• Silver linings playbook

    Vaccine Monday  This week started with Moderna’s announcement of its vaccine that’s over 94% effective. It was followed later in the week with Pfizer’s announcement to request emergency authorization from the FDA for its vaccine. On the other hand, the seven-day average of daily new COVID-19 cases is 24% higher than last week and states are implementing new rounds of restrictions. Last time this happened, the economy pretty much came to a halt. Speaking of which, new jobless claims increased last week and came in higher than expectations as new restrictions and shutdowns seem to be seeping into the labor market. Investors tried to grapple with the positive and negative news throughout the week,…

  • The end is in sight

    Have you seen, there’s a vaccine  Pfizer announced early Monday morning their COVID-19 vaccine was over 90% effective. We knew there were vaccine announcements coming, but efficacy this high (vs the flu vaccine which is closer to 40%-60% effective) is the silver bullet investors were waiting for – there’s officially an end in sight. Stocks that had been beneficiaries of the pandemic (Zoom, Peloton) fell in a big way while stocks that had gotten slammed by the pandemic (hotels, financials, energy) saw large recoveries. There was a double-digit difference in performance of the pandemic “haves” and “have nots” – a type of spread that normally happens over the course of a year…

  • History in the making

    A committed relationship  The Fed announced this week, as broadly expected, that it was keeping interest rates unchanged close to 0%. The Fed’s statement published shortly after the meeting earlier this week acknowledged that economic activity and employment have continued to recover though remain well below the levels at the beginning of the year. This language from the Fed was slightly less optimistic compared to last month’s statement that acknowledged economic activity had picked up in recent months. Moral of the story: Cutting interest rates is a mechanism used by the Fed to stimulate economic activity. Since rates are already at 0%, it leaves little room to impact policy through this tool.…

  • The worst week since March

    Earnings and things  This week, the market tried to digest rising COVID-19 cases and worries of large-scale shutdowns (like we’re seeing across Europe), additional stimulus talks falling apart, and of course preparations for election day while going through one of the busiest weeks for earnings. Apple reported a 20% decline in iPhone sales while Twitter and Facebook reported lower active users (honestly not surprising, the political content is getting overwhelming). Unsurprisingly, these stocks all slid after reporting results. It almost seemed habitual because even though Amazon knocked it out of the park, the stock still fell over 5% on its report. Google’s parent company, Alphabet, was the only name that managed to escape…

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