Weekly Market Commentary

July 20, 2020

 

The Markets

We are in a time that is requiring perseverance and patience. Keep going even if your inner voice is tempting you to stop. It is determination and faith in yourself that will be strengthened by the struggle. Every storm is always followed by beautiful days and sunshine so let us hang on to that truth. I always end my market commentary with Focus on the Positive. My intent is to pass on a hopeful, positive thought, or some light humor every week to be a light through the clouds. Often just the right thought will pass by you just when you need it. Thank you to all of you who have shown so much patience and wisdom as we work through this together.

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. There was positive news about progress on COVID-19 vaccines also 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.

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. That is an encouraging run for a benchmark that was down more than 30 percent in late March.

Markets may remain uneven 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.

Makes no cents to me!

 

Focus on the Positive

“They say time is money, but money can’t buy you time”

 

Best regards,

Bill Spalding