The July Fourth holiday will be very different this year. Although it’s a time to enjoy family and friends, and maybe even watch some fireworks, social distancing and a new wave of COVID-19 cases also may take a seat at the picnic table. We all continue to believe our doctors and medical community will help us conquer this disease; however, with more than 10 million confirmed cases of COVID-19 around the globe (Johns Hopkins), this terrible fight is far from over. Meanwhile, the US economy appears to be turning a major corner, and better times may be ahead later in 2020.

Recent economic data has created some fireworks itself, coming in significantly better than what economists had expected, and in some cases, beating previous records. For example, the May US Bureau of Labor Statistics employment report showed a record 2.5 million jobs created—10 million more than economists expected, according to Bloomberg. Additionally, retail sales soared nearly 18% in May, according to the US Census Bureau, again much better than what was expected. Even though these rebounds are coming off historically low levels, it has been encouraging to see how quickly the economy may be coming back.

The big question, though, is when will the economy get back to normal? Although parts of our economy are coming back quickly, other areas may take years to come back fully. Industries like hotels, restaurants, and airlines are going to be under pressure for a long time. In fact, in the 10 US recessions since 1950, it took nearly 30 months on average for all of the jobs that were lost to come back. More recently, it took four years for all the jobs to return after the tech bubble recession in the early 2000s, and more than six years for all of the lost jobs to return after the financial crisis of 2008–09. Our economy has lost nearly 20 million jobs in the past three months, and even with re-hiring activity in May and June, it may take years to recover all of those job losses. (Jobs data from US Census Bureau)

A major second wave of COVID-19 is the big wild card. Although most of us don’t expect to go into full lockdown mode again like we did in March and April, more restrictions may be put in place, which could hinder the economic recovery. But it isn’t all bad news. On June 22, Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Disease, said at a congressional hearing that a vaccine may be available by early 2021. He noted that in the past it has taken years to develop a vaccine against viruses, but with the entire world working together to beat COVID-19, this vaccine may be the fastest to market ever produced. 

Voltaire said, “History never repeats itself. Man always does.” Given the stock market is driven by fear and greed, it has very human-like qualities, which means history may be a guide for what may happen next. In March 2003, stocks hit a major low before a huge spike into early summer, when stocks consolidated—or sat on their gains—during the summer months, followed by an eventual move higher later in the year. There was a very similar reaction in the summer of 2009 after the March 2009 bear market lows. So far in 2020 we’ve had the March lows and a huge rally, so historically, a summertime pullback or consolidation would be normal—and maybe even healthy. 

While we’ve faced several health, social, and economic crises this year, July Fourth is a good time to think about how lucky we are to live in this great country and to remember the resilience and perseverance we’ve demonstrated over the past 244 years. History has shown us that better times will come.

Best wishes for a happy and safe Fourth of July, and contact me if you have any questions.

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of May 19, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All index data from FactSet.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

As we look ahead to the summer months, we can’t help but think what a challenging year it’s been so far. At the same time, we’re encouraged by the resiliency and accelerated innovation among US businesses and the efforts by our national, state, and local governments to support our communities. And we continue to be amazed by the unparalleled dedication and cooperation among our front-line healthcare professionals and medical researchers to see us through to the other side of this health crisis.

In a similar way, the recent strength of the financial markets appears to be looking beyond continued economic weakness. Much of the economic news has been dismal, and there may be more bad news ahead, but economic data is backward-looking. It’s important to remember that the stock market (#investing) looks forward.

Economic numbers are still negative, but they aren’t as bad as they were a month ago, and that’s usually been a prelude to things starting to get better. New claims for unemployment are still historically high, but they’ve improved eight weeks in a row, and the total number of people on the unemployment rolls has actually started to drop (US Labor Bureau). Manufacturing activity contracted in May, according to the Institute for Supply Management Purchasing Managers’ Index, but it was better than the prior month for the first time since January. And new home sales actually rose in the most recent US Census Bureau data for April, when they were widely expected to collapse.

Small businesses are anticipating better times ahead, too. In a recent survey by the National Federation of Independent Business (NFIB), small businesses expressed the most optimism about the economy improving than at any time in the last year and a half. And if they expect improvement, they’ll prepare for it—by retaining or rehiring workers, restocking inventories, and continuing to follow best practices for keeping customers safe.

