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Weekly Market Commentary (August 17, 2020)

The Markets
 
The Standard & Poor's (S&P) 500 Index finished the week within a whisker of its February high, reported Randall Forsyth of Barron's.
 
It's a remarkable feat. The stock market has recovered in just 175 days. Historically, comparable recoveries (those following market drops of 20 percent or more) have taken about four years, reported Vildana Hajric, Lu Wang, and Claire Ballentine of Bloomberg Quint.
 
"The sharpness and speed of the downturn - and the immediacy of the overwhelming liquidity and fiscal response from the Federal Reserve and Congress - forestalled the kind of grinding, purgative action of typical bear markets, which wrings out excesses and resets valuations lower. There was also not the shift in market leadership that usually occurs in the crucible of a bear market," reported Michael Santoli of CNBC.
 
The recovery is also remarkable because it occurred in the midst of a recession (that some have labeled a depression) and during a period of extraordinarily weak corporate earnings. It's possible investors are focusing on the fact economic and earnings data has been 'better-than-expected.' For instance: 
  • The U.S. economy shrank by -32.9 percent during the second quarter. While that was better than the -34.7 percent forecast, the U.S. economy still lost about one-third of its value. 
  • The blended earnings of companies in the S&P 500 Index were -33.8 percent during the second quarter, as of August 7, which is the latest FactSet Insight report available. While most companies have performed better than anticipated, their profits had fallen significantly. 
Last week, in a paper titled Reasons (Not) To Be Cheerful: Certainty, Absurdity, and Fallacious Narratives, GMO's James Montier wrote, "Never before have I seen a market so highly valued in the face of overwhelming uncertainty. Yet today the U.S. stock market stands at nosebleed-inducing levels of multiple, whilst the fundamentals seem more uncertain than ever before."
 
The bottom line is the economy and company profits have contracted sharply while stock market valuations have rocketed higher. The sonic boom of performance startled many market professionals. Strategists tracked by Bloomberg expected the S&P 500 to finish December at 3,117 or about 8 percent lower than it started. They may be wrong, but they may be right. No one is certain what lies ahead.
 

Data as of 8/14/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 0.6% 4.4% 18.7% 11.0% 10.0% 12.1%
Dow Jones Global ex-U.S. 1.7 -5.0 7.5 0.4 2.1 2.6
10-year Treasury Note (Yield Only) 0.7 NA 1.6 2.2 2.2 2.6
Gold (per ounce) -4.3 27.7 28.5 14.9 11.7 4.7
Bloomberg Commodity Index 0.5 -12.5 -7.9 -5.2 -4.8 -6.1
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.
 
LIFE: PANDEMIC STYLE. The pandemic has changed the ways people all over the world think and interact with one another. It has also inspired artists and designers to find solutions to pressing problems, such as the need for social distancing. Here are a few inventions that may help us cope with pandemic life and help us find a new normal: 
  • Glass lamps to dispel loneliness. Imagine you turn on a light in your home and it turns on a light in your parent's home or your grandparent's nursing home to let them know you're thinking about them. Video artist Alexander Lervik's website describes his invention like this:
"...a set of glass lamps shaped as rocks, which have been given the capacity of apprehending human touch and communicating with other rocks to express community and closeness. Perhaps you own one rock, and an older relative owns another so that they can sense when you touch your stone, thinking of them. The work offers a chance to think about all those old people who are lonely and in need of human touch." 
  • Devices to deliver anxiety-free dining. In the Netherlands, a restaurant has installed glass cabins on its patio that can accommodate two or three diners. Reuters reported, "Waiters wear gloves and transparent face shields, and use a long board to bring dishes into the glass cabins to ensure minimal physical contact with customers." 
Travel and Leisure reported some restaurants may make indoor dining more palatable by installing plexiglass cylinders that hang from the ceiling like lampshades. Diners settle inside the cylinders as they are seated. 
  • Hands-free door handles in grocery stores. To overcome pervasive reluctance to touch doorknobs and door handles in public places, a Finnish supermarket installed curved handles that allow shoppers to pull open cooler doors with their forearms, reported the World Economic Forum. 
Weekly Focus - Think About It
 
"There will come a time when you believe everything is finished. That will be the beginning."
--Louis L'Amour, Novelist
 
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 (August 12, 2020)

The Markets
 
There was good news and bad news in last week's employment report.
 
The good news was the U.S. Bureau of Labor Statistics delivered better-than-expected data about employment. In July, the U.S. economy added about 1.8 million new jobs.
 
