Where are we on vaccines and treatments?

During 2020, the United States government has spent more than $13 billion on Operation Warp Speed (OWS), which is focused on accelerating the development of vaccines and treatments for COVID-19, according to The Economist. The United States is not alone. Governments around the world are funding similar research.

The Economist reported, “…with the eagerness of the pharma sector to find treatments, along with the broad range of investments made by OWS (as well as other governments), there has been a lot of progress in the search for tests, drugs, and vaccines…Even the master of caution on vaccines, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, thinks a signal of vaccine efficacy might arrive in September.”

Any progress on treatments and vaccines is welcome news. Last week, there were more than 4 million confirmed COVID-19 cases in the United States, and the number of deaths rose above 1,000 a day, reported Joe Murphy and colleagues at NBC News. Late in the week, the number of new cases in Arizona, Florida, and South Carolina appeared to be trending lower, according to data from the Coronavirus Research Center at Johns Hopkins.

The resurgence of the virus may be one reason for the decline in U.S. stock markets last week. The Nasdaq Composite Index delivered back-to-back losses for the first time in more than a month, while the Dow Jones Industrial Average and the Standard & Poor’s 500 Index finished the week slightly lower, reported Ben Levisohn of Barron’s.

It’s difficult to pinpoint the exact cause of the drop because there were many possible drivers. For instance, the Department of Labor reported the number of new unemployment claims increased, after 15 weeks of declines. Markets may have been concerned about increasing unemployment numbers when the extra $600 in weekly unemployment benefits expires at the end of this week. Congress has yet to agree on whether or how to extend benefits.

In addition, earnings have been less than stellar – as expected. Last week, 26 percent of companies in the Standard & Poor’s 500 Index had reported second quarter results. The blended earnings, which combine actual results for companies that have reported with the estimated results for companies that have not yet reported, were down 42.4 percent, reported John Butters of FactSet.

There is little doubt the virus has wrought economic havoc. Let’s hope we find a vaccine soon. Future generations may think about COVID-19 the way we now think about polio, measles, and rubella.

Just For fun. The terms money and currency are often used interchangeably. However, Andrew Beattie of Investopedia pointed out, “According to some theories, money is inherently an intangible concept, while currency is the physical (tangible) manifestation of the intangible concept of money. By extension…money cannot be touched or smelled. Currency is the coin, note, object, etc…”

See what else you know – or don’t – about money by taking this brief quiz:

1. Which of the following was once used as currency?
   1. Tea bricks
   2. Knives
   3. Animal skins
   4. All of the above

2. Which was the first animal to appear on a U.S. coin?
   1. An eagle
   2. A buffalo
   3. A jackalope
   4. A ring-necked pheasant

3. What were nickels made of during WWII (1942-1945)?
   1. Nickel
   2. Metal alloy
   3. Steel
   4. Leather

4. What is chrometophobia?
   1. Fear of thinking about money
   2. Fear of spending money
   3. Fear of touching money
   4. All of the above

Weekly Focus – Think About It
“A nickel ain’t worth a dime anymore.”
–Yogi Berra, Professional baseball player

Answers:

1. D – All of the above (Tea bricks, Knives, and animal skins)
2. A – Eagle
3. B – Metal alloy
4. D – All of the above (Fear of thinking about money; fear of spending money; and fear of touching money)

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

https://www.economist.com/united-states/2020/07/18/donald-trump-is-hoping-for-a-covid-19-treatment-by-november (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-27-20_TheEconomist-Donald_Trump_is_Hoping_for_a_COVID-19_Treatment_by_November-Footnote_1.pdf)
https://www.nbcnews.com/health/health-news/coronavirus-deaths-united-states-each-day-2020-n1177936
https://coronavirus.jhu.edu/data/new-cases-50-states (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-27-20_JohnsHopkins-Daily_Confirmed_New_Cases-Footnote_3.pdf)
https://www.barrons.com/articles/tech-stocks-tanked-blame-it-on-the-value-of-the-dollar-51595638215?refsec=the-trader (or go to https://peakcontent.s3-us-west-2.amazonaws.com/+Peak+Commentary/07-27-20_Barrons-Another_Reason_Tech_Stocks_Tanked-A_Weak_Dollar-Footnote_4.pdf)
https://www.dol.gov/ui/data.pdf
https://www.cnbc.com/2020/07/23/weekly-jobless-claims.html
https://insight.factset.com/sp-500-earnings-season-update-july-24-2020
https://www.cdc.gov/globalhealth/immunization/default.htm
https://www.investopedia.com/articles/07/roots_of_money.asp
https://www.msn.com/en-ca/money/topstories/strange-things-used-as-currency-around-the-world/ar-AAjl3UB?li=AAgh0dA
https://www.usmint.gov/learn/kids/coins/fun-facts
https://turbo.intuit.com/blog/relationships/chrometophobia-fear-of-money-4734/
https://www.brainyquote.com/quotes/yogi_berra_106829