Looking forward also means gauging the ongoing impact of fiscal support. In the United States, Congress is working on a new stimulus package. The European Commission recently announced an unprecedented 750 billion euro stimulus. Japan has announced additional stimulus that could bring its total pandemic response to 40% of that country’s gross domestic product (GDP). While debt levels are rising and may have to be addressed in the future, these current fiscal actions continue to play an important role in limiting any long-term economic damage from the recession.

The stock market may have gotten a little ahead of itself, and there still may be bouts of volatility, but recent gains in the S&P 500 Index are not out of character. Like us, the markets are seeing things to look forward to. Consider the recent rally as the stock market’s version of anticipating dinner out with friends, enjoying a ballgame, or planning a vacation. These may not be right around the corner, and there may be setbacks along the way, but the plans have been made.

In the meantime, stay safe, thank you for supporting your local small businesses, and please contact me with any questions.

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Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of June 3, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All index data from FactSet.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

 “Never confuse a single defeat with a final defeat.”

— F. Scott Fitzgerald

The economic struggles in our country are among the worst we’ve ever seen. In April, a record 20 million people lost their jobs, and 36 million people have filed for unemployment since the COVID-19 pandemic struck in mid-March. Record drops in consumer confidence, manufacturing, and spending are all adding to the immediate economic fallout. Specific industries have been devastated, with names like J.C. Penney, J.Crew, and Neiman Marcus filing for bankruptcy.

Clothing sales are down 89%, furniture sales down 66%, and restaurant sales down 49% from this time last year, according to the United States Census Bureau. Yet, as F. Scott Fitzgerald wrote, these many single defeats won’t necessarily add up to the final defeat. Our country has survived many trying times before, and we are starting to see glimmers of hope on both the medical and economic fronts. Our resolve and fortitude will once again shine, as we head toward better times in the second half of 2020.

More testing for COVID-19 is needed to help identify infected people and to stop the virus from spreading. As testing has soared, the number of positive COVID-19 results as a percentage of total tests has trended lower, and that percentage consistently has been beneath 10%, according to data from the COVID Tracking Project. In addition, doctors have developed a “toolbox” of drugs to help provide patients a better chance at survival. Antiviral drugs like remdesivir in combination with other drugs are showing significantly better results now than just a few weeks ago. The World Health Organization has reported “potentially positive data” in several treatments. Although a vaccine could still be a year or more away, human drug trials are underway with encouraging initial results.

In the face of the devastating loss of human life and historically weak economic data, however, the S&P 500 Index has experienced one of its greatest short-term rallies ever, up more than 30% from the March 23 lows at its recent peak. Based on historical trends, a warranted correction in stocks over the coming months may be possible. Stock valuations are historically expensive, tensions are building between the United States and China, the stock market’s momentum is showing signs of waning, and we’re entering the historically weak summer months—all of these are reasons to be alert.

History bears this out. All major S&P 500 bear markets in the past 60 years had a significant bounce off the market lows, followed by a correction of about 10% on average before another surge higher. Based on this historical trend, a market correction of 8–12% after the recent big rally may be likely over the coming months.

While current economic data may sound bad, it’s important to remember it is backward-looking. Real-time economic data points such as public transportation, traveler data from the Transportation Security Administration, fuel sales, railroad traffic, and federal tax withholding are all showing improvement as the economy begins to re-open.

Finally, small businesses are the lifeblood of the US economy, and the Bureau of Labor Statistics shows they employ 47% of all private sector jobs. Recent data showed small businesses are as optimistic about the next six months as they’ve been in 18 months, suggesting the worst may be behind us, and a growing demand for their products and services could be brewing. The pain from this recession is impacting all of us, but better times are coming.

Stay safe, and don’t hesitate to contact me if you have any questions or concerns.

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of May 19, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

All index data from FactSet.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Tracking # 1-05012842

Investors like labels for the economy and financial markets—many of them with the word “great” in them. The Great Depression. The Great Recession. The Great Lockdown. Well, we’ve moved into what we might call the Great Disconnect. How can stocks have rebounded so strongly in the last month amid so much suffering and economic damage? What’s Wall Street seeing that so many on Main Street are not?

For one, in the United States more than 20 states have already begun to reopen their economies, and others have plans to begin very soon. In Europe, lockdowns are being eased, following Asia’s lead. Even gradual progress like this may help the stock market focus more on what’s ahead than where we are right now.

As lockdown restrictions are lifted, timely indicators like vehicle traffic, electricity consumption, public transportation use, daily consumer confidence surveys, and a wide variety of weekly economic indicators point to a low mark in economic activity in the United States in April. The “Great Lockdown” recession of 2020 may be over already—although it may not be officially declared a recession for several more months.

