good reasons for both of these services, but neither is always required. 

Preplanning ensures that your service will be the way that you want it, whether it is a simple memorial service, graveside or elsewhere, or a more elaborate traditional service. It ensures that your final arrangements will be as you prefer. Even better, no one can change them to what they think they should be.
Family disagreements can erupt during the emotional funeral planning process. Preplanning can help ensure that your family does not experience that unpleasantness. Preplanning also avoids indecision among family members or possible misgivings about decisions made. 

What should you do if you don’t preplan?

If you decide not to preplan your funeral, consider giving your health care power agent written instructions. An Illinois resident can direct their own body disposition and funeral arrangements in a legally binding document or designate an agent who is authorized to make decisions if no instructions are provided. In Iowa, an agent under a health care power of attorney will be able to plan your funeral if you specifically give them the power, preferably with reference to the appropriate code section, or a separate signed and witnessed authorization is attached to the health care power of attorney. Discuss with your attorney whether your health care power authorizes your agent to make your final arrangements if needed. 

Preplanning your funeral is not an unwise or ill-conceived act, and it’s unlikely you will get the slow shrug for having preplanned yours. It is a gift to your family, who likely will thank you for it, either now or later.

What’s next?

Contact Marie to talk about your options or to learn more at 563.388.2631 or mtarbox@northwestbank.com

Marie Rolling-Tarbox
Marie R. Tarbox, JD Vice President & Trust Officer

 

Lock in low rates with the Assumable Rate Conversion (ARC) loan program

What if you could lock in today’s rates for as long as 20 years? 

ARC LendingIf you own, want to purchase, or want to refinance a commercial building, you don’t have to deal with market rate fluctuations! With interest rates slowly beginning to come off their lows following the onset of COVID-19, now is a great time to lock in a long-term fixed interest rate to hedge against future rate increases. While traditional commercial real estate loans only allow for a 5-year fixed rate, through our long-term fixed rate program, we can potentially lock in your interest rate for up to 20 years!

This program is available for owner and non-owner occupied properties and a wide range of property types, including office, industrial, retail, medical, hospitality, and multi-family, among others. There are many additional perks to the program, as well.

Locking in your rate and avoiding rate changes allows you to maximize your return on investment. If you decide to sell, this product is assumable, meaning it can transfer to the new owner (pending credit approval), so they can keep the rate you locked in. This could be a huge upside to a buyer looking at increased rates in the future and could even make your property worth more because of this option. Additionally, this product is transferable; if you decide to sell, you have the option of simply transferring the loan balance to a new property you already own or plan to acquire.

Another benefit is the prepayment premium. If interest rates rise and you decide to pay the loan off, you would actually receive a prepayment premium. On the flip side, if interest rates were to decrease, you could be subject to a prepayment penalty. While this is a risk, we feel given today’s market conditions and historically low rates, this risk is minimal.

For further information on conditions, terms, and loan types, please contact your Northwest Bank commercial loan officer. Corey or Joe would be happy to talk to you about locking in your low fixed rate today! 

Joe Donahue

Joe Donahue

Vice President ,
Commercial Loan Officer

Corey Martin

Corey Martin

Vice President ,
Commercial Loan Officer

Market Viewpoints – Summer 2021

Keith Bonjour, Portfolio Manager
Keith Bonjour, CFP® Vice President, Portfolio Manager

U.S. stocks continued to show strong gains this year with the S&P touching new highs at the end of June on strong company earnings and increased consumer spending. Bond yields have also come down in the second quarter after the large increase to start the year. This helped bonds reduce the losses they suffered during the first quarter on rising yields and inflation fears. Inflation fears have been dominating headlines and worrying investors due to the large increases in demand in multiple parts of the economy leading to higher than expected inflation readings. Supply issues have continued to constrain companies from getting back to full capacity due to a lack of workers, supply chain issues, and pricing pressures. The economic recovery remains intact with GDP continuing to show a very robust rebound from the COVID induced shutdown last year. The U.S. is on track to post the strongest GDP figures in decades this year as long as the recovery continues as expected in the second half of the year. COVID-19 infections have come down meaningfully in the U.S.; however, the new Delta variant is of particular concern for its highly infectious characteristics especially for the pockets of the U.S. with the lowest vaccinations rates. This will be something important to track as the year progresses.

