The Independent Market Observer

Why Has the Market Disconnected from the Pandemic?

June 30, 2020

Right now, we seem to be seeing a disconnect between the rising case counts and the rising stock market. Yes, there was a bit of a pullback on the news that case growth was hitting a new high. But since then, the markets have started to bounce again, even as case counts continue to increase. I get many questions about this disconnect. Indeed, on the surface, it seems to make no sense. What is going on here?

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Monday Update: Personal Spending Rebounds in May

June 29, 2020

This was a full week of economic updates, including reports on housing, consumer confidence and spending, and durable goods orders. May’s personal spending report was a highlight, as consumers showed they were willing and able to go out and spend once reopening efforts began in earnest. This will be another busy week on the economic update front, with reports on manufacturer and consumer confidence, international trade, and June employment.

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Coronavirus Update: June 26, 2020 [Video]

June 26, 2020

Today, I'd like to discuss the coronavirus, including the economic and market implications. We’ve had some setbacks on the pandemic front this week, with notable outbreaks in Arizona, California, Florida, and Texas. Although we’re not yet seeing a national second wave, the risks are rising. Both the daily spread rate (now at 1.6 percent per day) and daily case growth (about 40,000 per day) have jumped from last week, in large part due to the four outbreak states. Despite this concerning medical news, the economic news was good. Layoffs continued to decline, while hiring continued to improve. Plus, with metrics like consumer confidence, consumer spending, and housing all showing signs of improvement, it appears the overall recovery remains well on track.

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Pandemic Growth Picks Up, But Economic Reopening Continues

June 25, 2020

The bad news this past week is that the chances of a national second wave of infections are increasing as localized outbreaks in several states continue to get worse. The states in question are Arizona, California, Florida, and Texas, with the Carolinas also under pressure. All have shown significant spikes in cases in recent days. Multiple other states are also seeing expanded case growth, although not yet at the levels of those four. While the virus remains under control in many states, the breadth and magnitude of the outbreaks continue to increase the risk at a national level.

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Green Shoots for International Equities?

June 24, 2020

Brad here. One of the questions I have been hearing a lot recently is whether it still makes sense to invest in international stocks. Indeed, it is a good question. Here, Anu Gaggar, Commonwealth’s international analyst, provides a timely and compelling look at why international markets may still make sense in your portfolio. Thanks, Anu!

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Is This the Second Wave?

June 23, 2020

COVID-19 case growth has spiked up recently in several states, taking the national case growth rate up above 30,000 per day for three of the past four days. So, do we have a second wave on our hands? And if so, what does that mean?

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Monday Update: Retail Sales Beat Expectations

June 22, 2020

Last week saw a number of important data releases come in above expectations, notably May’s retail sales report and June’s home builder confidence report. This will be another busy week for economic updates, with highlights on home sales, May’s durable goods orders report, and the personal income and spending reports for May.

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Coronavirus Update: June 19, 2020 [Video]

June 19, 2020

Today, I'd like to discuss the coronavirus, including its effect on the economy and markets. Over the past week, we’ve seen some state-level outbreaks of the virus. Still, there’s no sign of a national second wave of infections, with the daily spread rate at just above 1 percent and the daily case growth at 25,000 per day. So, despite some bad news at the local level, the virus remains under control and is actually showing signs of improvement in many states. On the economic front, the news was better. Layoffs continued to decrease, while hiring continued to improve. Perhaps the biggest news, however, was that consumer retail spending came in much better than expected, meaning consumers have jobs and are feeling confident.

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Despite Localized Outbreaks, Recovery Remains On Track

June 18, 2020

The bad news this past week is that there are signs of localized outbreaks in several states, specifically Arizona, California, Florida, and Texas. All have shown significant spikes in cases in recent days. But the good news is that outside these and a handful of other states, the virus remains under control, and there is still no national second wave of infections.

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Is the Market Melt-Up Cause for Concern?

June 17, 2020

With the market moving back up to close to its all-time highs, the betting would clearly seem to be that everything will be all right and that the V-shaped recovery is well underway. When you look a bit deeper, though, even if those positive assumptions come true (possible, but certainly not guaranteed), there are still reasons to be concerned about where the market is now. Let’s take a look at the details.

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In Response to “The Looming Bank Collapse”

June 16, 2020

Brad here. One of the side effects of the recent stock market pullback, combined with the pandemic, has been an increase in the perceptions of risk—in everything. Recently, we have gotten a number of questions about an article that claimed we were headed for another financial crisis on top of everything else. It was a very scary article, but (spoiler alert!) as my colleague Nick Follett discusses below, it was overstated and, in many respects, just plain wrong in many of its assertions. This post is a bit more technical than we usually do here, but I think it is worth taking a deeper dive to understand what is really happening. Over to you, Nick!