That's about 300,000 more than the Wall Street consensus forecast, according to Jeff Cox of CNBC, who reported, "...there were wide variations around the estimates as the pandemic's resurgence dented plans to get the shuttered U.S. economy completely back online. Forecasts ranged from a decline of half a million jobs to a rise of 3 million..."
 
The flip side of employment is unemployment. The U-3 unemployment rate, which reflects unemployed people who are actively seeking a job, declined in July. It has moved steadily lower during the last few months, from 14.7 percent in April to 10.2 percent in July. The U-6 rate, which includes unemployed, underemployed, and discouraged workers, has declined from 22.8 percent in April to 16.5 percent in July.
 
The bad news is that, despite declining unemployment numbers, the U.S. unemployment rate is now at 10.2 percent - a level that rivals unemployment during the 1981-82 recession and the Great Recession. On Friday, Matthew Klein of Barron's explained:
 
"The July data were better than feared, but that doesn't mean the U.S. economy is in good shape. The danger now is that the private sector's slowing momentum will be exacerbated by ongoing state and local government retrenchment and the expiration of emergency unemployment benefits that had been supporting disposable income."
 
It is possible emergency unemployment benefits will restart before Congress reaches agreement. On Saturday, President Trump issued an executive memo authorizing enhanced unemployment benefits of $400 a week. Three-fourths of the amount would be paid for with disaster relief funds. Regular unemployment benefits plus one-fourth of the emergency benefit would be paid by states.
 
It is also possible benefits won't restart until Congress reaches agreement. "Although [President Trump] signed an order to provide enhanced unemployment benefits to millions of out-of-work Americans, it's unclear if he has the authority to do so by executive order while side-stepping Congress. And, it could take months for states to implement," reported Jessica Menton of USA Today.
 
Major U.S. stock indices finished higher for the week.
 

Data as of 8/7/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 2.5% 3.7% 16.2% 10.5% 10.0% 11.5%
Dow Jones Global ex-U.S. 1.8 -6.6 4.8 -0.7 1.5 2.1
10-year Treasury Note (Yield Only) 0.6 NA 1.7 2.3 2.2 2.8
Gold (per ounce) 3.4 33.4 34.9 17.3 13.2 5.4
Bloomberg Commodity Index 2.6 -12.9 -7.3 -5.6 -4.9 -6.4
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.
 
Uncrowded. As professional sports resume play in empty stadiums, teams are finding innovative ways to support and encourage players and, sometimes, viewers. For instance:
 
  • The U.S. National Women's Soccer League was the first contact sports league to return to play. Its fans offer support and encouragement via social media. In July, "the nearly 20,000-member [social media] group, NWSL Supporters, raised over $5,000 to cover the players' coffee orders at the tournament's on-site coffee truck, reported Nicole Wetsman of The Verge.
  • Japan's Nippon Professional Baseball has robots that dance to the Fukuoka Hawks' fight song before each game. Jack Tarrant of Reuters reported one humanoid robot and several four-legged robots, "...stamped and shimmied in a choreographed dance that is usually performed by the Hawks' fans before games..."
  • U.S. Major League Baseball stadiums are filled with cardboard cutouts of fans. However, one broadcaster faked crowd noise and filled the stands with virtual fans in some shots, but not others. Overall, real fans were not impressed, reported USA Today.
  • The National Basketball Association is bringing basketball fans courtside through a virtual experience during live games. The 'Together Mode for Teams' uses artificial intelligence to segment fan's faces and shoulders and show them in courtside seats. "This new experience...gives participating fans the feeling of sitting next to one another at a live game without leaving the comfort and safety of their homes," reported Tom Warren of The Verge.
  • The Women's National Basketball Association hosted the first ever live virtual draft by a professional league. Sports Illustrated reported, "...the WNBA draft recorded its best ratings in 16 years. While [WNBA commissioner Cathy Engelbert] noted fans may have been hungry for a live sporting event, she also acknowledged the importance of naming Gianna Bryant, Alyssa Altobelli, and Payton Chester, who died in a helicopter crash on January 26, as honorary draft picks."
 
Weekly Focus - Think About It
 
"Outstanding leaders go out of their way to boost the self-esteem of their personnel. If people believe in themselves, it's amazing what they can accomplish."
                                                                     --Sam Walton, Businessman and entrepreneur
 
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 (August 5, 2020)


 
The Markets
 
Last week delivered a mixed bag of financial and economic news.
 
