Yesterday I appeared on CNBC’s The Exchange to discuss the sectors I favor right now and the markets. 

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!

We’ve reached that point in the election cycle where I've started getting questions, from both sides, about the effect of the upcoming election on the markets. “Surely,” the question goes (and note that it is not really a question), “if Candidate X wins, the market will tank for the following reasons . . .”

Overall, July was a good month for the markets. As the month began, we saw strong job gains, declining layoff numbers, and rising consumer confidence and spending. Markets rose on this good news. But then infection counts went up, leading to state-level closures. This shift hit hiring and confidence, slowing the recovery. As a result, several market indices declined from their midmonth levels.

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.

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.

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.

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.

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.

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.