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Weekly Commentary (May 26, 2020)

The Markets
 
It was a good week for stock markets in the United States, but there was trouble in Asia.
 
U.S. stock markets rallied last week. The Dow Jones Industrial Average, Standard & Poor's 500 Index, and Nasdaq Composite all gained more than 3 percent, reported Ben Levisohn of Barron's.
 
Investors had plenty of fuel for optimism early in the week. On Sunday, Federal Reserve Chair Jerome Powell struck a positive tone during his 60 Minutes interview stating, "The big thing we have to avoid...is a second wave of the virus. But if we do, then the economy can continue to recover. We'll see GDP move back up after the very low numbers of this quarter. We'll see unemployment come down. But I think though it'll be a while before we really feel well recovered."
 
On Monday, there was news early testing of a potential vaccine had delivered promising results, and the vaccine company's stock shot higher. The report was tarnished when top executives sold shares the next day, and a respected medical website indicated the published results meant little, reported John Authers in Bloomberg Opinion.
 
Positive momentum slowed later in the week when China indicated it will impose national security laws on Hong Kong. Reshma Kapadia of Barron's reported, "While the risks have ratcheted higher, it isn't clear yet whether the new security laws will destroy Hong Kong's ability to act as a financial center. What that could mean for investors will probably play out over the next couple of months."
 
Hong Kong's Hang Seng index closed down 5.6 percent, reported Financial Times (FT). That was the index's worst one-day performance in almost five years.
 
China's leadership also declined to set a gross domestic product (GDP) target for the first time ever. GDP is the value of all goods and services produced in a nation. The decision led to a decline in mainland China's CSI 300 index of Shanghai and Shenzhen-listed stocks, reported FT.
 
Data as of 5/22/20 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 3.2% -8.5% 3.5% 7.3% 6.8% 10.7%
Dow Jones Global ex-U.S. 2.3 -18. -10.5 -3.9 -2.7 1.9
10-year Treasury Note (Yield Only) 0.7 NA 2.4 2.3 2.1 3.2
Gold (per ounce) -0.1 13.8 36.1 11.3 7.6 3.9
Bloomberg Commodity Index 1.8 -22.4 -20.5 -9.7 -9.4 -6.6
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
HOW IMPORTANT ARE SMALL BUSINESSES? In April, the Federal Reserve Bank of New York (FRBNY) surveyed U.S. small businesses. It reported, late in 2019, before the coronavirus crisis, 35 percent were healthy, 35 percent were stable, 23 percent were at risk, and 6 percent were in distress.
 
Having a preponderance of healthy and stable small companies is a positive economic sign because, as Lisa Beilfuss of Barron's explained, small companies: 
  • Employ about 50 percent of American workers
  • Produce about 50 percent of U.S. GDP
  • Generate 40 percent of total business revenue
 Simply put, small businesses are an essential part of the American economy.
 
The FRBNY survey also noted few small businesses had deep cash reserves. In fact, it estimated just one in five healthy small companies could survive a two-month revenue loss. In such circumstances, "A majority of small businesses would be likely to reduce their workforce and operations, or delay payments. Many firms would rely on personal funds or debt to bridge the gap."
 
As you might imagine (and may have experienced), the coronavirus crisis has exacted a heavy toll on small businesses. Forty-three percent were temporarily closed by April 2020, according to a survey conducted by the National Bureau of Economic Research (NBER). Others had modified operations to meet social distancing and other COVID-19 safety guidelines.
 
In an effort to help small businesses, Congress, the President, and the Small Business Administration have passed fiscal stimulus measures. The Federal Reserve is providing monetary stimulus. Despite these efforts, the future of small companies remains uncertain.
 
Byrne Hobart of The Diff, a newsletter that tracks inflection points in finance and technology, believes diverse outcomes are possible:
 
"The pessimistic one is front-end corporatization: small businesses just evaporate, their real estate is taken over by big companies, and (some of) their employees find new jobs at these companies...Here's the good one. Those same local businesses are running down their cash reserves, but lenders are banging down the door with a crazy offer: borrow enough to meet payroll now, pay nothing - until business starts coming back...[Lenders get] more involved in the borrower's business - get them good bookkeeping software and a modern point-of-sale system. Band together a bunch of borrowers and start negotiating with suppliers and landlords. In short, use software economics to give small businesses the same economies of scale that large ones already benefit from."
 