Is the United States economy recovering or faltering?

It depends on who you ask and which data you consider. For example, last week, the Department of Labor reported fewer people applied for first-time unemployment benefits during the week of July 11. That could be a tick in the positive data column. Week-to-week the number declined from 1.31 million to 1.30 million. The lackluster decline could be a tick in the negative data column since the long-term weekly average is about 20 percent of that number.

There was positive news about progress on COVID-19 vaccines last week. The hope it inspired was tempered by reports the number of new cases continued to grow in a majority of U.S. states.

 Concern about the resurgence of the virus negatively affected consumer sentiment during the first half of July. The University of Michigan Consumer Sentiment Survey reported, “The promising gain recorded in June was reversed, leaving the Sentiment Index in early July insignificantly above the April low (+1.4 points).”

Uncertainty is reflected in the divergent stories told by stock and bond markets.

The year-to-date return for the Standard & Poor’s 500 Index moved briefly into positive territory last week before finishing slightly down, reported Financial Times. That’s an impressive run for a benchmark that was down more than 30 percent in late March. Meanwhile, the tech-heavy Nasdaq Composite has been in positive territory for a while.

Last week, Mike Wilson, Chief U.S. Equity Strategist at Morgan Stanley said, “The bottom line, equity markets have been telling us growth is going to surprise on the upside.”

Bond markets have been less optimistic. Yields on U.S. Treasuries remain exceptionally low, suggesting investors continue to seek safe havens amidst uncertainty about the future. On January 2, 2020, 10-year Treasury notes yielded 1.88 percent. Last week, the yield was 0.63 percent.

On a recent earnings call, Jamie Dimon, chairman of JPMorgan Chase, shared his thoughts on the state of the economy. “Can I just amplify it? In a normal recession unemployment goes up, delinquencies go up, charge-offs go up, home prices go down; none of that’s true here…Savings are up, incomes are up, home prices are up. So you will see the effect of this recession; you’re just not going to see it right away because of all the stimulus…you’re going to have a much murkier economic environment going forward than you had in May and June, and you have to be prepared for that…”

Markets may remain volatile until the economic picture gains some clarity.

Stop making cents? 
You may not have noticed, but there is a coin shortage in the United States. National Public Radio explained:

“Supermarkets and gas stations across the U.S. are asking shoppers to pay with a card or produce exact change when possible. [A big box store] has converted some of its self-checkout registers to accept only plastic. [A grocery chain] is offering to load change that would normally involve coins onto loyalty cards.”

Social distancing, and other safety measures taken to slow the spread of COVID-19, also slowed the U.S. Mint’s coin production. In June, the Federal Reserve began rationing coins, and convened a task force to investigate the issue.

With coins in the public eye, it may be time to resurrect the ‘Kill the penny’ movement, suggested Greg Rosalsky of Planet Money.

In 2019, 60 percent of the coins produced by the U.S. Mint were pennies. The majority of the Mint’s coin-producing time was spent making about seven billion pennies. The problem is pennies cost more to produce than they are worth as currency.

According to the U.S. Mint’s 2019 Annual Report, “The unit cost for both pennies (1.99 cents) and nickels (7.62 cents) remained above face value for the fourteenth consecutive fiscal year.” In other words, the Mint lost more than $72 million making pennies last year.

How often do you use pennies and nickels?

