Worn Off Immunity

Worn off immunity.  Stocks fell yesterday as news that New York City’s schools will close reminded traders that we are still in the midst of a pandemic.  Good news from Pfizer gave stocks an early boost but gains slipped in losses in the wake of the school closure tweet from NYC Mayor de Blasio.




Home, home in the range. Yesterday’s session featured a battle between what will be and what is.  The day kicked off with news that Pfizer and BioNTech completed their Phase 3 vaccine trials resulting in a reported 95% efficacy rate, slightly higher than what they reported last week. Since Pfizer’s initial announcement, Moderna announced that its vaccine had a 95% efficacy rate.  The two companies are expected to be able to produce 2 billion doses of the vaccine starting as early as next month and throughout 2021. That is a lot, but we have to factor in the reality that it will take 13 months to produce and administer the vaccine.  Moreover, according to a recent survey,  only an estimated 58% of respondents said they would take a vaccine. Though that may alarm you, epidemiology experts say that even at 58%, we can achieve herd immunity and drastically curb the spread of the virus.  Also announced yesterday morning was the FDA approval of a home COVID testing device from Lucira Health.  The device reportedly allows users to get accurate results within 30 minutes.  More vaccines and more testing is unarguably good news for the health of the public… and the economy… and the markets. Speaking of the markets, stocks had already factored in good vaccine news over the past few weeks as evidenced by the most recent rally led by value and small cap stocks, something I have written quite a bit about in the past few weeks.  Yesterday’s news was good and affirming, but not good enough to counter the negative reality of the recent surge in positivity, hospitalizations, and deaths.  If you listen to local New York news you would be well aware of the magical 3% average positivity threshold being closely watched by the Mayor.  If the 7-day average positivity rate hits 3%, NYC’s public schools go remote. The number has been inching up as cases spike in the city, just as they have around the country.  Last Friday, the Mayor warned that the threshold might be met as early as this past Monday, though it did not… until yesterday.  So, for local New Yorkers, yesterday’s announcement was like a blinding glimpse of the obvious.  For the rest of the world, the announcement was a stark reminder that we are still very much in the midst of a pandemic and damaging potential lockdowns cannot be ignored. The  New York City school system is the largest in the country and the closure will impact over 1 million children… and their parents.  Though far from an April-style lockdown, the temporary shuttering of the public schools puts pressure on parents, possibly preventing them from working or re-entering the workforce.  Once the closure was announced, stocks gave up early gains and sold off into the close.  The selloff hit value stocks slightly harder than growth stocks, indicating a reversal of the re-opening trade of the past few weeks.  Lockdown favorites Zoom Video and Peloton rose by +3.34% and +1.95% with the certainty and precision of a Radio City Rockette.  So, the bottom line is that stocks appear to be in a range as the battle between today’s virus reality and tomorrow’s vaccinated future rages on.  Breaking out of that range would require additional catalysts which might come from a stimulus package, more companies announcing positive trials, or perhaps a wildly successful holiday shopping season (online).




Stocks slipped yesterday, ignoring positive vaccine news.  The selling was spurred by an announcement that New York City public schools would be temporarily shuttered in response to a recent rise in COVID positivity rates.  The S&P500 dropped by -1.16%, the Dow Jones Industrial Average sold off by -1.16%, the Russell 2000 Index traded off by -1.26%, and the Nasdaq Composite Index gave up -0.82%. Bonds climbed and 10-year treasury yields climbed by +2 basis points to 0.87%.  Crude oil held up over $40, closing up by +0.94% and Bitcoin topped 18,000 intraday for the first time in almost 2 years.




– Initial Jobless Claims (Nov 14) is expected to be 700k, down from last week’s 709k.

– Continuing Jobless Claims (Nov 7) is projected to be 6.4 million compared to last week’s 6.786 million claims.

– The Conference Board’s Leading Index (Oct) may have advanced by +0.70%, same as September.

– Existing Home Sales (Oct) are expected to have fallen by -1.1% after jumping by +9.4% in the prior month.

– Fed speakers include Mester and Rosengren.

– This morning, BJ’s Wholesale Club and Macy’s beat estimates After the close we will hear from Intuit, Williams-Sonoma, McAfee, Workday, and Ross Stores.



daily chartbook 2020-11-19


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