As many expected, the U.S. economy did not fare well during the second quarter. COVID-19 lockdowns and business closings caused productivity to fall by one-third. Real gross domestic product, which is the value of all goods and services produced by our country, dropped 32.9 percent during the second quarter of 2020, reported the Bureau of Economic Analysis. During the first quarter of the year, productivity fell by 5 percent.
 
The Federal Reserve held its Federal Open Market Committee meeting last week. Fed Chair Jerome Powell committed to "...using our tools to do what we can, and for as long as it takes, to provide some relief and stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy."
 
Powell also said, "Elected officials have the power to tax and spend and to make decisions about where we, as a society, should direct our collective resources. The fiscal policy actions that have been taken thus far have made a critical difference to families, businesses, and communities across the country. Even so, the current economic downturn is the most severe in our lifetimes."
 
Our elected officials were unable to reach an agreement about how to support unemployed Americans whose jobs disappeared because of COVID-19. Enhanced unemployment benefits and a moratorium on evictions both expired at the end of last week. Congress met over the weekend and officials indicated they had made progress in negotiations, reported The Washington Post.
 
Earnings offered a glimmer of positive news for investors. Al Root of Barron's reported, "...companies are crushing overly bearish estimates...More than 300 [Standard & Poor's 500 Index] companies have reported second-quarter numbers so far. About 85 percent are beating Wall Street earnings estimates by an average of 22 percent."
 
Overall, blended earnings for the Standard & Poor's 500 Index (S&P 500) has declined 35.7 percent. If that is the actual change in earnings for the second quarter, it would be the biggest year-over-year decline since the fourth quarter of 2008 when earnings dropped 69.1 percent.
 
The S&P 500 and the Nasdaq Composites both gained last week. The Dow Jones Industrial Index finished the week lower.
 

Data as of 7/31/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 1.4% 1.3% 9.8% 9.8% 9.2% 11.3%
Dow Jones Global ex-U.S. -0.3 -8.2 -1.2 -1.0 1.0 2.0
10-year Treasury Note (Yield Only) 0.5 NA 2.0 2.3 2.2 3.0
Gold (per ounce) 8.7 29.0 37.6 15.7 12.3 5.2
Bloomberg Commodity Index 3.3 -15.1 -13.0 -6.6 -5.6 -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.
 
Fast food for thought. In 1986, The Economist developed a tasty way to assess whether currencies are trading as they should be: The Big Mac Index.
 
In theory, countries' exchange rates should allow a person to buy the same product - in this case, a burger - for the same amount of money in any currency. In reality, currencies are often undervalued or overvalued. When an analyst says a country's currency is undervalued relative to the U.S. dollar, it means a burger costs less in that country than it does in the United States.
 
For example, in June 2020, a fancy burger cost about $5.71 in the United States. In Britain, it cost £3.39, which is about $4.46 using last week's exchange rate. That makes a British burger a lot less expensive than a U.S. burger. If the currencies were aligned properly, the burger should have cost £4.34. So, the British pound is undervalued relative to the U.S. dollar.
 
In June, visitors to Switzerland paid more for burgers than they would have in the United States. A Swiss burger cost SFr6.50 or about $7.15 in June 2020. If the currencies were aligned, the burger would have cost about SFr5.19.
 
The cheapest burger in the world was found in South Africa, where it sold for 31.00 rand or $1.83 in June. If the currencies had been in parity, then a South African burger would have cost 96.97 rand. You also can buy a burger for less in China. The Economist explained, "A [burger] costs 21.70 yuan in China and $5.71 in the United States...[This] suggests the Chinese yuan is 45.7 percent undervalued."
 
The Big Mac Index should be taken with a grain of salt. It's an imprecise tool some economists find hard to swallow because the price of a burger should be lower in countries with lower labor costs, and higher in countries with higher labor costs. When index prices are adjusted for labor, the Thai baht and Brazilian real are the world's most overvalued currencies relative to the U.S. dollar, while the Hong Kong dollar and the Russian ruble are the most undervalued.
 
Weekly Focus - Think About It
 
"There are basically two types of people. People who accomplish things, and people who claim to have accomplished things. The first group is less crowded."
                                                                                                                                                                                                       --Mark Twain, Humorist
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 (July 23, 2020)

The Markets
 
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.
 

Data as of 7/17/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 1.3% -0.2% 8.1% 9.5% 8.7% 11.7%
Dow Jones Global ex-U.S. 1.2 -8.0 -2.2 -0.6 0.7 2.7
10-year Treasury Note (Yield Only) 0.6 NA 2.1 2.3 2.4 3.0
Gold (per ounce) 0.2 18.7 28.2 13.6 9.8 4.4
Bloomberg Commodity Index -0.2 -17.8 -16.5 -7.0 -7.4 -6.3
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.
 
