Weekly Market Commentary

November 16, 2020

 

Vaccine News Cheers Markets

 

Vaccine can be a powerful word and last week it was worth a lot to financial markets.

On Monday, a pharmaceutical company and a biotech company announced preliminary trials of their vaccine show it may be 90 percent effective, reported Financial Times. The revelation conjured tantalizing visions of a future in which virus precautions are unnecessary and life returns to normal around the world, pandemic-fatigued populations cheered and markets rallied.

Mid-week, enthusiasm moderated. While investors remained confident a vaccine could lead to economic recovery over the longer term, concerns about the shorter-term issues took center stage.

 

  • Weaker-than-expected consumer sentiment. Sentiment is an important measure because consumer spending is a major driver of U.S. economic growth. When sentiment declines, people may spend less.

 

  • A surge in coronavirus cases. The number of daily cases has increased by more than 70 percent nationwide since the beginning of November. Eighteen states are at risk of reaching full hospital capacity, reported NPR.

 

  • New pandemic restrictions. As holidays approach, many cities and states introduced or re-introduced restrictions intended to slow the spread of the virus. The measures could slow economic recovery.

 

  • No progress on new stimulus. If good news about a vaccine throttles political appetite for additional stimulus, small business owners could be in trouble. In 2019, small businesses employed almost 60 million people – 47 percent of working Americans. A new Goldman Sachs survey found “…more than half of small business owners (52 percent) have stopped paying themselves in a bid to keep their businesses afloat and four in 10 (42 percent) already have begun laying off employees or cutting worker pay,” reported

 

Market volatility is likely to persist. Stay calm and do not let short-term events jar you from your long-term financial goals.

 

Focus On The Positive

 

“The vaccine news airlines have been waiting for arrived this week, raising hopes for a recovery in passenger air travel – but only if the crippled industry can muster the resources to deliver billions of life-saving doses to the world…Just providing a single dose to the world’s 7.8 billion people would fill 8,000 747 freighter planes…”

–Joann Muller, Axios News, November 13, 2020

 

Best regards,

Bill Spalding