The Independent Market Observer

Coronavirus Update: July 31, 2020 [Video]

July 31, 2020

Today, let's take a look at where we are in the coronavirus crisis, including the economic and market implications. On the pandemic front, we had some good news this week. At the state level, case growth in most of the worst affected states appeared to have peaked. Nationally, the number of new cases was about 70,000 (almost the same as last week), and the daily spread rate improved from just under 2 percent to 1.5 percent per day. Overall, the national risks remain under control, and the possibility of another national shutdown is very unlikely.

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Has the Second Wave Peaked?

July 30, 2020

The good news this week is that things are starting to get better. Case growth has peaked, at least in the short term, and the case growth rate has ticked down. After last week’s stabilization of the second wave, this progress is the next step. The data indicates that, in many states, outbreaks are being contained, as expected.

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Another Look at the Dollar: The Fed and Interest Rates

July 29, 2020

One of the reasons behind the recent decline of the dollar is reportedly the fact that the Fed has largely committed to keeping rates low—the market believes—forever. Looking at the yield curve, the 30-year Treasury rates are at 1.22 percent as I write this. With rates that low, the value of the dollar would certainly take a hit if other central banks raised rates.

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The Dollar Is Not Collapsing

July 28, 2020

We have returned to that point in the cycle where the dollar starts moving down and the doomsayers come out of the woodwork. As the headlines have begun to point out the decline of the dollar in recent months, worries have started to rise. In fact, if you look at the chart for the most recent couple of months, you can see where these headlines are coming from.

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Monday Update: Initial Jobless Claims Increase

July 27, 2020

Last week was relatively slow in terms of economic updates. Notably, a disappointing jobless claims report raised concerns of a slowing economic recovery in July due to rising coronavirus case counts and a pause or rollback in reopening efforts in some states. This week will be very busy, with scheduled reports covering most important areas of the economy. Highlights include the major consumer confidence reports for July and our first look at second-quarter GDP.

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Coronavirus Update: July 24, 2020 [Video]

July 24, 2020

Today, I'd like to discuss the coronavirus, including its implications for the economy and markets. On the pandemic front, this week was much the same as last week. Nationally, the number of new cases per day held at just above 70,000, and the daily spread rate has been below 2 percent per day for the past five days. These numbers are still too high, but they’re not getting worse. This is good news, as stabilization represents real progress.

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Signs of Stabilization on the Pandemic Front

July 23, 2020

The good news this week is that things are about the same as they were last week. The reason this is good news is that things had been getting worse. So, this stabilization represents progress. It also indicates that, in many states, outbreaks are being contained, as expected.

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Q2 2020 Earnings: Terrible, But Still Positive

July 22, 2020

While it is still early days, with only 9 percent of S&P 500 companies reporting as of the end of last week, the initial earnings reports seem to show that things are still not good. According to FactSet, quarterly earnings are down, so far, by 44 percent. If this number holds, it would be the second-worst quarterly drop since the end of 2008 during the financial crisis. Scary news—but not unexpected.

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Where Is Value Now?

July 21, 2020

Brad here. “Value” is an often-mentioned word, but few people have really considered what it means in the context of the whole economy. A short while ago, Pete Essele, one of Commonwealth’s most senior portfolio managers, wrote a post for this blog in which he discusses value investing and its underperformance. That was the first part of the story. Here, he takes a deeper look at why that underperformance happened—with very interesting implications for the future. Take it away, Pete!

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Monday Update: Retail Sales Jump for Second Month in a Row

July 20, 2020

Last week was jam-packed with economic updates, highlighted by better-than-expected industrial production and retail sales reports showing a continuing recovery as reopening efforts took hold in June. This week, the economic update front will be relatively quiet, with a focus on home sales and the weekly initial jobless claims report.

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Coronavirus Update: July 17, 2020 [Video]

July 17, 2020

Today, I'd like to provide an update on the coronavirus, including its effect on the economy and markets. On the medical front, it was another bad week. The viral outbreaks continued to get worse, with several health care systems getting close to capacity. So far, however, most of the damage remains localized. And with affected states starting to impose restrictive measures, we’ve started to move in the right direction, and the likelihood of another national shutdown remains small.

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So Far, Medical Risks Not Derailing Economic Recovery

July 16, 2020

This week’s update is somewhat worse than last week’s. Medical risks are still rising. Outbreaks in several states (notably, Arizona, California, Florida, and Texas) continued to get worse, even as other states began showing faster outbreaks.

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Monthly Market Risk Update: July 2020

July 15, 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!

Markets continued to rise in June, as efforts to reopen state economies across the country continued throughout the month. Investors reacted to the continued reopening with optimism, driving the S&P 500 up 1.99 percent in June following a 4.76 percent increase in May. These positive results came despite some midmonth volatility created by concerns of rising national coronavirus case numbers. While the continued market rebound during the month was certainly welcome for investors, very real risks to markets still remain—and there are several key factors that matter when determining the overall risk level.