It's possible we could see both situations occur.
 
Weekly Focus - Think About It
 
"Now the commencement speakers will typically also wish you good luck and extend good wishes to you. I will not do that, and I'll tell you why. From time to time in the years to come, I hope you will be treated unfairly, so that you will come to know the value of justice...I wish you bad luck, again, from time to time so that you will be conscious of the role of chance in life and understand that your success is not completely deserved and that the failure of others is not completely deserved either...Whether I wish these things or not, they're going to happen. And whether you benefit from them or not will depend upon your ability to see the message in your misfortunes."
--John Roberts, U.S. Supreme Court Chief Justice
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Weekly Market Commentary (May 21, 2020)

 
The Markets
 
 America is reopening, state by state.
 
That's welcome news for many businesses, but we're far from business as usual. Last week's economic news included unemployment hitting an 80-year high, a record drop in retail sales (-16.4 percent), and an unprecedented decline in industrial production (-11.2 percent).
 
Weak consumer demand is also a concern, according to Matthew Klein of Barron's. "...The pandemic has lowered consumer demand much more than it has damaged productive capacity. It's much easier to bring factories back online than it is to get customers back into shops and auto dealerships...Unless consumption rebounds quickly, the world will soon be faced with an unprecedented glut of goods that can't be sold."
 
Some households may be able to sustain or increase consumption because of generous unemployment benefits. The Coronavirus Aid, Relief, and Economic Security (CARES) Act increased unemployment benefits by $600 per week. The intent was to provide Americans, who were out of work because of the pandemic, with income equal to the national average salary of $970 per week, reported Amelia Thomson-DeVeaux of FiveThirtyEight.
 
As it turns out, about 68 percent of those filing for unemployment - teachers, construction workers, medical assistants, food service workers, and others - are receiving more money through unemployment than they did from employers.
 
An analysis conducted by economists at the University of Chicago, and cited by FiveThirtyEight, found, "...the estimated median replacement rate - the share of a worker's original weekly salary that is being replaced by unemployment benefits - is 134 percent, or more than one-third above their original wage."
 
In recent weeks, the number of unemployed workers has grown to about 36 million, according to CBS News. Unusually high unemployment combined with unusually high unemployment benefits may mean some Americans may have more money to spend than they might have had otherwise. The combination could improve demand for goods. It also could make it more difficult for employers to persuade employees to return to work.
 
Last week, major U.S. stock indices finished lower. A few of you have asked questions when noting the 10 years average of the S&P 500 is at a healthy 9.7%. Keep in mind to get this return on a portfolio, one would need to have 100% of your portfolio in this index. This is considered speculative.
 

Data as of 5/15/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -2.3% -11.4% 0.5% 6.0% 6.2% 9.7%
Dow Jones Global ex-U.S. -2.6 -20.7 -12.9 -4.5 -3.2 1.3
10-year Treasury Note (Yield Only) 0.6 NA 2.4 2.3 2.1 3.5
Gold (per ounce) 1.8 13.9 33.6 12.1 7.3 3.5
Bloomberg Commodity Index -1.1 -23.8 -22.6 -9.6 -10.2 -6.8
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
Öffnungsdiskussionsorgien. The German language boasts many unique words with oddly specific meanings. You may be familiar with some German words that have become part of the English language such as schadenfreude (finding joy in other people's trouble), wanderlust (an impulse to travel the world), and weltschmerz (sadness about the state of the world).
 
Amanda Sloat of ForeignPolicy (FP) reported the Germans have invented a new word to describe debates about when and how to reopen the world: Öffnungsdiskussionsorgien.
 
The goal of many leaders around the world is to minimize infection, minimize death, and minimize economic hardship. It's a tall order and there is no 'right' answer. One thing is clear, though. People who have been on lockdown, no matter which country they reside in, have cabin fever. FP reported:
 
"An American expat in Spain promised her teary tween that for her 12th birthday she could help take the trash 50 yards to a communal receptacle across the courtyard; that special gift was scrapped after a police car parked nearby. To take advantage of exemptions allowing owners to walk their pets, one person in Romania took his fish on a walk, while a young woman put her cat in a bag to justify a trip to the mall."
 
In the United States, Buzzfeed and BoredPanda have reported on an abundance of pandemic jokes and memes. Americans have watched Michigan's Father Tim Pelc use a squirt gun of holy water to bless Easter baskets from a socially safe distance. We've also been alerted to the possibility of a baby boom that will yield Quaranteens in 2033 and endless rounds of toilet paper jokes.
 
