With the market moving back up to close to its all-time highs, the betting would clearly seem to be that everything will be all right and that the V-shaped recovery is well underway. When you look a bit deeper, though, even if those positive assumptions come true (possible, but certainly not guaranteed), there are still reasons to be concerned about where the market is now. Let’s take a look at the details.

Brad here. One of the side effects of the recent stock market pullback, combined with the pandemic, has been an increase in the perceptions of risk—in everything. Recently, we have gotten a number of questions about an article that claimed we were headed for another financial crisis on top of everything else. It was a very scary article, but (spoiler alert!) as my colleague Nick Follett discusses below, it was overstated and, in many respects, just plain wrong in many of its assertions. This post is a bit more technical than we usually do here, but I think it is worth taking a deeper dive to understand what is really happening. Over to you, Nick!

The news this past week is that there is still no sign of a national second wave of infections. The spread rate remains low, dipping under 1 percent for the first time on two days, and case growth continues to be constrained at around 20,000 per day. That being said, several states are undergoing local second waves, with case counts rising rapidly. So far, those increases have been offset by improvement elsewhere in the country. As such, these outbreaks, while severe at the local level, are not translating to a national level. This development will be something to watch moving forward, as either a further increase in case counts in the affected states or a slowdown in improvement in the other states could reverse the trend.

The news over this past week is what has still not happened: at present, there are no signs of a second wave of infections stemming from the ongoing reopening of the economy and the loosening of social distancing measures in several states. In fact, the data shows that social distancing had been subsiding in many areas even before the formal loosening. So, we are now three weeks or more into the start of a new environment for the spread of the virus. Not only has there been no significant increase in the case growth rate, but case growth itself has trended back down to around 20,000 per day.

May was a good month, in terms of the virus, the economy, and the markets. But what does this positive news mean for the month ahead? Let’s take a closer look.

The big news this past week has been what has not happened: there are, at present, no signs of a second wave of infections stemming from the ongoing reopening of the economy and the loosening of social distancing measures in several states. In fact, the data shows that social distancing had been subsiding in many areas even before the formal loosening. So, we are now two weeks or more into the start of a new environment for the spread of the virus. While it is still early in the process, some growth in cases could have been expected. The fact that we have continued to see the spread rates at close to the lowest levels of the pandemic is positive.

Recently, I’ve gotten some questions on news reports that the Centers for Disease Control and Prevention (CDC) and many states have been conflating two different types of COVID-19 tests in their reporting. The substance of both the news reports and the subsequent questions was that this conflation made the data unreliable and that the situation could be worse—with respect to the virus and the pandemic—than we had thought. Indeed, it is a reasonable concern. And given that I use various coronavirus data here on the blog, I thought it would be worth writing about what we know about the virus and how we know it.

This past week revealed a mix of improvement and stabilization in the COVID-19 pandemic. While testing continues to expand, the progress in slowing the spread rate and case growth has stalled, leaving both at levels consistent with the past two weeks. The number of active cases has started to grow again, which is a negative. Overall, conditions remain much better than they have been in recent weeks, but we did not see much, if any, additional progress in controlling the virus.

Today’s post on ESG investing comes from Brian Price, senior vice president of investment management and research here at Commonwealth—and a self-proclaimed ESG investing skeptic. Over to you, Brian!

Brad here. One of the most common questions I get from investors is where to invest. Stocks, bonds, or something else? Are things different this time, and how should we react? And, perhaps most relevant, should we invest in the U.S. or abroad? Anu Gaggar, Commonwealth’s international analyst, spends her days thinking about how—and whether—to invest abroad, and this post provides a timely and very useful guide to how she is thinking about emerging markets. Thanks, Anu!