Seeking Calm

Seeking calm.  Stocks achieved modest gains yesterday as shares rocketed up from deep early losses only to fade, once again later in the session. Investors continue to worry over the lack of a follow-on stimulus package while jobless data showed a greater than expected rise in first-time claims last week.

N O T E W O R T H Y

Lest we forget.  Wait, how did we get here?  Last thing I remember was a signed Phase I trade deal with China, rising corporate earnings, low interest rates, a record-low unemployment rate, low inflation, and stocks at all-time highs.  It was a mild winter in the Northeast and the warm Springtime sun was beckoning, just weeks away.  All we had to do was… stay on the path.  Sounds like a setup out of one of those cookie-cutter series on Netflix. You know, the setup that happens just before everything goes epically South as the season ends, leaving you on edge only to have to wait for the next season which will be released: TBD. COVID-19 abruptly ended the nirvana we all enjoyed as one of the longest economic expansions in modern history felt like it might never end.  But still, the reality is that the pandemic was singularly responsible for our current economic dilemma.  If you have been seeking answers from politicians, you are probably confused.  They are, after all, politicians and we are in a highly contentious election year.  If you have looked to the markets for answers, you are most likely equally confused.  Stock indexes appear to be business-as-usual, bouncing off oxygen-devoid lows in March to breath-taking new highs.  Formerly unknown companies have gone public and become large-cap companies overnight and more are lining up every day.  But the virus still persists, and the US just in this past week, overtook the grim 200,000 death milestone, something we could never have even imagined back in January. For long term investors, these past six months have been challenging.  Scary to watch nest-eggs diminish only to experience a moderate recovery, while wishing you bought that one stock that was up triple digits. Long term investors had to comfort themselves with the statistics that clearly indicate success with a long term strategy. Those that stayed the course and stuck to their core investment strategies can breathe a bit easier these days, though we are far from out of the woods. Though many are pursuing it, there is currently no legitimately approved vaccine for the virus.  The experts are anticipating that telling trial results will begin to appear sometime later this year into next, which is encouraging.  These are the front runners:  Moderna (MRNA) started its Phase 3 trial in July and hopes to have its safety certification as soon as next month or as late as December. Pfizer (PFE) and NioNTech also began their Phase 3 trial in July and have hopes to deliver positive results later next month. AstraZeneca (AZN) kicked off its Phase 3 trial in August and expects to have the necessary data for approval by the end of the year or beginning of 2021. Johnson & Johnson (JNJ) just recently kicked off a massive 60,000 participant trial of its single-dose vaccine and hopes to have initial results in early 2021. Finally, Novavax (NVAX) announced yesterday that it will publish testing protocols within days followed by the launch of its 30,000 participant trial, which could start as early as next month if its Phase 2 results are approved. That makes 5 companies in the final stages of trials with a potential results window of November 2020 through March 2021. That progress is certainly encouraging from a health perspective.  Patient investors have always been aware that credible therapies would be necessary to move on to the next chapter of true recovery.  We are getting close – stay patient, stay focused, and stay healthy.

THE MARKETS

Stocks posted modest gains yesterday experiencing broad intraday swings as investors remain concerned that Congress has yet to produce a further plan for economic stimulus.  The S&P500 climbed by +0.30%, the Dow Jones Industrial Average rose by +0.20%, the Russell 2000 Index advanced by a slim +0.02%, and the Nasdaq Composite Index added +0.37%. Bonds slipped marginally and 10-year treasury yields fell by -1 basis point to 0.66%.

NXT UP

– Durable Goods Orders (Aug) are expected to have grown by +1.4% compared to last month’s +11.4% growth.

– New York Fed President John Williams and Kansas City Fed President Esther George will speak today.

– Next week, we will get more housing numbers, Consumer Confidence, GDP, PCE Deflators, flash PMIs, and the monthly employment numbers for September.  Check back on Monday for calendars and details.

daily chartbook 2020-09-25