Pre-market inventory: vaccine advances outweigh bad economic news

What’s happening: Drugmaker AstraZeneca announced on Monday that its investigational Covid-19 vaccine is highly effective in large-scale trials – the latest of several vaccine trials to show promising results this month.

US stocks rose early in the session, with the S&P 500 rising 0.5% for the last time. Last week, the S&P 500 and the Dow posted modest losses, while the Nasdaq Composite edged up.

But the markets will have to sort out two competing impulses in the coming months. Monday’s gains come despite a harrowing outlook for coronavirus cases and new data showing related restrictions weighing on the economy.

In Europe, which has put tough lockdowns in place in recent weeks, the IHS Markit Composite Purchasing Managers Index – a closely watched gauge of manufacturing and service sectors – has hit an all-time low in six months.

The declines, which in October only affected the service sector, are now also affecting industrial production.

“The eurozone economy plunged back into a serious decline in November amid renewed efforts to reverse the rising tide of Covid-19 infections,” said Chris Williamson, chief economist at IHS Markit. “The data adds to the likelihood that the euro area will see GDP contract again in the fourth quarter.”

While November’s contractions are not as severe as those seen this spring – in part because economic output had not fully recovered from the last plunge – they could still prove to be damaging.

It’s a warning to the United States, where policymakers are grappling with how to handle the spike in cases and record hospitalizations from the virus. At least 83,870 Covid-19 patients were hospitalized on Sunday – the 13th consecutive day the United States has broken its record, according to the Covid Tracking Project.

JPMorgan chief economist Bruce Kasman said these changes will inevitably affect global growth, slowing global recovery.

“With the forecast for the United States and Europe to contract and the pandemic to worsen, the rest of the world is likely to weaken,” Kasman told clients on Friday.

So why are risky assets like stocks increasing? Regarding Europe, Florian Hense of Berenberg Bank offers three explanations. The setbacks have been widely taken into account, he said, and while the near-term outlook in the region is not good, it has not worsened (the same cannot be said for the United States). ). Meanwhile, the medium-term outlook has only become more positive, reinforced by “calmer US foreign and trade policy. [and] vaccine progress. “

He also noted that, according to the IHS Markit survey, business expectations for the next 12 months have recovered most of the crisis seen in October and are at their second highest level since February.

Investors have been eyeing 2021 for some time. For now, the alarm about this winter does not change the focus.

Travel to United States increases despite Covid warnings

Despite a record number of new Covid-19 cases and a recommendation from the Centers for Disease Control not to travel on Thanksgiving, Sunday was the busiest day at U.S. airports since the pandemic began.

The Transportation Security Administration said it has screened more than a million people. Add Friday and Saturday, and over 3 million people took flights last weekend.

This is 57% less than the projected volume over the same period last year. But a TSA spokesperson said it was still the highest level of travel seen since March.

United airlines (UAL) said Thursday he had seen an increase in flight cancellations and a drop in bookings as cases of Covid-19 increased. Southwest and American Airlines have also reported a drop in bookings.
Despite this, US airlines are bracing for a busy period. American Airlines (AAL) said he would increase his schedule by about 15% during Thanksgiving week, with plans to operate more than 4,000 flights.

The airline industry does not encourage or discourage vacation travel, the industry trade group chief said Thursday.

“Do we want to see [people] to travel? Yes, but only if it’s safe for them, ”said Nick Calio, CEO of Airlines for America. “There are a variety of factors involved in this for every traveler. Prevention here.

The pandemic stimulates new trials of “utopian” ideas

Christine Jardine, a Scottish politician who represents Edinburgh in the UK parliament, was not a fan of the Universal Basic Income before the pandemic struck.

“It was seen by some as some sort of socialist idea,” said Jardine, a member of the centrist Liberal Democrats.

But soon after the government closed schools, shops, restaurants and pubs in March with little warning, she began to reconsider her position. And she’s not alone, I’m reporting from London. As the economic crisis triggered by the coronavirus continues, support in Europe increases for progressive policies once seen as pipe dreams of the political left.

In Germany, millions have applied to participate in a universal basic income study that will provide participants with € 1,200 ($ 1,423) per month, while in the UK more than 100 lawmakers – including Jardine – urge the government to launch similar trials. .

That’s not all: Austria, meanwhile, has launched a one-of-a-kind pilot program that will ensure paid jobs for residents struggling with persistent unemployment in Marienthal, a long-suffering former industrial town at around 40 miles southwest of Vienna.

Whether the spike in popularity and search will translate into a wave of action is an open question. But some, like Jardine, see reasons for optimism. A study by the University of Oxford in March found that 71% of Europeans are now in favor of introducing a universal basic income.

“For an idea that has often been dismissed as extremely unrealistic and utopian, this is a remarkable figure,” wrote researchers Timothy Garton Ash and Antonia Zimmermann.


The latest PMI reading for the United States, a key look at the health of the manufacturing and service sectors, is released at 9.45am ET.

Coming tomorrow: Nordstrom (JWN), Difference (GPS), American eagle (AEO), Dollar tree (DLTR), Best buy (BBY) and Abercrombie & Fitch (ANF) declare earnings.

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