Weekly Focus - Think About It
 
"The future belongs to those who believe in the beauty of their dreams."
                   --Eleanor Roosevelt, Former First Lady, diplomat, and activist
 
Best regards,
Lee Barczak
President
 
* 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. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * 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. * 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. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary (May 5, 2020)

 
The Markets
 
There are signs COVID-19 may be in retreat.
 
Last week, the Centers for Disease Control reported, overall in the United States, for the week ending April 25 (officially week 17 of the coronavirus), the number of:
 
  • People visiting healthcare providers with COVID-19 symptoms declined.
  • Positive tests at public health, clinical, and commercial laboratories declined or remained similar.
  • Deaths attributed to pneumonia, influenza, or COVID-19 declined, too, although the percentage remains above normal.
 
This is good news since some states are beginning to reopen.
 
Last week, the Bureau of Economic Analysis reported on the early economic impact of COVID-19 and shelter-in-place orders, which were implemented to prevent healthcare systems from being overwhelmed by COVID-19 patients. The U.S. economy contracted 4.8 percent during the first quarter of 2020.
 
The contraction is expected to be more significant for the second quarter. FactSet estimates the U.S. economy will shrink 27.0 percent, quarter-to-quarter, and finish the year down 3.0 percent overall. 
 
Despite the economic contraction, U.S. stocks finished April with the biggest monthly gain since 1987, reported Colby Smith and colleagues at Financial Times (FT). April's gains were partly the result of fiscal and monetary support, according to FT. The publication cited a global markets strategist who, "...attributed [April's] rally in part to the U.S. Congress and the Federal Reserve extending enormous support to the economy and financial markets in the form of relief packages and emergency lending measures."
 
The Fed isn't the only central bank providing unusual support in these uncertain times. The European Central Bank and the Bank of Japan also announced significant lending and bond buying programs last week, reported Dion Rabouin of Axios.
 

Data as of 5/1/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -0.2% -12.4% -3.2% 5.8% 6.1% 8.9%
Dow Jones Global ex-U.S. 3.3 -19.2 -14.8 -3.2 -2.6 0.6
10-year Treasury Note (Yield Only) 0.6 NA 2.5 2.3 2.1 3.7
Gold (per ounce) -1.7 10.7 31.4 10.3 7.5 3.6
Bloomberg Commodity Index 0.8 -25.0 -24.5 -10.3 -10.1 -7.7
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
WHAT DO YOU GET WHEN YOU COMBINE PARENTS, CHILDREN, HOMESCHOOLING, AND REMOTE WORK? Here are some quotes about pandemic life curated from social media by Fast Company, BoredPanda, Buzzfeed, and Today:
 
  • "If you had asked me what the hardest part of battling a global pandemic would be, I would have never guessed, 'teaching elementary school math."' - Simon Holland
  • "Homeschooling update day 9: Today we did maths. If you have three kids, and they are awake roughly 13 hours in the day, and you're trying to work from home, how many times will you hear the word 'snack'? - ThreeTimeDaddy
  •  "Day 3 of quarantine and distance learning from home: 6-year-old writes biography titled, 'Why I Hate My Family'" - Z
  • "My coworker suggested I work from his fort." - Sam
  • "Boss: I need you to-
[Four kids run by: one on fire, one naked, two in ski masks and capes]

Boss: Never mind" - Rodney
  • "I know the C-Virus is scary but try working with a 4-year-old dressed like Spiderman perched on the kitchen table behind you whispering, 'Can you hear me breathe?'" - Krista Myers Duzan
  • "The first hour of homeschooling started out strong, with some great reading comprehension exercises, and concluded with an epic tantrum over the fact that she can't watch Frozen 3 because it does not exist." - Jeff Kosseff
  • "...been homeschooling a 6-year-old and an 8-year-old for one hour and 11 minutes. Teachers deserve to make a billion dollars a year. Or a week." - Shonda 
How is your homeschooling and/or remote work experience going?
 
Weekly Focus - Think About It
 
"Rule a kingdom as if cooking a small fish," he once told me. "If you interfere with it too much while cooking, it will fall apart and be inedible."
--Solala Towler, Tales from the Tao: The Wisdom of the Taoist Masters
 
Best regards,
 
Lee Barczak
President
 
* 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. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * 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. * 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. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary

Weekly Market Commentary (April 29, 2020)
 
The Markets
  
We live in interesting times.
 