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Monday Update: Reopening Takes Hold, Consumer Confidence Jumps

June 15, 2020

Last week saw a number of important economic updates, with a focus on inflation, the Fed’s June meeting, and consumer confidence. June’s consumer confidence report was a highlight, revealing better-than-expected results that bode well for consumer spending growth. This week, which will be relatively quiet, will include important updates on May retail sales and the housing market in May and June.

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Coronavirus Update: June 12, 2020 [Video]

June 12, 2020

Today, I'd like to provide an update on the coronavirus pandemic, including the economic and market implications. The virus remains under control, with the case growth rate at about 1 percent per day and daily case growth at about 20,000 per day. But while we didn’t see any signs of a national wave of second infections, it was a different story at the local level. Infection rates started to tick up in some states, which is something we need to keep an eye on. The news on the economic side, however, was better. Thus far, the reopening has been happening faster and more successfully than most imagined. In fact, last week’s jobs report revealed 2.5 million jobs were created in May. With economists anticipating a loss of 7.5 million jobs, this result was certainly a positive surprise. Plus, we saw a bounce in consumer and business confidence, as well as a rise in consumer spending.

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No Sign of Second Wave of Infections at National Level

June 11, 2020

The news this past week is that there is still no sign of a national second wave of infections. The spread rate remains low, dipping under 1 percent for the first time on two days, and case growth continues to be constrained at around 20,000 per day. That being said, several states are undergoing local second waves, with case counts rising rapidly. So far, those increases have been offset by improvement elsewhere in the country. As such, these outbreaks, while severe at the local level, are not translating to a national level. This development will be something to watch moving forward, as either a further increase in case counts in the affected states or a slowdown in improvement in the other states could reverse the trend.

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Monthly Market Risk Update: June 2020

June 10, 2020

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!

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Economic Risk Factor Update: June 2020

June 9, 2020

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

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Monday Update: May Jobs Report Blows Away Expectations

June 8, 2020

Last week’s economic updates showed a stabilizing economy in May, with solid results for business confidence and employment during the month as highlights. This week, important reports will focus on inflation, the rate decision from the Fed’s June meeting, and consumer confidence.

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Appearance on Yahoo Finance’s The Final Round, June 5, 2020 [Video]

June 8, 2020

What can we expect to see with the markets by the end of the year? I discussed this and more Friday on Yahoo Finance’s The Final Round.

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Coronavirus Update: June 5, 2020 [Video]

June 5, 2020

Today, I'd like to discuss where we are in the coronavirus crisis, including the latest economic and market news. It was a good week in terms of virus control here in the U.S. The daily spread growth rate dropped to 1.1 percent, and the number of new cases ticked down to 20,000 per day. Still, the possibility of a second wave of infections remains, especially given the protests happening across the country. Turning to the economy, we had more good news. Layoffs continued to decline, more people returned to work, and business and consumer confidence showed signs of improvement. The markets certainly took note of these positive developments, as evidenced by the steady rise in the stock market.

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Reopening on Track, But Protests Introduce New Risks

June 4, 2020

The news over this past week is what has still not happened: at present, there are no signs of a second wave of infections stemming from the ongoing reopening of the economy and the loosening of social distancing measures in several states. In fact, the data shows that social distancing had been subsiding in many areas even before the formal loosening. So, we are now three weeks or more into the start of a new environment for the spread of the virus. Not only has there been no significant increase in the case growth rate, but case growth itself has trended back down to around 20,000 per day.

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Looking Back at the Markets in May and Ahead to June 2020

June 3, 2020

May was a good month, in terms of the virus, the economy, and the markets. But what does this positive news mean for the month ahead? Let’s take a closer look.

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Market Thoughts for June 2020 [Video]

June 2, 2020

In May, we saw real progress in the coronavirus, which allowed the economy to begin reopening. Hundreds of thousands returned to work, people began to shop again, and confidence started to stabilize. In turn, U.S. markets rose to just above their long-term trend line and are now fully expecting a V-shaped recovery.

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Monday Update: Consumer Confidence Stabilizes in May

June 1, 2020

Last week’s economic updates came in mixed, with the solid results for consumer confidence in May offset by historically bad spending figures in April. Once again, this week will be packed with updates, with a focus on business confidence, international trade, and the May employment report.

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