Consumer demand has been robust this year after last year’s lockdown measures with many consumers eager to resume spending on dining out, travel, home and auto purchases, and many other retail sectors as the economy reopens. This put a lot of pressure on companies to increase capacity quickly, but many were caught flat-footed and were unable to ramp-up production, obtain the supplies they needed, or hire back enough workers to meet the robust demand. These constraints have caused spikes in inflation along with surging prices in many different areas of the economy. However, there are signs that supply can catch-up with demand eventually noting that the prices of lumber came down over 40% in June as production increased after an extraordinary run-up in lumber prices over the last year. The Fed still views inflation as transitory expecting that the recent sharp increases should eventually subside and average inflation coming back down to more acceptable levels into 2022. We will monitor this area closely in the months ahead as new inflation indicators become available.

Congress is continuing discussion on trying to get a new infrastructure package approved. The Biden administration along with a bipartisan group of senators agreed to a $1.2 trillion infrastructure bill, The Bipartisan Infrastructure Framework, made up of almost $600 billion of new spending and the rest from dollars earmarked for previous unused coronavirus relief funds. The package proposal aims to spend the funds on infrastructure projects over a period of eight years; however, it faces a tough path forward to win approval from Congress. The proposal includes billions of additional spending to improve our nation’s infrastructure with a focus on traditional infrastructure projects benefitting roads, bridges and rail, water systems, and broadband internet access.

We maintain our view to be mindful of risks facing the market in 2021 as COVID-19 cases are on the rise again, and stocks and bonds still trade expensive compared to their historical averages. However, central banks and governments continue to provide massive amounts of stimulus that are driving up asset prices. We continue to recommend staying the course with your investment objective and to rebalance your portfolio by selling strengths and buying into weaknesses to adjust to movements in the market over time. We also recommend determining any short-term cash needs that you may need over the next six months. Creating this cash can help protect against an increase in volatility and short-term moves in the market. We recommend maintaining a more long-term focus on investment goals and objectives, and not reacting to short term up or down movements in the market.

In the Community – Summer 2021

Our Non-Profit Community Spotlight

The Putnam Museum World Culture Gallery

By Rachael Mullens, President/CEO

The Putnam MuseumThe Putnam Museum and Science Center recently unveiled its new World Culture Gallery showcasing cultures from around the world as reflected in the museum’s historic collection. As a Smithsonian Institution Affiliate, the Putnam houses a collection entrusted to the museum by seven generations of Quad Citians, including objects from the world travels of some of the museum’s founders including the Putnam, Palmer, and Figge families.

The World Culture Gallery’s inaugural exhibit, The Colors of Culture, explores the meaning of color to people of different cultures, including the symbolism of color in adornment, home, and celebration. Raising awareness of the rich cultural diversity found right here in our own community, the exhibit is a partnership with World Relief Quad Cities and includes artifacts loaned by families from the organization’s refugee resettlement program.

The World Culture Gallery is the first of its scale since the opening of the Science Center in 2014 and was made possible by support from Bechtel Trusts, Scott County Regional Authority, the Putnam Museum Guild and numerous private donors and Trustees. Longstanding and generous support of community partners including Northwest Bank & Trust Company are how the Putnam has been able to serve the community for over 150 years.

A museum of history, culture, and science, the Putnam has served the Quad Cities region since 1867 and is the Quad Cities’ only Smithsonian Affiliate. The Putnam brings to life a sense of place, time and purpose to ignite human potential and inspire our diverse community to learn about and care for our world and all its people.


Visit putnam.org and click “Join and Support” to learn about ways you can get involved.

Upcoming Events from our Nonprofit Partners

the catalyst awards

The Catalyst Awards & Auction | July 30, 2021 | Schweibert Park, Rock Island, IL
The Arc of the Quad Cities Area
Join the Arc of the QCA in celebration of the people and organizations who have been a light in the lives of people with disabilities and ignited a passion for inclusion at The Arc’s Catalyst Awards. Visit www.arcqca.org for bidding and tickets.

Grant Opportunity | LOIs for Nonprofit Capacity Building Grants | Due September 1, 2021
Quad Cities Community Foundation
Nonprofit Capacity Building Grants strengthen nonprofits by increasing their core systems and operations. By improving infrastructure at the organizational level, these time-limited projects help nonprofits more effectively carry out their missions. For more information on how to apply, contact Lisa Stachula at (563) 326-2840 or visit www.qccommunityfoundation.org/nonprofitcapacitybuilding.

