Insights

 

WuRevue Week Ending 12/11/2020

 

Top News:

12/07: Reality is sinking in as EU-UK stand on the precipice of a messy “no-deal” Brexit deadline of December 31^st.  In contrast, China’s exports in November grew at the fastest pace in almost three years.  However, investor enthusiasm was restrained given the US is reportedly preparing more sanctions, in response to China’s further restrictions on Hong Kong’s autonomy.

 

12/08: Peer reviewed data showed the most promising European vaccine to be safe and capable of preventing disease, though some questions remain.  In a prelude to this Thursday’s meeting of outside experts, the FDA released briefing documents supporting the efficacy of the Pfizer/BioNTech vaccine. 

 

12/09: Investors endeavored to read the tea leaves on Congressional fiscal aid, for there are now no fewer than four proposals floated as opening gambits in time-sensitive negotiations. The FTC and a coalition of 48 states filed separate antitrust lawsuits against Facebook, spurring profit-taking in tech shares.  Faced with the waning probability of a Brexit deal, leaders of UK and the EU are making a last-ditch attempt at compromise. 

 

12/10: US weekly unemployment claims report telegraphed a weakening labor market.  As another sign the economy still has more room to reflate, November’s CPI continued to be below the Fed’s target of 2% on a sustained basis.  The House passed a stopgap funding extension, trying to buy time to strike a broader spending and coronavirus relief bill.  The ECB upped the size of its monetary stimulus scheme by €500 billion and extended its expiration until March 2022.

 

12/11: While Congress remains deadlocked on stimulus, November’s wholesale prices suggest a challenging near-term economic recovery. On the upside, however, came FDA’s imminent approval of its first vaccine, as well as an unexpected uptick in consumer sentiment in early December, due to a “more favorable long-term outlook.”  In Europe, investors were unnerved by vaccine development setbacks (here, here) and pervasive resignation to a “no-deal” Brexit (here, here), despite EU’s tentative agreement on a sizable €1.8T budget and recovery package

 

 

Heard on the Street:

“Stimulus checks are really popular and really effective. There is more and more research coming out that dollar for dollar people spend this. If people spend money, businesses have money, and then they don’t have to lay off people.  [November’s] jobs report is the straw that broke the camel’s back…On top of that, the economic data says [sic] this is really going to get worse so it comes down to how can [lawmakers] not act?” 

— Claudia Sahm, former Federal Reserve economist, quoted by MarketWatch on 12/7/2020

 

 

Longer Game:

Labeling “sustainable development” as “our generation’s moonshot mission,” one Columbia professor laid out a blueprint of a public-private partnership worldwide in order to chart collaborative pathways to success.

 

 

Bonus:

Is current investor sentiment already too bullish?  According to one poll of active investment managers, their mean exposure to US stocks is at the second highest reading since the survey first began in 2006.  The highest level occurred in December 2017, which was followed by a 12% correction in January 2018.