The strength (or lack thereof) of the dollar is a perennial topic here on the blog. Looking at the past several years, I see “U.S. Dollar Still Failing to Collapse” (November 2015), “Should You Be Worried About the Strong Dollar?” (December 2016), and, after a bit of a hiatus, “The Dollar Is Not Collapsing” (July 2020). There are many other versions, of course. (Notably, I did a whole series on money and the dollar back in 2013.) But the message has consistently been this: exchange rates bounce up and down, but there is no reason to worry.

Yesterday I appeared on Nasdaq's TradeTalks to discuss economic risks, the impact of inflation on the markets, and more. Watch the full segment.

The regular meeting of the Fed starts today. Tomorrow, the Fed will issue a press release, describing any actions it decides to take, and hold a press conference where the chair, Jerome Powell, will take questions.

This will be the last of the Coronavirus Update videos, at least for the foreseeable future. There will be one more written update, which will be posted on the blog on June 25.

Much of the commentary on recent issues—especially inflation—has focused on terrible reported numbers. As always, though, it is helpful to remember there is nothing sacred about those numbers. They have assumptions and biases built in, which are unavoidable. As analysts, we need to understand those assumptions and biases, so we can see when they are reasonable (and when they are not).

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!

Equity markets started off strong in May, but volatility later in the month led to a partial pullback. The S&P 500 and Dow Jones Industrial Average (DJIA) indices both hit all-time highs earlier in the month before suffering from volatility. Despite the turbulence along the way, the S&P 500 gained 0.70 percent during the month, and the DJIA saw a solid 2.21 percent return. The Nasdaq Composite fell by 1.44 percent, as the heavy technology weighting led to additional volatility for the index.

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!

The economic recovery picked up steam in May, driven by continued improvements on the public health front and ongoing reopening efforts across the country. Improving business confidence was a highlight, as service sector confidence set a record high. The May employment report showed that the pace of hiring accelerated following a lull in April, although headline job growth came in below economist estimates.

May was another good month, albeit one with some ups and downs. On the upside, the pandemic entered its endgame and corporate earnings blew away expectations. On the downside, the significant problems of success attending our move back to normal started to become apparent. Overall, May took us further along the road to normal, but it also began to reveal the bumps on that road.

It was a mixed bag for the markets in May, with the Dow up more than 2 percent, the S&P 500 up slightly, and the Nasdaq down. On the medical front, case growth and death rates declined, and more than 4 of 10 people are now fully vaccinated. With fading medical risks, the economy continued to improve. Layoffs are trending down, and consumer confidence remains close to pre-pandemic levels.

Given how much things have improved on the medical front, I will now be doing two pandemic updates a month. The video update will appear on the second Friday of the month, while this written update will appear on the last Friday of the month. Have a great holiday weekend!