HANDS Auxiliary Auction | October 2, 2021 | Modern Woodmen Park
Handicapped Development Center
Join HDC for an evening of entertainment, heavy hor’d’oeuvres, beverages, live and silent auctions, a TV raffle, and more. For tickets, contact Mary Egger at maryegger@hdcmail.org or call (563) 391-4834.

BASH 2021 | October 5, 8, and 12, 2021 | Scott Community College Culinary Arts & Hospitality Management Center
Scott Community College Foundation
Scott Community College will be hosting three small events on their brand new outdoor kitchen at the Culinary Arts & Hospitality Management Center. Attendees will enjoy food prepared and served with the help of the college’s Culinary Arts and Hospitality Management students. A virtual silent auction and an exciting raffle will be held. For more details, visit www.eicc.edu/sccbash.

Social Security Benefits Payee Representative

Marie Rolling-Tarbox
Marie R. Tarbox, JD Vice President & Trust Officer

As you may recall, with a power of attorney for finances, you name who you want to manage your financial affairs if you are unable to do so. Interestingly, the social security administration (“SSA”) does not accept powers of attorney. It has its own process for identifying who will receive and manage the social security benefits of the legally incompetent.

The SSA refers to someone who receives payments as a beneficiary. If a beneficiary is under the age of 18, is legally incompetent, or if the SSA determines a beneficiary is incapable of managing or directing the management of their benefits, it requires the beneficiary to have a Payee Representative (PR). The PR is then the person who receives the beneficiary’s payments, and who must file an annual report with the SSA about how the benefits were used. 

Historically, a PR was a person, agency, organization or institution selected by the SSA to manage the beneficiary’s benefits. The SSA vetted an individual who was came forward as a relative, friend or other interested party to serve as the PR. This was sometimes frustrating to an attorney-in-fact or agent properly acting under a beneficiary’s general durable power of attorney, especially when the named agent was not selected as the PR. 

In 2018 Congress passed a law which made changes to the Social Security Act, which included assessments to improve and strengthen the PR program. As the result of that law, and following the required assessments, the SSA now permits a beneficiary to designate who they want as their PR, if one becomes necessary. The designation process is referred to by the SSA as an Advanced Designation. You can even designate alternate PRs, just as you can name an alternate agent under your power of attorney. 

You may want to consider naming as your PR the same person you’ve named as your agent under your power of attorney, with your preferred alternates. If circumstances change, you may change your designated PR. You can complete your Advanced Designation online through your ‘my Social Security account’ (http://www.ssa.gov/myaccount), by telephone (1-800-772-1213), by going to the local SSA office (appointments necessary) or via mail using Form SSA-4547. Your agent acting under your power of attorney cannot complete an Advanced Designation on your behalf. The right to designate a PR is personal to you, and must be done by you. 

If and when the time comes for a PR, the SSA will still vet your designated PR. However, being able to designate your preferred PR to manage your social security benefits is far more similar to naming an agent under your power of attorney than the prior process, when the SSA selected your PR without input from you as a beneficiary. Using an Advanced Designation to designate your PR is another implement in your estate planning toolkit.

Contact Marie: 563.388.2631

Customer Satisfaction Survey

Cody Allen, Investment Management Group
Cody Allen, Senior Vice President

Thank you to all of you that completed our recent survey. We had a wonderful response and we appreciate the time you took to give us feedback. Here are some highlights of what we learned.

You told us how much you appreciate how easy it is to reach us when you need us, and that you appreciate our knowledgeable, friendly approach. You gave us high marks across the board, rating us as Excellent in every category. 

We know that a few of you are struggling with our online platform or statements. We are working on some informational videos that we hope will be helpful. We’ll let you know as soon as they are available. Of course, you are always welcome to reach out if there are specific questions we can answer.

We were able calculate a Net Promotor Score (NPS) from this survey. Net Promoter Score measures not just customer satisfaction, but customer loyalty. Currently, the average Net Promoter Score for brokerages and investment firms is 45, which ranks it among the highest of all types of companies. You gave us a 73! We work every day to provide an outstanding experience to every client and are very proud of this score. Thank you for the trust you have placed in us!

Brian Duffy Joins Northwest Bank Board

Brian DuffyJoe Slavens, president & CEO, Northwest Bank & Trust Company announced that Brian Duffy was recently elected to the bank’s board of directors. Duffy is the president and CEO of Per Mar Security Services.