There is discussion about whether the saying, "May you live in interesting times," is a blessing or a curse. At this point in 2020, we all understand why.
 
Last week, the world watched in consternation as the price of oil, specifically West Texas Intermediate crude oil, dropped into negative territory. The price moved below zero because a purchase date coincided with a lack of storage space. As a result, the owners of the oil had to pay to have it taken off their hands, reported Ben Levisohn of Barron's.
 
Oil prices recovered on Wednesday. Global oil producers have promised to reduce output, which would realign supply and demand, but it has yet to happen, reported Evie Liu of Barron's. The delay may reflect a hope that coronavirus restrictions will ease, economies will begin to reopen, and demand for oil will increase.
 
Investors were understandably unsettled by oil prices, and U.S. stocks lost value early in the week. As oil stabilized, U.S. stocks pushed higher. The rebound in stocks stalled on news that trials for a potential COVID-19 treatment had produced disappointing results.
 
Thursday's unemployment data showed 4.4 million people filed for unemployment benefits the previous week. That brought the number of unemployed Americans to more than 26 million, according to Jeffry Bartash of MarketWatch.
 
Earnings, which reflect companies' profits, remained less than robust, as expected. "The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings decline for the first quarter is -15.8 percent..." reported John Butters of FactSet.
 
The energy sector finished the week in positive territory.
 

Data as of 4/24/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) -1.3% -12.2% -3.1% 6.1% 6.0% 8.9%
Dow Jones Global ex-U.S. -1.9 -21.8 -17.4 -4.1 -3.4 -0.1
10-year Treasury Note (Yield Only) 0.6 NA 2.5 2.3 1.9 3.8
Gold (per ounce) 1.4 12.7 34.9 11.2 7.4 4.0
Bloomberg Commodity Index -3.0 -25.5 -26.0 -10.4 -9.9 -7.8
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
Stimulus Checks Are Arriving. The Internal Revenue Service (IRS) has distributed $157.9 billion through 88 million stimulus payments, according to Andrew Keshner of MarketWatch.
 
If you have recently lost a job, or you're having difficulty paying bills, your check may already be spent. However, if you're still working, or remain financially comfortable, think carefully about how you want to spend your checks. The money could be used to improve your long-term financial outlook or provide support to people in need. For instance, you could:
 
  • Contribute to an emergency fund. It's a sound idea to have savings equal to three to six months of expenses in a rainy-day fund in case something unexpected happens, such as a coronavirus quarantine.
 
In 2019, the Board of Governors of the Federal Reserve reported just 61 percent of adults had enough savings set aside to cover a $400 unexpected expense. The report stated, "During 2018, one-fifth of adults had major, unexpected medical bills to pay, with the median expense between $1,000 and $4,999. Among those with medical expenses, 4 in 10 have unpaid debt from those bills."
 
  • Pay off high-interest rate debt. If your income is secure, using your check to reduce high interest rate debt may be a good choice.
 
In early April, the average interest rate assessed on credit cards accounts with unpaid balances was 16.61 percent. Reducing your balance, could significantly reduce the amount of interest you pay. In addition, if something unexpected happens, having a higher level of available credit could be beneficial.
 
  • Donate the amount. If you are confident you will not need the money, consider making a donation. A donation can take many forms. You could help a loved one pay bills or provide support to a church or charity.
 
"...many charities and nonprofits are still struggling. Donations to some churches have plummeted, and many charities have had to cancel crucial fundraising events such as galas, bike races, and walkathons," reported the Associated Press.
 
What are you planning to do with your stimulus check?
 
Weekly Focus - Think About It
 
"Do you think you remember a movie in which a knight gallops toward a castle just as its drawbridge is going up, and his white horse jumps the moat in one glorious airborne leap?
 
