Weekly Market Digest: How Will Coronavirus Change Global Consumption Habits?

On Friday, June 19th, Personal Capital staff received a paid day off in recognition of Juneteenth and to reflect, learn about or take actions to help end systemic racism. Juneteenth is a holiday which recognizes the day in 1865 in which General Gordon Granger of the Union Army announced that all people held as slaves in Texas were free.

Equities in both the U.S. and abroad closed positively for the week, as did Gold and the U.S. 10 Year Treasury.

Unemployment information was mixed, with new unemployment claims coming in above expectations, and continuing claims declining.

Weekly Returns

S&P 500: 3097.7 (1.9%)
FTSE All-World ex-US(VEU): (0.9%)
US 10 Year Treasury Yield: 0.69% (-2.25%)
Gold: $1,743.01(0.7%)
EUR/USD: 1.118 (-0.7%)

Major Events

• Monday – Federal Reserve communicates that it will begin purchases of Individual Corporate Bonds, expanding a recent development of beginning to purchase corporate debt as part of its effort to support the US financial system.
• Tuesday – Census Bureau announces US Retail sales in May 2020 jumped over 17%, the largest monthly jump of all time.
• Wednesday – World Health Organization announces malaria drug ‘Hydroxychloroquine’ will be dropped from its testing of treatment for the coronavirus.
• Thursday – New jobless claims from prior week announced: 1.5 million new claims, above the 1.3 million expected, signaling that the impact of the coronavirus remains.
• Friday – Apple announces that it is closing 11 stores in response to increased coronavirus cases in 4 states.

Our Take

The coronavirus continues to dominate news, markets, and many other aspects of the rest of our lives. In my client & personal interactions from the past several weeks there has been one consistent theme of conversation: Is this the new normal?

Many of my conversations of late have centered on speculation of how the coronavirus will change global consumption habits. Will business travel become a thing of the past? Are technology companies the best investment in this environment? Will Venice once again be a crowd filled tourist attraction?

While certainly a fascinating topic of discussion, there can be no certainty around how, or how long, coronavirus will be a dominating force for the global economy. In the face of this uncertainty, I believe it is best to be positioned for as many different outcomes as possible. One great way to take many possible outcomes head on, is through diversification.

Right now, Google, Facebook, Microsoft, Apple and Amazon combined represent more than 20% of the S&P 500. So if you have an S&P 500 fund in your investment portfolio, here’s some food for thought that we shared with our clients this week.