For the second earnings season in a row, we have had blowout results. After an amazingly strong first quarter, the results for the second quarter are coming in even better. As of the end of last week, according to FactSet, 9 of 10 companies (91 percent) had reported. Of these, almost 7 of 8 (87 percent) beat expected earnings. These are the highest levels of beats on earnings seen since the start of records in 2008 and slightly above what we saw last quarter.

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

Over the past couple of weeks, I have gotten a number of questions on inflation. It seems to be one of the top-of-mind issues. Given that, and the fact that the most recent inflation data hit this morning, it seems appropriate to give an update.

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!

July was another dickens of a month—at once the best of times and the worst of times. For the financial markets, the news was largely good. The U.S. markets ended up across the board, hitting new all-time highs during the month. Earnings reports continued to substantially beat expectations. That good news, combined with dropping interest rates, drove markets higher. Bond markets continued to rally on those lower rates. From a financial perspective, July was a very good month here in the U.S.

The monthly jobs report gives us a good chance to think through where we are in the recovery—and what effect the most recent developments have had. With the next report coming this Friday, what should we be looking for?

July was a generally good month for the markets, with all three major U.S. indices up by more than 1 percent. But emerging markets were hit hard and ended the month down significantly. On the economic front, the data remains positive, although business and consumer confidence declined. Further, medical risks are on the rise, with the Delta variant hitting the unvaccinated population.

For some reason, I have been getting another round of questions about the end of the world. The dollar is collapsing, the IMF is devaluing the U.S. currency, the deficit and debt are blowing up, inflation is rising, and so forth. These end-of-the-world worries usually happen every couple of years, driven by some outside anxiety, which is, at the moment, COVID.

Yesterday, we talked about whether the labor market would balance in the short term. We also discussed whether there were enough people outside the labor force who might move back in, with higher wages and other inducements, to provide enough bodies to not only fill the current vacancies but also provide enough of a cushion to prevent further dislocations in the future. Although it is close, so far the numbers suggest there are enough people out there to do that. In the next year or so, jobs and employees should move back into a rough equilibrium.

A couple of weeks ago, we left off our discussion on the labor market with the conclusion that the labor market shifts were real and reflected underlying changes in both the demographics and demand for jobs. Knowing that, however, doesn’t tell us what is likely to happen in the future. So, let’s think through the factors that will determine just that.