Last week was packed with economic updates that touched on wide swaths of the economy. The first estimate of second-quarter GDP growth drew a lot of attention. It showed the economy contracted at the fastest quarterly rate on record, highlighting the devastating economic impact of anti-coronavirus measures. This will be another relatively busy week for economic updates, with a focus on business confidence and the July employment report.

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.

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.

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.

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.

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!