“I’m very happy to have Brian join our board,” stated Slavens.  “He leads a third-generation family business that, like us, delivers services through relationship driven experts.  We share the same values and look forward to leveraging his insights for the benefit of both our customers and team members.”

When asked about joining the board, Duffy responded, “I have always had a lot of respect for Northwest Bank and the Slavens family, and I am honored to have the opportunity to serve on the board of an essential organization in our community.”

Brian Duffy is an active member of numerous security associations locally and nationally. He serves on the board for NetOne and Junior Achievement of the Heartland. In addition, he is active in the Notre Dame Club of the Quad Cities. A native of Davenport, Iowa, Brian Duffy graduated from University of Notre Dame with a Bachelor of Arts in Economics.

About Northwest Bank & Trust Company

Northwest Bank & Trust Company is a family and employee owned community bank that has been part of the Quad Cities for over 75 years. The bank offers a full line of banking products and services for both individuals and businesses. We believe in a synergistic approach to meeting the needs of our customers, so in addition, we have an Investment Management Group that has been assisting clients with trust, investment, and estate planning for over 50 years and currently has over $375 million in assets under management. In 2019, Northwest Bank acquired our first accounting firm. Since that time, we have merged more firms to create Centennial Tax & Accounting, which resides on the 5th floor of the Northwest Bank NorthPark Tower. We also have a software company that develops, markets, and services financial operation software to banks and credit unions across the country.

Market Viewpoints – Spring 2021

By Keith Bonjour, Vice President, Portfolio Manager

Keith Bonjour, Portfolio ManagerBoth the stock and bond markets have traded in a more volatile and choppy fashion in the 1st quarter of 2021, with longer term bonds pulling back more than short term bonds on renewed worries over inflation after the additional stimulus measure enacted by Congress. The recent stimulus package, called the American Rescue Plan Act of 2021, provides an additional $1.9 trillion of stimulus via stimulus checks, extending unemployment benefits, expanding tax credits, along with aid to state and municipalities as well as other payments. The additional stimulus package on top of the large stimulus provided in 2020, along with the global economy gaining momentum on reopening hopes, has created worries in the market about rising inflation and weighed heavy on bond prices in the first quarter of 2021. The Federal Reserve is continuing their accommodative stance and have indicated they are not concerned about increasing inflation expectations. The Fed has stated they feel the increase in inflation will not last with inflation coming back in line with the Fed’s 2.0% mandate in 2022 and that they still do not foresee any increases in the Fed funds rate until at least 2023.

 
With the passage of the American Rescue Plan Act of 2021, expectations have increased for GDP growth in the United States this year. The market is pricing in a strong recovery in the second half of 2021 as more Americans become fully vaccinated and both businesses and consumers begin to open their wallets due to pent up demand. Consumers are expected to increase their spending on travel and entertainment which has helped drive a shift out of some of the best performing sectors (IE: Technology) in 2020 to the worst performing sectors (IE: Energy and Travel/Leisure). The increase in inflation expectations along with government inquiries into big technology companies have also been weighing on technology stock returns this year. We continue to recommend maintaining a well-diversified portfolio to weather the volatility.

 
COVID-19 infections rates have come down in the U.S. and vaccinations have ramped up in a meaningful way. However, the increased travel this spring and states beginning to re-open and lift restrictions has caused a recent uptick in infection rates. We are also seeing a more meaningful uptick in Europe and Latin America so even with the increase in available vaccines, the various strains of the virus still pose a risk to growth assumptions this year. It will be important for the market to continue to show signs of positive earnings growth and for the economy to continue its expected strong recovery without any new lockdown measures imposed in the second half of the year. President Biden is also proposing a new infrastructure package in a two-part proposal, the American Jobs Plan and the American Families Plan, which could aid GDP growth if enacted this year. However, it will be important to see what tax hikes are in the proposal to fund the infrastructure package and what effects those tax increases may have on corporate earnings.


We continue to be mindful of risks facing the market in 2021 as COVID-19 cases are on the rise again, and stocks and bonds still trade expensive compared to their historical averages. However, central banks and governments continue to provide massive amounts of stimulus that are driving up asset prices. We continue to recommend staying the course with your investment objective and to continue to rebalance your portfolio by selling strengths and buying into weaknesses to adjust to movements in the market over time. We also recommend determining any short-term cash needs that you may be need over the next six months. Creating this cash can help protect against an increase in volatility and short-term moves in the market. We recommend maintaining a more long-term focus on investment goals and objectives, and not reacting to short term up or down movements in the market.