The Independent Market Observer

Positive Signs in the Economic Recovery

September 30, 2020

I am running this post a day earlier than usual, as we will post the beginning-of-the-month fare tomorrow (e.g., Market Thoughts video). Next week, we will go back to a Thursday update.

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Does Politics Affect the Economy?

September 29, 2020

One of the big unexamined assumptions of many of the questions I have been getting recently is that politics matters to economics. I get questions from both sides—how bad will it be if candidate X wins? They all assume that candidate X, whoever it is, has the ability to significantly affect the economy and the markets. But is that really the case?

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Monday Update: Housing Sales Keep Improving

September 28, 2020

Last week was relatively quiet on the economic update front, with a focus on August’s housing sales and durable goods orders reports. This week will be packed with economic updates, with a focus on consumer and manufacturer confidence and the September jobs report.

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How to Remain Calm (and Carry On)

September 25, 2020

In a client event this week, I got an interesting question: “How do you stay calm? With everything that is going on, with all of the problems and risks that you have to evaluate, every day, how do you manage to stay calm?” I thought it was a very good question.

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Financial Markets Bounce Around on Rising Medical Risks

September 24, 2020

Over the past week, the news on the medical front has been mixed. The pandemic remains under control, and the case growth rate remains low. But case growth has started to slowly increase again, as post-Labor Day infections begin to register and as schools and universities reopen.

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Will the Election Sink the Markets?

September 23, 2020

Recently, I have been getting a number of questions from people who are scared about what might happen to the financial markets at election time. The fear is that if we get a disputed election, it could lead to disruption and possibly even violence. If so, we could well see markets take a significant hit.

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More Market Volatility in the Forecast?

September 22, 2020

As we have seen, markets have continued to decline throughout September. Despite some attempts to rally, we are now well below the peak at the start of the month. How worried should we be?

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Monday Update: Retail Sales Slow in August

September 21, 2020

Last week was packed with economic updates, with a focus on housing, consumer confidence and spending, and the results from the Fed’s September meeting. The news for consumers was mixed, with better-than-expected confidence in September helping to calm concerns about slower sales growth in August. This week will be less busy for economic updates, with reports primarily focused on housing sales and durable goods orders.

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Coronavirus Update: September 18, 2020 [Video]

September 18, 2020

Today, I'd like to provide an update on the coronavirus, including the economic and market implications. This week, we had some mixed news on the medical front. Although the pandemic remains under control, case counts have started to rise again, as post-Labor Day infections begin to register and as schools and universities reopen. Still, case growth remains well below July and August levels, and the positive test rate has continued to decline and is now around the recommended 5 percent level.

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Economic Recovery on Track, But Some Signs of Weakness

September 17, 2020

The past week has seen the case growth rate remain low. But there are signs that the case count may be rising, as post-Labor Day infections start to register and as schools and universities reopen. While the pandemic remains under control, the steady improvement in both the case growth rate and case growth itself has paused and may be starting to falter. While the control measures are still working, conditions are changing.

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Is the Market Too Complacent?

September 16, 2020

As a follow-up to yesterday’s post about how no one seems to be worrying about the federal deficit, I was having a conversation with a reporter this morning and found myself expanding on other things the market seems to have forgotten about. Yes, we have the pandemic and the U.S. recovery on the radar, but not the deficit. And once you start thinking about it, there are other issues out there that were rattling markets only last year. What about the pending hard Brexit, for example? What about the U.S.-China trade conflict and deals? What about the continued weakness of the energy sector? What about the rising pandemic costs in emerging markets? What about the growing conflict between Greece and Turkey (two NATO countries) in the eastern Mediterranean? And so on, and so on.

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What About the Federal Deficit?

September 15, 2020

Recently, the number of questions I’ve been getting has been greater than usual. People are getting scared. It is not just about the pandemic, as that seems to be and is, at the moment, moving under control. Rather, people are worried about the election (and what that means for their portfolios), about the value of the dollar (and what that means for their portfolios), and about inflation (and what that means for their portfolios). The first concern comes up every four years, and the second and third are perennials, which appear whenever things look a bit dicey. No surprises here. But what is surprising is what’s missing: the questions about the federal deficit. This kind of uncertainty typically generates questions about what the deficit, and the debt, mean. Not this time.

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Monday Update: Unemployment Claims Remain Stubbornly High

September 14, 2020

Last week was relatively quiet on the economic update front, with reports on inflation and weekly unemployment providing the highlights. This week will be much busier, with updates scheduled to cover consumer confidence and spending, the housing market, and the Fed’s September meeting.

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Monthly Market Risk Update: September 2020

September 11, 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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Signs of a Slowdown in the Economic Recovery?

September 10, 2020

The past week has seen continued improvement, with the case growth rate down to new lows and case growth below 30,000 per day for the first time since June 21. The pandemic remains under control, and things are still getting better. The control measures are working.

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Economic Risk Factor Update: September 2020

September 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: August Employment Report Beats Expectations

September 8, 2020

Last week’s economic highlights included important releases on business confidence, international trade, and the employment market. This week will be relatively quiet due to the holiday, with releases scheduled on inflation and the weekly initial jobless claims.

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More Market Turbulence: What's Going On?

September 4, 2020

After a record-setting August, we are now seeing some market turbulence in September. Markets were down significantly yesterday and are headed lower today. What’s going on?

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Coronavirus Update: September 4, 2020 [Video]

September 4, 2020

Today, I'd like to provide an update on the coronavirus, including the economic and market implications. We had good news on the medical front, as the pandemic remains under control. Case growth is down, and the case growth rate remains well below the lows seen in mid-June. Still, testing continues to be an area of weakness, and the possibility that school reopenings will lead to more infections is a concern.

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Pandemic News Continues to Improve Along with the Economy

September 3, 2020

The good news is that the pandemic remains under control, with continued improvement. Case growth has gone down further over the past two weeks, and the case growth rate remains below the lows seen in mid-June. The control measures are working.

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Looking Back at the Markets in August and Ahead to September 2020

September 2, 2020

After a great month like August, expectations and momentum are high, and you could reasonably expect to see another great month ahead. That scenario happens, and it is certainly what we are seeing in the first days of September. But taking a detailed look at last month’s results suggests some reasons for caution. Let’s start with where the returns came from.

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Market Thoughts for September 2020 [Video]

September 1, 2020

August was a very good month for the markets. The Nasdaq and S&P 500 reached new highs, and investors continued to move back into the markets. We also saw infection numbers decline, and the economic recovery started to regain strength. Consumer confidence looks to have bottomed, and wage growth has ticked up again, supporting spending growth.

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