 Weekly Focus – Think About It 
“Money often costs too much.”
–Ralph Waldo Emerson, Philosopher and essayist

Best regards,

Jack Reutemann, Jr. CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Investment advice offered through Research Financial Strategies, a registered investment advisor.

Is the United States economy recovering or faltering?

It depends on who you ask and which data you consider. For example, last week, the Department of Labor reported fewer people applied for first-time unemployment benefits during the week of July 11. That could be a tick in the positive data column. Week-to-week the number declined from 1.31 million to 1.30 million. The lackluster decline could be a tick in the negative data column since the long-term weekly average is about 20 percent of that number.

There was positive news about progress on COVID-19 vaccines last week. The hope it inspired was tempered by reports the number of new cases continued to grow in a majority of U.S. states.

Concern about the resurgence of the virus negatively affected consumer sentiment during the first half of July. The University of Michigan Consumer Sentiment Survey reported, “The promising gain recorded in June was reversed, leaving the Sentiment Index in early July insignificantly above the April low (+1.4 points).”

Uncertainty is reflected in the divergent stories told by stock and bond markets.

The year-to-date return for the Standard & Poor’s 500 Index moved briefly into positive territory last week before finishing slightly down, reported Financial Times. That’s an impressive run for a benchmark that was down more than 30 percent in late March. Meanwhile, the tech-heavy Nasdaq Composite has been in positive territory for a while.

Last week, Mike Wilson, Chief U.S. Equity Strategist at Morgan Stanley said, “The bottom line, equity markets have been telling us growth is going to surprise on the upside.”

Bond markets have been less optimistic. Yields on U.S. Treasuries remain exceptionally low, suggesting investors continue to seek safe havens amidst uncertainty about the future. On January 2, 2020, 10-year Treasury notes yielded 1.88 percent. Last week, the yield was 0.63 percent.

On a recent earnings call, Jamie Dimon, chairman of JPMorgan Chase, shared his thoughts on the state of the economy. “Can I just amplify it? In a normal recession unemployment goes up, delinquencies go up, charge-offs go up, home prices go down; none of that’s true here…Savings are up, incomes are up, home prices are up. So you will see the effect of this recession; you’re just not going to see it right away because of all the stimulus…you’re going to have a much murkier economic environment going forward than you had in May and June, and you have to be prepared for that…”

Markets may remain volatile until the economic picture gains some clarity.

Stop making cents?
You may not have noticed, but there is a coin shortage in the United States. National Public Radio explained:

“Supermarkets and gas stations across the U.S. are asking shoppers to pay with a card or produce exact change when possible. [A big box store] has converted some of its self-checkout registers to accept only plastic. [A grocery chain] is offering to load change that would normally involve coins onto loyalty cards.”

Social distancing, and other safety measures taken to slow the spread of COVID-19, also slowed the U.S. Mint’s coin production. In June, the Federal Reserve began rationing coins, and convened a task force to investigate the issue.

With coins in the public eye, it may be time to resurrect the ‘Kill the penny’ movement, suggested Greg Rosalsky of Planet Money.

In 2019, 60 percent of the coins produced by the U.S. Mint were pennies. The majority of the Mint’s coin-producing time was spent making about seven billion pennies. The problem is pennies cost more to produce than they are worth as currency.

According to the U.S. Mint’s 2019 Annual Report, “The unit cost for both pennies (1.99 cents) and nickels (7.62 cents) remained above face value for the fourteenth consecutive fiscal year.” In other words, the Mint lost more than $72 million making pennies last year.

How often do you use pennies and nickels?

Weekly Focus – Think About It
“Money often costs too much.”
–Ralph Waldo Emerson, Philosopher and essayist

Best regards,

Jack Reutemann, Jr. CLU, CFP®

P.S.  Please feel free to forward this commentary to family, friends, or colleagues.

Investment advice offered through Research Financial Strategies, a registered investment advisor.
* This newsletter and commentary expressed should not be construed as investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.  However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
* To unsubscribe from the Weekly Market Commentary please reply to this e-mail with “Unsubscribe” in the subject.

Investment advice offered through Research Financial Strategies, a registered investment advisor.