Nowhere to go but up isn’t normally very reassuring, but to the stock market it may be. Historically, when things have looked their worst, the opportunity in stocks has tended to be the best. The S&P 500 Index has usually hit its bottom and started the climb back up about five months before a recession has ended.

Other factors have helped boost investor sentiment recently. Market participants have gained confidence from the bold stimulus response from policymakers in Washington, DC, and the Federal Reserve. The total amount of the stimulus this year is about 22% of the entire US economy, based on gross domestic product (GDP). During the entire 2008–09 financial crisis, the total amount of stimulus was 16.6% of GDP. And there may be more. Surging unemployment and weakening finances at the state and municipal levels may be catalysts for more action. Though millions of jobs have been lost to this crisis, many millions surely have been saved as well.

The medical community also has provided reasons for optimism. Though no one knows for sure when a COVID-19 vaccine will be ready, rapid progress is being made, and several promising candidates are now in human trials. Testing capacity has also ramped up, while some of the best capitalized and most innovative companies in the world are developing contact-tracing tools to help facilitate safe re-openings. While stocks may have come a bit too far, too fast in the short term, markets are clearly responding to these positive developments.

Reopening the US economy will be a gradual process, and temporary setbacks may be possible. Some of the lost jobs may not return. The possibility of disappointment as the “Great Reopen” unfolds is real. We are facing a tremendous challenge, but it is being met with incredible resilience, resourcefulness, and innovation. Together we will get through this crisis and return to better times.

Please take care, and don’t hesitate to contact me if you have any questions or concerns.

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of May 6, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Tracking # 1-05007832

“Life is 10% what happens to you and 90% how you respond to it.” — Lou Holtz, Hall of Fame football coach

As the battle against the COVID-19 pandemic continues, how we respond to it will determine how we beat it. Continued sacrifices range from everyone in the medical community working on the front lines to the thousands of truck drivers across our country keeping goods flowing, parents who have become homeschoolers, and folks missing their family events to help stop the spread of this terrible outbreak. As Lou Holtz said, we can’t control what happens, but how we respond to it is what matters. Our response to this crisis has shown the resolve and strength of the human spirit, which is why we will overcome.

The response from the economy and stock market, however, has shown a disconnect between the two. Tragically, 22 million people have filed for unemployment in the past four weeks, nearly wiping out all the jobs created during the record 10-year economic expansion. Historic drops in consumer confidence, retail sales, industrial production, oil prices, and housing starts have shown how quickly our economy has gone from solid growth to virtually stopping in its tracks. Yet, stocks have been soaring the past few weeks. Remember, stocks tend to weaken before the economy, and they tend to lead before the economy turns around. Stocks see light at the end of the tunnel before the economy feels it, and the big move recently may be a sign the economy could turn around later this year.

Small businesses have been impacted the most by the economic crisis, and the government and Federal Reserve actions to bridge the gap to better times are unprecedented. The combined stimulus from fiscal and monetary policy is more than 20% of the value of the entire US economy, as measured by gross domestic product, greatly mitigating the economic hardships. The hurried roll out of the small business loan program wasn’t perfect, but it is helping those businesses.

This recession—though not officially declared yet—is unlike any other. It wasn’t caused by the virus itself, but by the government telling people to stay home in an effort to flatten the curve. The government can’t simply turn on a switch to get things back to normal, but with all of the stimulus making its way through the system, it’s possible this could be one of the shortest recessions ever. First quarter earnings season has begun, and it will be interesting to learn how quickly corporate America anticipates the slowdown ending. Estimates for earnings in 2020 have reduced drastically, but there is still hope that a strong second-half economic rebound could help support a recovery in corporate profits.

More than 2 million people worldwide have been infected by the virus, and we all have been impacted in some way. There are drug companies all around the world working nonstop to find an effective treatment, while Boeing, one of the hardest hit companies during this crisis, said it might start building planes again soon. We aren’t out of the woods yet, and the economic data and headlines may get worse before they get better, but our response to this crisis reinforces our confidence that the future remains bright.

Please stay healthy, and don’t hesitate to contact me if you have any questions or concerns.

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of April 23, 2020.

Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

LPL # 1-05002504

Dimensional Regional Director Scott Bosworth discusses the impact emotions can have on an investor’s portfolio, citing research and examples from a recent client event.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters.

Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

Tracking Number 1-981712

In recent days, the increase in volatility in the stock market has resulted in renewed anxiety for many investors. While it may be difficult to remain calm during a substantial market decline, it is important to remember that volatility is a normal part of investing. Additionally, for long-term investors, reacting emotionally to volatile markets may be more detrimental to portfolio performance than the drawdown itself.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters.

Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

Recent Market Volatility Download

Tracking Number 1-981712

The impact of missing just a few of the market’s best days can be profound, as this client-ready data visualization of a hypothetical investment in the stocks that make up the S&P 500 Index shows.

We at Cornerstone hope you found this video helpful. Please call us with any questions you may have on this or any other financial planning matters. Also, we invite you to forward this message to friends, family, and colleagues who have expressed concerns about short term volatility. And its potential impact on their long-term financial well-being. Creating an opportunity for success starts with the ability to make good choices when times are challenging. During stressful times, this is easier said than done. We are happy to extend to them our thoughts, clarity, and financial coaching. After all, there is no need for people you care about to walk through times like this alone.

Tuning Out the Noise Download

Tracking Number 1-981712

Since most families are sheltering at home, this “spare time” represents an excellent opportunity to catch up on small and important financial matters: the type of tasks that are easy to neglect because we don’t have the time. This opportunity is interesting enough to catch the attention of our local CBS Station KPIX TV in San Francisco.

Please call us with any questions you may have on this or any other financial planning matters. We invite you to forward this message to friends, family, and colleagues who have expressed concerns about today’s economic and investing environment, and might want to talk about their questions. After all, there is no need for people you care about to walk through times like this alone.

“Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, reach for a bucket.” —Warren Buffett
The battle with COVID-19 rages on, and the headlines continue to get worse. The number of new cases and deaths continues to grow. Individuals and companies are hurting, with even an iconic company like The Cheesecake Factory telling landlords they won’t be able to make their rent payments for April. This current situation is a human crisis, and there is no way to put a value on the lives that have been lost. However, we will get past this pandemic, as we’ve gotten past every other crisis, and we will see better times in the future. As

Warren Buffett stated, when clouds are dark, that could spell opportunity for longer-term investors.
We’re already seeing some good news on the horizon. The number of new cases may have peaked in Spain and Italy, the epicenter of the outbreak in Europe. Here at home, new cases may begin to slow within the next few weeks, while Seattle, one of the first major cities in the United States to have an outbreak, has reached its peak of new cases. Corporate America is seeing major breakthroughs as well, as Johnson & Johnson announced human testing on its COVID-19 treatment should start by September, and a vaccine may be ready by early next year.

While we wait for containment measures to take effect and for an ultimate cure, the immediate impact to the economy has been devastating. More than 3.2 million people applied for unemployment benefits last week, more than five times the previous record, while US gross domestic product (GDP) is expected to take a historic dive. Remember, the economy can stop by either pumping the brakes or hitting a tree. Our economy has hit a tree, and the short- and long-term impacts of this abrupt halt could be felt for a long time to come.

The double-barreled support from the Federal Reserve (Fed) and Washington’s recent $2 trillion fiscal stimulus plan (CARES Act) won’t fix the root of the problem—only doctors and scientists can—but it may help the economy restart more quickly once the pandemic subsides. Fed Chair Jerome Powell noted we very well may be in a recession, but this isn’t a typical recession, as our economy started from a strong position. The $2 trillion CARES Act, totaling more than 9.3% of GDP, provided an additional boost. For reference, the 2008 fiscal stimulus plan was 5.5% of GDP, showing just how much larger this plan is than anything else we’ve ever seen. These measures may be viewed as a bridge for consumers and small businesses to help them get to the other side, and so businesses are positioned to take full advantage when the economy restarts. The combined monetary and fiscal policy action may be the catalyst to propel a historic bounce back for our economy over the second half of this year.

World War I took more than 15 million lives, only to be followed by the pandemic of 1918, which claimed another 50 million. Very few would have expected to see the boom in technological development, economic growth, and the stock market that followed during the “Roaring ‘20s.” It is always darkest right before the dawn, and our resolve and determination will once again shine through. Longer-term investors may want to consider looking for opportunities to invest in an eventual market recovery, as stocks are in the zone where adding to equity exposure could be quite beneficial. Or as Warren Buffett would say, they better get their buckets ready.

Please stay healthy and contact Cornerstone if you have any questions or concerns.

Important Information

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.

All data is provided as of April 1, 2020.

This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

Tracking # 1-975747