Barbara Shapiro 333 Elm Street Suite 210 Dedham,MA 02026 bshapiro@hms-financial.com 781-251-2655 Welcome to HMS Financial Group We are a full-service financial planning and investment firm located in Dedham, Massachusetts. Life brings many opportunities and challenges and we are here to help our clients navigate through both the positive and negative times. HMS Financial Group works closely with our clients to create a personalized plan to fit their current and future needs. Our willingness to listen, educate and empathize with our clients sets us apart from other firms. Barbara Shapiro, President EdM2 MSF CFP® CFS CMC CDFA CeFT®

June 30, 2020

Reopening Related to Surges? 

Most economies have reopened to some degree. And several states have seen a surge in infections at the same time. From this, we can conclude one thing -- the virus is not taking the summer off as some had speculated might happen. On the other hand, can we say that the reopenings are causing the spikes? Certainly, increased activity should cause an increase in infections. On the other hand, not every state which is opening is seeing the same spike. 

The markets are watching this relationship very closely. We mentioned previously that the stock market comeback was extremely dramatic. But we have seen some precipitous drops as well. News of surging cases has made the markets nervous, just as news of possible drugs or vaccines have sent the markets into a frenzy. Thus, the markets are reacting to medical news as much as economic news today. 

Medical news is not scheduled, but economic news does follow the calendar. At the end of this week we will see the jobs data for June. It will be a very interesting report as May's numbers were better than expected, but there was much speculation that the avalanche of unemployment claims was overwhelming tracking systems. Originally, we thought the first sign of rebound would be this report, but since we saw this rebound in May, we are not quite sure what we will see in June. Stay tuned for what could be a wild ride. 

Last week stocks started off on the plus side. But they turn lower mid-week as COVID cases spiked in many states and finished sharply lower on Friday.  Gold prices rose, while interest rates and oil prices eased.  Existing home sales were lower than expected, but new home sales were strong. Orders for durable goods came in lower than forecasted, but close to expectations minus the transportation component, and the revision of the first quarter measure of the GDP came in as expected at -5.0%. Finally, personal income and spending showed major volatility from month-to-month, which was expected in this environment. This week we will see the all-important jobs report on Thursday because Friday is a holiday. We will also see the ISM factory and services indices, as well as factory orders. Next week, will be light for data releases -- wholesale inflation is the feature.  

Current Financial Indices
Updated June 26, 2020

 The longest economic expansion in American history is officially over. The National Bureau of Economic Research declared that the recession began in February. The economy collapsed so rapidly that NBER wasted no time in announcing a recession, a stark contrast to previous downturns when the body took upwards of a year to declare what most people already knew. This was the fastest that NBER has declared any recession since the group began formal announcements in 1979. Social distancing requirements imposed to fight the pandemic have crushed broad swaths of the US economy, from airlines and cruise ships to restaurants and Broadway shows. "The unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions," NBER wrote. The pandemic marked an end to the mediocre but long recovery from the Great Recession. In July 2019, that expansion officially became the longest period of uninterrupted growth in US history dating back to 1854. It spanned 128 months, easily breaking the prior record of 120 months set between March 1991 and March 2001 during the dotcom boom. Normally, economists define a recession as consecutive quarters of negative growth. The United States already endured one quarter of a shrinking economy, with GDP dropping by 5% during the first quarter. NBER decided not to wait for a second quarter of a contracting economy, although it is widely expected to happen during the second quarter. Source: CNN/Money

U.S. Treasury Secretary Steven Mnuchin said he would seriously consider more direct payments to individuals in the next phase of coronavirus rescue legislation, adding that funds should also be targeted to help sectors struggling to reopen, including hospitality and tourism. Testifying before the U.S. Senate Small Business Committee, Mnuchin said the Treasury also planned to issue new guidance to ease rules that prohibit business owners with a criminal conviction in the past five years from accessing forgivable Paycheck Protection Program loans. That would be reduced to three years, and Mnuchin said he was open to easing the rules further. Mnuchin said he “definitely” believed another round of federal coronavirus aid would be needed, including measures to create jobs. Congress has so far passed three coronavirus bills totaling about $3 trillion in programs, including the small- business payroll loans, payments to individuals, money for healthcare providers and Federal Reserve credit market backstops. “We will have a significant amount of unemployment and we’re going to need to look at doing something there,” Mnuchin said. “I think we’re going to seriously look at whether we want to do more direct money to stimulate the economy, but I think this is all going to be about getting people back to work.” Source: The New York Times

U.S. household wealth fell 5.6% to $110.8 trillion in the first quarter of this year as U.S. stock markets were hammered by the escalating novel coronavirus epidemic, which has since pushed the United States into recession. The majority of the drop came from cratering U.S. stock prices at the time, data released by the Federal Reserve showed. From mid February through the end of March, an index that covers 90% of the market capitalization of U.S. stocks lost more than $10 trillion in value. Over the quarter the S&P 500’s decline was 20%, the largest quarterly loss since the fourth quarter of 2008, but it has since recouped much of those losses. The last two weeks of the quarter also saw job losses mount as the spreading virus caused many U.S. states to begin to issue stay-at-home orders and close non-essential businesses. Low-wage workers were particularly hard hit. By contrast, household net worth was $117.3 trillion in the fourth quarter of 2019. Source: Reuters 

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