June was a mixed month. The national reopening in May and June led to new viral outbreaks and a spike in new infections in multiple states. Surprisingly, though, both the economic recovery and financial markets did very well. As we enter July, the question of many minds is whether the medical situation will improve—and whether the good economic and market news will continue.

The bad news this past week is that the medical risks are still rising. Outbreaks in several states, notably Arizona, California, Florida, and Texas, have continued to get worse. All have shown significant spikes in cases in recent days, and health care capacity is becoming a concern in some cities. Multiple other states have also seen expanded case growth, although not yet at the levels of those four. At the national level, as of July 1, the number of new cases broke above 50,000 for the first time, and the daily spread rate is now approaching 2 percent per day. Similarly, even as the number of tests continues to rise, the positive rate is also increasing. The breadth and magnitude of the outbreaks continue to increase the risk at a national level.

Right now, we seem to be seeing a disconnect between the rising case counts and the rising stock market. Yes, there was a bit of a pullback on the news that case growth was hitting a new high. But since then, the markets have started to bounce again, even as case counts continue to increase. I get many questions about this disconnect. Indeed, on the surface, it seems to make no sense. What is going on here?

The bad news this past week is that the chances of a national second wave of infections are increasing as localized outbreaks in several states continue to get worse. The states in question are Arizona, California, Florida, and Texas, with the Carolinas also under pressure. All have shown significant spikes in cases in recent days. Multiple other states are also seeing expanded case growth, although not yet at the levels of those four. While the virus remains under control in many states, the breadth and magnitude of the outbreaks continue to increase the risk at a national level.

Brad here. One of the questions I have been hearing a lot recently is whether it still makes sense to invest in international stocks. Indeed, it is a good question. Here, Anu Gaggar, Commonwealth’s international analyst, provides a timely and compelling look at why international markets may still make sense in your portfolio. Thanks, Anu!

COVID-19 case growth has spiked up recently in several states, taking the national case growth rate up above 30,000 per day for three of the past four days. So, do we have a second wave on our hands? And if so, what does that mean?

The bad news this past week is that there are signs of localized outbreaks in several states, specifically Arizona, California, Florida, and Texas. All have shown significant spikes in cases in recent days. But the good news is that outside these and a handful of other states, the virus remains under control, and there is still no national second wave of infections.

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.