STOP MAKING CENTSYou 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,
 
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 (July 17, 2020)

The Markets
 
Please don't scream inside your heart.
 
Last week, a reopened Japanese theme park asked patrons to wear masks to help reduce the spread of coronavirus. It also asked them not to scream while riding the rollercoaster. "Please scream inside your heart," park management urged.
 
During 2020, stock markets in the United States have taken investors on an emotional rollercoaster ride. By late March, the Standard & Poor's 500 Index had lost more than 30 percent. The Index has since regained most of those losses, although there have been many ups and downs along the way.
 
The culprits behind market volatility have been fear and uncertainty, often inspired by twists and turns in the coronavirus saga. Last week, as stocks faltered and demand for U.S. government bonds surged, Eric Platt and Colby Smith of Financial Times reported:
 
"The strong demand for [safe] haven assets emerged after several U.S. states reported further increases in coronavirus cases, after Florida on Thursday recorded its largest death toll since the crisis spread to the United States. Some succor was provided to nervous investors on Friday after [a pharmaceutical company] released data showing its potential coronavirus treatment...had reduced mortality rates in early trials. That provided a bump to stocks and tempered the gains in Treasuries."
 
Volatile markets often cause investors to become uneasy. Sometimes, the emotional rollercoaster causes them to focus on short-term performance rather than long-term financial goals. Today, market fluctuations, in tandem with health concerns, work anxiety, and social distancing requirements, may trigger a stronger response than usual, making investors particularly vulnerable to the emotional biases within us.
 
If short-term market swings are making you restless or uncomfortable, don't keep it to yourself. This is a good time to re-evaluate your risk tolerance, review your financial goals, and make sure you have enough cash to meet current needs.
 

Data as of 7/10/20
1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 (Domestic Stocks) 1.8% -1.4% 6.4% 9.5% 8.9% 11.4%
Dow Jones Global ex-U.S. 1.4 -9.0 -3.1 -0.1 0.8 2.6
10-year Treasury Note (Yield Only) 0.6 NA 2.1 2.4 2.4 3.1
Gold (per ounce) 1.7 18.4 28.0 14.2 9.2 4.1
Bloomberg Commodity Index 1.5 -17.6 -17.2 -6.8 -7.7 -6.2
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.
 
The coronavirus effect. COVID-19 has been reshaping Americans' financial habits. During the second quarter, credit card debt and personal savings data showed, overall, we were spending less and saving more than ever before.
 
In 2019, when a pandemic was a planning and preparedness exercise for epidemiologists, healthcare professionals, and health officials, the debt Americans accrued on credit cards increased between 2.5 and 4.6 percent each quarter.
 
Since COVID-19 arrived on our shores and began to spread, credit card debt has fallen dramatically. From January through March, it was down 7.6 percent (the seasonally adjusted annual rate). In early July, the Federal Reserve reported the numbers through May:
 
April 2020: - 64.8 percent (seasonally adj. annual rate)
May 2020: - 28.6 percent (seasonally adj. annual rate)
 
Lower spending may have contributed to higher savings. The personal saving rate (PSR) in the United States is the percentage of income left after people spend money and pay taxes each month. It increased dramatically in 2020:
 
            January 2020: 7.9 percent (seasonally adj. annual rate)
            February 2020: 8.4 percent (seasonally adj. annual rate)
            March 2020: 12.6 percent (seasonally adj. annual rate)
            April 2020: 32.2 percent (seasonally adj. annual rate)
            May 2020: 23.2 percent (seasonally adj. annual rate)
 
Some believe higher rates of saving are the result of lockdowns and will reverse quickly as states reopen. An analyst cited by Jessica Dickler of CNBC explained, "In a month with large government stimulus payments to the majority of U.S. households and widespread economic shutdowns that largely curtailed discretionary spending, the boost to income and the plunge in spending produced an outsized savings rate."
 
The shift in percentages from April to May appear to support the hypothesis. We won't really know whether Americans will continue to charge less and save more until the pandemic ends.
 
Weekly Focus - Think About It
 
"It's good to have money and the things that money can buy, but it's good, too, to check up once in a while and make sure that you haven't lost the things that money can't buy."
                                                                                                                                                                                                                                         --George Lorimer, Journalist
 
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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