“We Made This List…And Checked It Twice"

MONETARY

• In a virtual conference hosted by the European Central Bank, Fed Chairman Jerome Powell highlights some risks facing lower-paid, public-facing service sector jobs. As the pandemic has accelerated the broader trend of digitization, some job losses in the public-facing service sector may prove to be permanent³
  • (Powell) “Even after the unemployment rate goes down and there’s a vaccine, there’s going to be a substantial group of workers who are going to need support as they find their way in a post-pandemic economy,”³
  • Chairman Powell also reiterated the need for additional fiscal stimulus in order to help lessen the burden on those workers who do experience permanent, structural job losses³
• Treasury Secretary Mnuchin sends letter to Federal Reserve stating that the Treasury will not renew several emergency lending facilities that were put in place during the early stages of the pandemic⁷
  • Effected facilities are those that used CARES Act funding (PMCCF, SMCCF, MLF, MSLP, TALF)⁷
  • The Treasury left open the possibility of re-instating the facilities should the need arise in the future, (Mnuchin) “In the unlikely event that it becomes necessary in the future to reestablish any of these facilities, the Federal Reserve can request approval from the Secretary of the Treasury and, upon approval, the facilities can be funded with Core ESF funds, to the extent permitted by law, or additional funds appropriated by Congress.”⁷

 

FISCAL

• President-elect Joe Biden plans to nominate former Fed Chair Janet Yellen to be the next incoming Treasury Secretary⁸
  • Yellen was nominated to be the Fed Chair by Barack Obama in late 2013, and then served as Fed Chair from 2014 to 2018 when she was replaced by the current Chairman Jerome Powell⁸
• Lawmakers seeking to come to a compromise ahead of the end of the year to pass a fiscal stimulus package¹²
  • Some speculated outcomes for this negotiation process include:
    • Completing a deal before January 20
    • Negotiators agree on a deal, however it fails in House or Senate
    • Negotiations fail and Congress attempts to restart talks after President-elect Joe Biden becomes inaugurated
      • In this scenario, Biden could unilaterally move to provide support through executive actions via raising minimum wage for federal contractors, stopping evictions for unpaid rent, and pausing student loan payment without interest¹²
    • A smaller package is passed before January 20, and then a larger package is passed in 2021 if Democrats gain control of the Senate in the January 5 runoff elections in Georgia¹²

 

GEOPOLITICS

• France formally sends notices to a collection of large tech companies ordering them to pay the country’s Digital Services Tax⁹
  • Tax is a 3% levy on revenue earned from digital services earned in the country of France, only applying to companies who earn more than €25M of revenue in France and who also earn greater than €750M worldwide⁹
  • Negotiations are currently ongoing at the OECD level between the United States and a constituency of European countries to reach a mutually agreeable deal to resolve the broader issue of cross-border taxation of digital services revenue⁹
• President-elect Joe Biden set to review Trump administration’s tariffs on international trade and has called for a more unified front, with help from U.S. trading partners, to deal with unfavorable Chinese trade practices¹⁰
  • Some speculation that aluminum and steel tariffs on European countries may be removed or reduced as part of a potential strategy to form an ‘economic-bloc’ to confront China¹⁰
• Trump administration set to add SMIC and CNOOC to the U.S.’s blacklist of companies owned or controlled by the Chinese military¹¹
  • Move could prohibit companies from buying a range of U.S. goods and technology, as well as prohibiting U.S. investors from accessing such companies¹¹

 

VACCINE

• New study out of the UK finds that “cellular immunity” to COVID-19 remains, at a minimum, of 6 months after initial infection¹
  • The study analyzed the blood of 100 patients who were infected with COVID-19 and presented as symptomatic or asymptomatic and found that while antibodies dropped, the patients’ t-cell response remained robust¹
  • T-Cell responses in patients who presented as symptomatic were also noted as being notably higher than those who presented as asymptomatic¹
• Pfizer and BioNTech release efficacy data on its COVID-19 vaccine candidate which shows the vaccine was more than 90% effective, far exceeding expectations²
  • Both companies confirm that they have seen no serious safety concerns with its vaccine candidate, and are hopeful that the U.S. will issue an Emergency Use Authorization for its vaccine by December²
  • The two companies project that they will be able to produce roughly 50M doses in 2020, and are estimating around 1.3B doses in 2021²
• Moderna reaches its primary efficacy endpoint goal from its first analysis of its late-stage study on its COVID-19 vaccine candidate. The company says its vaccine candidate was 94.5% effective⁴
  • Company says it intends to submit for an Emergency Use Authorization in the coming weeks⁴
  • Internal estimates have the company being able to have roughly 20M doses of its vaccine candidate ready to ship by the end of 2020⁴
• AstraZeneca reports that its vaccine was 90% effective when administered as a half dose, followed by a full dose a month later⁶
  • Company expects to have around 200M doses available by the end of 2020⁶
  • AstraZeneca’s vaccine candidate is cheaper than Pfizer’s & Moderna’s and can be stored and shipped at normal refrigerator temperatures, rather than Pfizer whose vaccine must be stored and shipped at around -70C⁶

 

[See Below for Disclosures & Annotations]

DISCLOSURES

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

The companies presented here are for illustrative purposes only and are not to be viewed as an investment recommendation.

 

ANNOTATIONS

1. Reuters. “T-cell study adds to debate over duration of COVID-19 immunity”. November 2, 2020
2. Reuters. “’Great day for humanity’: Pfizer says COVID-19 vaccine over 90% effective”. November 9, 2020
3. Business Insider. “’We’re not going back to the same economy’: The rise of technology poses risks to low-paid service workers amid the ongoing recovery, Fed Chair Powell says”. November 12, 2020
4. Moderna. “Moderna’s COVID-19 Vaccine Candidate Meets its Primary Efficacy Endpoint in the First Interim Analysis of the Phase 3 COVE Study”. November 15, 2020
5. The Wall Street Journal. “Fed’s Powell Says Rising Coronavirus Cases Pose Threat to Economy”. November 17, 2020
6. Reuters. “AstraZeneca says COVID-19 “vaccine for the world” can be 90% effective”. November 23, 2020
7. U.S. Department of the Treasury. “Letter from Secretary Steven T. Mnuchin on the Status of Facilities Authorized Under Section 13(3) of the Federal Reserve Act”. November 19, 2020
8. The Wall Street Journal. “Janet Yellen Is Biden’s Pick for Treasury Secretary”. November 23, 2020
9. US News. “France Orders Tech Giants to Pay Digital Tax”. November 25, 2020
10. The Wall Street Journal. “Biden Is Expected to Review Trump’s Trade Tariffs”. November 9, 2020
11. Reuters. “Trump to add China’s SMIC and CNOOC to defense blacklist – sources”. November 29, 2020
12. CNET. “Stimulus package: Congress is back Monday — can a deal get done before 2020 ends?”. November 29, 2020