...we're that rider. Chasing us is the dreaded coronavirus. We're in midair, hoping we make it to the other side, where life will have returned to what we think of as normal. So, what should we do while we're up there, between now and then? Think of all the things you hope will still be there in that castle of the future when we get across. Then do what you can, now, to ensure the future existence of those things."
                                                                                                                                              --Margaret Atwood, Time Magazine, April 16, 2020
 
Best regards,
 
Lee Barczak
President
 
* 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. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * 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. * 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. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.
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Weekly Market Commentary (April 21, 2020)

The Markets
 
Last week's economic data was about what you might expect in the midst of a virus crisis that has shut down businesses and forced people to stay home:
  • Retail sales were down 8.7 percent in March. Retail sales track demand for everything from clothing to refrigerators. The March decline was the worst monthly performance on record, according to Ben Levisohn of Barron's.
  •  Oil prices fell further. Saudi Arabia, Russia, and other nations agreed to reduce oil production, but that may not be enough to steady prices. The Economist explained, "Global demand may fall by 29 [million] barrels a day this month, three times the OPEC deal's promised cuts."
  •  Earnings season began with a whimper. Just a sliver (9 percent) of the companies in the Standard & Poor's 500 Index have reported first quarter earnings. So far, blended earnings (actual results for companies that have reported plus estimated results for companies that have not) are down 14.5 percent for the first quarter, reported John Butters of FactSet.
 
There were some bright spots, though, that boosted optimism in financial markets.
 
New York state, where more than 13,000 residents have died as a result of the coronavirus, may be entering a period of deceleration. The number of hospitalizations and deaths moved lower late last week, reported MarketWatch.
 
Germany announced it is slowly beginning to reopen shops and schools. Guy Chazan of Financial Times reported, "Germany has managed to contain coronavirus more effectively than other European countries, partly thanks to a comprehensive testing regime that allowed authorities to identify and isolate those infected with the virus at an early stage. It has the capacity to run 650,000 tests a week."
 
Major U.S. stock markets moved higher last week and expectations for future volatility moved lower.
 

Data as of 4/17/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 3.0% -11.0% -0.9% 7.0% 6.8% 9.2%
Dow Jones Global ex-U.S. 1.2 -20.3 -16.4 -3.0 -2.7 0.2
10-year Treasury Note (Yield Only) 0.7 NA 2.6 2.3 1.9 3.8
Gold (per ounce) 0.7 11.1 32.7 9.8 7.1 4.1
Bloomberg Commodity Index -2.2 -23.2 -24.0 -10.3 -9.4 -7.4
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, MarketWatch, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
 
FIVE things to do if you just lost your job. During the past four weeks, 22 million Americans have filed for unemployment benefits. It's an enormous number that reflects the staggering magnitude of job losses due to the coronavirus.
 
Job loss is painful in any circumstances. It's particularly intimidating when it occurs in the midst of a pandemic and economic downturn. If you are recently unemployed, here are five things you can do:
 
  1. Review your health insurance options. You may have the option to keep your employee health plan for a period of time. It's temporary and it can be expensive. You pay the entire premium, including the amount your employer used to pay. It may be less expensive to join a spouse's plan, if that is an option. Another alternative is to purchase a plan through the Health Insurance Marketplace. Losing a job qualifies you for a special enrollment period.
 

2. Get financial advice. We'll help you evaluate your financial position by reviewing monthly expenditures and available cash, so you know how long you can make ends meet with current financial resources.

 
It may be possible to reduce monthly spending relatively quickly. Banks, credit card companies, and other institutions are allowing customers who call to defer payments because of COVID-19 shutdowns.
 

3.File for unemployment benefits. Ratchet up your patience. State unemployment benefit systems have been overwhelmed by the sheer number of applicants. Completing online forms and filing for weekly payments can take a significant amount of time, so file as soon as you can and be patient.

 

4. Update your resume and LinkedIn profile. Revamp your resume. Polish your LinkedIn profile. Make sure your profile is 'public' so people can find you. Join groups that share your interests and passions. Learn more about companies you may want to join.

 

5.Reach out. Start connecting with friends and colleagues. Let them know you are looking for your next opportunity.

 
Consider doing volunteer work or freelancing until you find a new position. Work of any kind will help you stay busy during the times you're not hunting for a new job.
 
Weekly Focus - Think About It
 
"Far and away the best prize that life offers is the chance to work hard at work worth doing."
--Theodore Roosevelt, 26th American President
 
Best regards,
 
Lee Barczak
President
 
* 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. * The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. * 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. * 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. * You cannot invest directly in an index. * Consult your financial professional before making any investment decision.

 

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Morgan Kenwood Advisors, LLC
5130 West Loomis Road
Greendale, WI 53129-1424
Phone: (414) 423-4020
Fax: (414) 423-4023
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