Busy Week Ahead of Christmas Week
There's a lot to unpack for the week ahead. As a result, we've added more graphs than we normally include in the weekly recap. Click below if you'd like to read our summarized content. Continue reading to see our unabridged comments.
Congress is working toward a stimulus package that would appear to be a compromise between the two sides. Reports are that the two sticking points - $160 billion in aid to state & local governments and COVID liability protections for businesses - are to be stripped out, leaving a package worth approximately $700-800 billion in stimulus. Hopes are that a deal will get done before the end of the week, when the government's spending authority is set to expire.
Markets are also higher this morning on the delivery of Pfizer's COVID vaccine that will reportedly reach more than 600 different sites this week and according to the plans laid out by Operation Warp Speed, more than 40 million doses will be delivered by the end of the year. In addition, Moderna's COVID vaccine is due to be approved by the FDA this week. Unfortunately, the excitement around these vaccines has been blurred by politics and fear. Multiple politicians have stated publicly they would not take the vaccine or trust its efficacy. In reality, the key ingredient of both Pfizer's & Moderna's vaccine is mRNA, which is synthetic in nature. This key ingredient has sped up the process of manufacturing more so than the removal of government red tape. Also, mRNA eliminates the need to inject a live version of the virus into the bloodstream, unlike conventional vaccines. Lastly, both Pfizer's and Moderna's efficacy studies (95% and 94.1%, respectively) far exceed the FDA's typical bar of 50% efficacy. There's not enough evidence to fear the vaccines. It is noted that 2 people in the U.K. that have taken the Pfizer vaccine developed allergic reactions. However, allergic reactions occur in 1 out of every 1.4 million vaccination shots each year.
On the virus front, we now have enough samplings and evidence to suggest lockdowns are not an effective means of addressing COVID. In the graphs below, cases & deaths are rising in 4 states with the most stringent lockdowns. Cases are also falling in states with no lockdowns. In terms of shutting businesses down to reduce cases, only 1.4% of cases can be attributed through contact tracing to restaurants and bars. Yet, several states - NY, PA, & CA - are closing those small businesses for the next few weeks, despite lack of evidence. In terms of fear, Americans have greater risk of dying from heart disease, cancer, a car accident, or drowning than they do COVID. And, despite the media's fear campaign, annual deaths from ALL CAUSES has plummeted this year to only 2.5 million people in contrast to the 2.8 million and 2.9 million that died in 2018 and 2019, respectively.
While economic data has hit a soft patch, due to the draconian lockdowns in certain states, the overall economic picture remains stable. The St. Louis Fed's "Financial Stress" index is below zero, which indicates little-to-no financial stress in the system. Also, the Chicago Fed's "National Financial Conditions Index" is at its lowest point since just before the pandemic and well below the historical average of zero. Overall, the financial picture is not a concern yet. Meanwhile, people are tired of the restrictions and are learning to adapt. Recent mobility numbers from Apple suggest people are driving, walking, and taking transit more than the worst point of the pandemic and that trend has increased over the last 3 weeks, even in areas on severe lockdown.