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Economic Risk Factor Update: July 2020

July 14, 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: Service Sector Sentiment Skyrockets

July 13, 2020

Last week was relatively quiet on the economic update front, with only three major data releases. The highlight of the week was the ISM Nonmanufacturing index, which showed that service sector confidence rebounded by far more than expected in June. This week, we’ll get numerous important updates, with a focus on consumer inflation, industrial production, retail sales, housing, and consumer confidence.

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Coronavirus Update: July 10, 2020 [Video]

July 10, 2020

Today, I'd like to provide an update on the coronavirus, including the economic and market implications. It was another bad week on the medical front. The viral outbreaks in several states continued to get worse, with some health care systems reaching capacity. Further, new cases at the national level broke 60,000 per day for the first time, and the daily spread rate reached 2 percent per day. Although the risks are rising, the affected states have started to impose the needed restrictive measures, and the public has begun to modify its behavior. As such, we can reasonably expect these outbreaks to peak and then decline in the next couple of weeks.

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Are Localized Viral Outbreaks Turning into a National Threat?

July 9, 2020

This week’s coronavirus update is pretty much the same as last week’s. The medical risks are still rising. Outbreaks in several states (notably, Arizona, California, Florida, and Texas) have continued to get worse. All have shown significant spikes in cases in recent days, and health care capacity is now a concern in some cities. Further, multiple other states are also seeing expanded case growth, although not yet at the levels of those four. At the national level, as of July 9, the number of new cases broke above 60,000 for the first time, and the daily spread rate is now at 2 percent per day. Similarly, even as the number of tests continues to rise, the positive rate is also increasing. The breadth and magnitude of the outbreaks continue to increase the risk at a national level.

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2020 Midyear Outlook [Video]

July 8, 2020

The rest of 2020 will be all about the virus. We’re seeing localized outbreaks, but the necessary countermeasures are in place. So, we can reasonably expect the virus to remain under control. Despite the medical setbacks, millions of jobs have returned, along with consumer confidence and spending. The recovery remains on track and is likely to continue. And that's exactly what the markets are expecting.

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Appearance on Yahoo Finance’s On the Move, July 8, 2020 [Video]

July 8, 2020

How can a second quarter depression lead to new growth? I discussed this and more today on Yahoo Finance’s On the Move.

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Is the Value Premium Dead?

July 8, 2020

Brad here. Another question I have been getting repeatedly is whether value is dead. Just as with emerging markets, a long run of underperformance has raised this question. Is the situation different now? Peter Essele, one of Commonwealth’s most senior portfolio managers, is very well positioned to answer that question. Over to you, Pete!

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Appearance on Nasdaq’s Trade Talks, July 7, 2020 [Video]

July 7, 2020

What is the investor focus for the remainder of 2020? I discussed this and more today on Nasdaq’s Trade Talks.

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

July 7, 2020

June was a mixed month. The national reopening in May and June led to new viral outbreaks and a spike in new infections in multiple states. Surprisingly, though, both the economic recovery and financial markets did very well. As we enter July, the question of many minds is whether the medical situation will improve—and whether the good economic and market news will continue.

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Monday Update: June Jobs Report Hints at Faster Recovery

July 6, 2020

Last week was packed with economic updates, with results largely beating expectations. For the second month in a row, the headline job report came in far above economist estimates, supporting hopes for a faster-than-anticipated economic recovery. This week, the economic update front will be relatively quiet, with highlights on service sector confidence, the weekly initial claims report, and producer inflation.

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Economic Recovery Persists Despite Rising Risks

July 3, 2020

The bad news this past week is that the medical risks are still rising. Outbreaks in several states, notably Arizona, California, Florida, and Texas, have continued to get worse. All have shown significant spikes in cases in recent days, and health care capacity is becoming a concern in some cities. Multiple other states have also seen expanded case growth, although not yet at the levels of those four. At the national level, as of July 1, the number of new cases broke above 50,000 for the first time, and the daily spread rate is now approaching 2 percent per day. Similarly, even as the number of tests continues to rise, the positive rate is also increasing. The breadth and magnitude of the outbreaks continue to increase the risk at a national level.

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Coronavirus Update: July 2, 2020 [Video]

July 2, 2020

Today, I'd like to discuss the coronavirus, including its effects on the economy and markets. Over the past week, we had some bad news on the pandemic front. There were growing viral outbreaks in several states, and the national number of new cases broke the 50,000 per day level for the first time. Although the risks are certainly rising, the appropriate measures are being taken, and we can reasonably expect the outbreaks to peak and start to decline in the next couple of weeks.

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Market Thoughts for July 2020 [Video]

July 1, 2020

June was a great month for the markets. In part, markets were reacting to progress on the viral front, with drops in the daily case growth rate and increased testing. They were also responding to the continued economic recovery. Millions of jobs returned, and consumer confidence bounced back. Of course, there were setbacks, with some states seeing an uptick in virus cases.

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