My twin toddler grandsons often clamor for me to read to them a 1972 children’s book called “Alexander and the Terrible, Horrible, No Good, Very Bad Day.” The book has since been made into a movie and a stage musical. You can guess the plot.

I recently thought of the book, as I contemplated second-quarter corporate earnings season, which kicks into high gear next week. Investors should brace themselves for terrible, horrible, no good, very bad Q2 earnings results.

Here’s the insidious part: many corporate CFOs are probably low-balling estimates. The reasoning is, if earnings are set to come in lousy anyway, why not exaggerate the picture to ensure an earnings beat?

In sports, it’s called “gaming the refs.”

Better-than-feared earnings results often result in a lift in share prices. But this shell game isn’t much use in predicting a company’s future competitiveness and cash flows.

The upshot: second-quarter earnings season is likely to be confusing, muddy and a drag on equities. In a minute, I’ll discuss Q2 earnings in greater detail. First, let’s look at the latest gyrations of the markets.

The Dow Jones Industrial Average and the S&P 500 closed sharply lower Thursday, by 1.39% and 0.56%, respectively, as Wall Street woke up and smelled the coffee about surging coronavirus cases. Yesterday’s trading was a roller-coaster ride.

However, the tech-heavy NASDAQ composite rose 0.53%, posting another record closing high as investors looked toward a post-COVID world in which tech giants enjoy even more clout due to the widespread embrace of mobile, remote and collaborative capabilities. The overvalued NASDAQ is poised for a tumble one day, but Thursday wasn’t it.

Treasury yields plunged lower across the curve Thursday, with long-dated rates falling the most during the selloff. The 30- and 10-year yields fell to their lowest levels since late-May. Investors are once again pivoting to safe havens, such as Treasuries. Below, I pinpoint another group of safe haven investments you should consider now.

In pre-market futures trading Friday morning, stocks were poised to extend their losses as investors nervously eyed the resurgent pandemic. All three main U.S. indices were on track to open deeply in the red.

The U.S. witnessed more than 60,000 new coronavirus infections on Wednesday, setting a single-day global record while Florida and Texas reported a record one-day increase in deaths. As of this writing Friday morning, the world has experienced more than 12.1 million coronavirus cases and more than 551,000 deaths. This data comes courtesy of Johns Hopkins University.

Johns Hopkins is one of the most prestigious medical centers in the world; it’s the gold standard for health care and research. And yet, many people have been persuaded by partisans to believe that numbers from Johns Hopkins and similar institutions are manipulated and unreliable.

If projections about the pandemic aren’t optimistic enough, they’re attacked by those who want the economy immediately thrown open. The “war on truth” rages on.

The country’s hyper-partisan environment has made it more difficult to contain the virus. The aspersions cast by some members of the chattering class on scientists has not only done a disservice to public health but also to investors.

Read This Story: Get Ready for The Stock Market Bubble to Pop

Led down the primrose path by science deniers, overly optimistic investors have loaded up on risk-on assets that are now vulnerable to correction as states rescind openings in the face of a resurgent virus.

Flying blind on earnings guidance…

Investors also are jittery about second-quarter earnings season. S&P 500 companies are expected to post the biggest quarterly decline in earnings since the financial crisis of 2008-2009. According to FactSet, the data provider for Investing Daily, the estimated Q2 earnings decline for the S&P 500 is -43.8%.

Most S&P 500 companies have withdrawn 2020 earnings guidance altogether, which will breed considerable confusion.

During the first six months of calendar year (CY) 2020, analysts lowered earnings per share (EPS) estimates for companies in the S&P 500 for the year (see chart).

The CY 2020 bottom-up EPS estimate declined by 28.6% (to $126.89 from $177.82) during this period. “Bottom-up” is an aggregation of the median 2020 EPS estimates for all the companies in the S&P 500 index.

This reduction represented the largest decrease in the annual EPS estimate for the S&P 500 over the first half of the year since FactSet began tracking the annual bottom-up EPS estimate in 1996. The previous record was -24.4%, which occurred in the first six months of CY 2009.

The economic backdrop is dismal as well.

The U.S. Labor Department reported Thursday that Americans filing for jobless benefits dropped to a near four-month low last week. But that’s cold comfort, because a record 32.9 million people were collecting unemployment checks in the third week of June.

Separate data show that 30% of Americans missed their housing payments in June, a stunning statistic that undermines the case for bullishness. Enhanced unemployment benefits run out at the end of July and it’s unlikely they’ll get extended.

Read This Story: Your Congress, Inaction…

Three sectors appropriate under current market conditions are utilities, health care and consumer staples. These three sectors provide essential services that people need regardless of economic ups and downs.

The overbought stock market is colliding with coronavirus realities, which makes defensive sectors smart bets now. Utilities, in particular, offer a safe haven from the impending storm. For a list of the best utilities stocks now, click here. The stocks on our list are well-positioned to survive the terrible, horrible, no good, very bad days ahead.

John Persinos is the editorial director of Investing Daily. He also edits the premium trading service, Utility Forecaster. You can reach him at: mailbag@investingdaily.com.