June 29, 2020
The Markets
Blame it on the coronavirus.

Stock markets in the United States and Europe retreated last week as the number of new COVID-19 cases increased steadily in America. On Thursday, there were more than 44,000 new cases, the highest daily total to date, according to data from the Centers for Disease Control .

“The turn has created a new puzzle for investors, many of whom had started focusing on 2021 earnings expectations as the next performance-driver for stocks. The old market gauges, like manufacturing surveys, jobs tallies, and retail sales, feel like lagging indicators. The new leading indicators deal with the disease. Yet tracking its progress is tricky even for epidemiologists who have studied these issues for decades,” reported Avi Salzman of Barron’s .

Another piece of the investment puzzle was reshaped when the Federal Reserve (Fed) released bank stress test results last week. It found most banks were likely to remain well-capitalized if economic growth rebounds relatively quickly. However, in a worst-case economic recovery scenario, banks did not fare as well. Consequently, the Fed suspended share buybacks and capped the dividends banks can pay investors, reported Alexandra Scaggs of Barron’s .

“The Fed…also said future payouts would depend on bank earnings – and bank earnings will start to look worse as pre-coronavirus quarters drop out and are replaced by COVID-impaired results. Even that decision might not have been a problem if the market believed the spread of COVID was under control. Then the numbers started coming out. Florida’s seven-day average of cases grew 7.8 percent, up from the previous day’s 4.1 percent. Arizona’s jumped to 5.4 percent, from 2.9 percent. In Texas, the positivity rate – that is, the number of tests divided by positive results – hit 11.8 percent,” reported Ben Levisohn of Barron’s .

Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, dispelled the notion this is a second wave of the virus. He told The Wall Street Journal , “People keep talking about a second wave…We’re still in a first wave.”
Coping With Pandemic Stress
If your stress and anxiety levels are reaching a breaking point, you’re not alone. A recent Kaiser Family Foundation (KFF) poll found 45 percent of adults in the United States are feeling worry and stress related to the coronavirus. Steps taken to reduce loss of life – social distancing, non-essential business closures, remote work, lack of daycare, shelter-in-place orders, online school – have caused many people to feel overwhelmed or isolated or both. Anxiety has been triggered by uncertainty about the future and concern loved ones may become ill.
 
Fortunately, there are actions we can take to stay calm and carry on. For instance, you can:
 
1.    Take a news detox . Being bombarded with news and information can be distressing and take a toll on your well-being. As a result, it may benefit you to take a break from watching, listening, and/or reading pandemic updates. Reducing social media consumption may help, too.
 
Use the extra time for activities that are more constructive and less upsetting. You could listen to music, practice yoga, meditate, listen to a funny audio book, go for a walk, or do something else you enjoy.
2.    Make it about you . For some people, stress and anxiety negatively affect immune response. Take some steps to boost your immune system. Harvard Health recommends: 3
 
  • Don't smoke
  • Eat a diet high in fruits and vegetables
  • Exercise regularly
  • Maintain a healthy weight
  • Drink alcohol only in moderation
  • Get enough sleep 
 
3.    Connect and reconnect . Sheltering in place may keep you safe from the virus, but isolation can have negative mental health repercussions. On the PsychCentral blog, Susan Zinn recommends interacting with neighbors from a safe distance, sharing a wave and a smile on daily walks, and participating in digital family get-togethers which may lift your spirits.
 
No one knows how long the pandemic will last or what life will be like in the years ahead. Coping with uncertainty is easier when you take control of things you can influence.
Weekly Focus - Think About It
“Do not judge me by my successes, judge me by how many times I fell down and got back up again.”
--Nelson Mandela, Former President of South Africa
Bruce Kuehl | 763.542.8884 | bkuehl@lifestagewealth.com