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July 2020
Index Month Year
Dow Jones +2.5040% -6.1748%
S&P 500 +5.6351% +2.2821%
NASDAQ +6.8533% +20.3499%
10-Yr Treasury yield was 0.65% at the end of June and 0.62% at the end of July



July was a very revealing month for the financial markets. With coronavirus cases and deaths spiking, as well as slowing reopening efforts in many states, the commerce department confirmed that the US economy shrank by a record 32.9% in the second quarter. However, Wall Street barely blinked.* The Dow Jones Industrial Average actually ended July about 900 points higher than it started the month, and the Nasdaq hit a new intraday record on the first trading day of August.

Ultimately, it seems that big investors remain optimistic the economy can still make a strong recovery by year’s end despite the damage already done. This is also despite spiking Covid-19 cases that have led to spiking unemployment numbers. They may be right, but I believe it hinges on three factors all going positively in the next six months: the virus (we have no major resurgence over what we’ve already seen), the vaccine (we get one and it is effective), and more government relief (it gets approved and is sufficient).

Unfortunately, as of this writing, the virus is still raging in many states. The US surpassed over 150,000 reported deaths in July, and the Centers for Disease Control has estimated we could hit 200,000 deaths by the end of August.** As for the vaccine, several promising drugs are in development, and the goal is to have one available by January. Of course, Congress was haggling over a new relief package as August began and many provisions in the old one expired.

For the market to avoid another major pullback, I believe all three of these factors must develop positively in the next six months. Beyond these key issues, there are many other factors that could impact the direction of the economy and the financial markets in the months ahead. Ultimately, the Age of Economic Uncertainty we had already been in before this crisis has been taken to a whole new level in the last four months. Many new risks have emerged, along with new opportunities.

During this time, I believe it is crucial for investors in or nearing retirement to measure these risks and opportunities carefully, and to continue making sure your downside is protected and your retirement income is secure!

Portfolio Transactions:

When managing your portfolio at SIS, we look for one of four possible “enhancement” trades while reviewing securities and possible transactions. Income generation is our primary goal for our clients, and we consider the following four portfolio enhancements before transacting: current yield, yield to worst (minimum projected annualized total return), interest rate risk, and default risk. The intents of these transactions are categorized as follows:

  • Pay Me Now – Enhancing current yield
  • Pay Me Later – Enhancing yield to worst
  • Cover My Assets I. – Managing interest rate risk
  • Cover My Assets II. – Managing default risk

We evaluate the transactions by determining whether they meet one, two, three, or all four enhancements. A baseball analogy for this: SINGLES, DOUBLES, TRIPLES, and HOME RUNS.

There were no swaps for the month of July.

*“US Economy Shrinks in Second Quarter,” Garden City Telegram, Aug. 2, 2020
**“CDC Says This Many Americans Will Die from Covid This Month,” msn.com, Aug. 3, 2020


Note: The above trades were recent block trades and do not reflect all trades done on an individual specific basis. Sound Income Strategies, LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance is not an indication of future results. Be sure to first consult with a qualified financial advisor or tax professional about your specific financial situation before implementing any strategy discussed herein.

You are advised to give independent consideration to, and conduct independent investigation with regards to the information above in accordance with your individual investment objectives. Use of the Information is at the reader’s risk, is strictly intended for informational purposes in conjunction with the recipient’s due diligence, and should not be construed as a solicitation by Sound Income Strategies, LLC. Past performance will never indicate or guarantee future behavior. Sound Income Strategies, LLC does not represent or warrant that the contents of the document are suitable for you from compliance, regulatory, legal, or any other perspective. We shall have no responsibility or liability for your use or non-use of the document or any portion thereof.

Sound Income Strategies, LLC is registered as an investment advisor under the Investment Advisers Act of 1940 and is regulated by the SEC. Sound Income Strategies, LLC and its affiliates may only transact business or render personalized investment advice in those states and jurisdictions where we are registered or otherwise qualified to do so.

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