This week, CIO Tom Weary, CFA®️, discusses the United Kingdom beginning to utilize Pfizer’s COVID-19 vaccine and what it means to the United States. He also goes over the latest pandemic numbers and shares updates on the economic recovery.

Transcript

Hi, I’m Tom Weary here at Reilly Financial Advisors with your Weekly Market Update.   As the year winds down the flow of economic data is slowing but we did hit a new milestone this week in the war against the pandemic.  On Monday, the United Kingdom began vaccinating their general population for the first time with the vaccine from Pfizer, so let’s start there before turning to take a look at the economy.

You will recall that authorities in the U.K. gave a very rapid approval for the emergency use of the new coronavirus vaccine from Pfizer which was shown to be 95% effective in clinical trials, giving them a jump in vaccinating their population amongst Western countries.  The Chinese and the Russians have been vaccinating their own populations with home-grown but not thoroughly vetted vaccines for a while now.  The FDA met this week to consider emergency use approval, so the U.S. should not be far behind.  While the beginning of vaccinations is cause for celebration, we should keep a couple of things in mind.  First, the initial amount of vaccine available is quite small and will be targeted first for the most vulnerable, including frontline healthcare workers, first responders, essential workers and the frail and elderly.  It may be many months, perhaps by late Spring, before enough vaccine is available for all of those who want to be vaccinated.  Second, enough people have to want to be vaccinated for us to reach herd immunity, and many Americans remain skeptical.  And third, as this chart indicates, it takes a month after the initial injection to achieve full immunity, so we are going to have continue being careful about wearing masks and physical distancing for some time to come.  While the vaccines do represent a hopeful light at the end of the pandemic tunnel, we are currently in a very dark part of the tunnel.  As this next chart shows, average daily cases in the U.S. have now surpassed 200,000, a once unthinkable number.  This is more that 5 times the level of the worst times last Spring during the initial surge.  Perhaps more worrisome, as this next chart shows, hospitalizations now exceed 100,000 with many areas of the country running short of ICU capacity necessitating further lockdowns as here in California.  And tragically, as this last chart shows, this is leading to a surge in the number of COVID related deaths.  Just on Wednesday alone we lost more Americans than we did on 9/11 making it the third most lethal day in American history after the Galveston hurricane of 1900 and the Battle of Antietam in 1862.  It’s going to be a tough holiday season for many, so count your blessings.

In the near term, the pandemic is driving the dynamics of the economic recovery.  As this first chart illustrates, the recent surge in COVID cases is creating a drag on the economic rebound.  It appears from many measures that the economy is in danger of rolling over just as it was getting going.  As an example, this next chart shows the number of restaurant reservations booked on the website OpenTable taking a nosedive after peaking in October probably due to a combination of colder weather limiting outdoor dining and renewed lockdowns preventing indoor dining.  Unfortunately, numerous restaurants and other small businesses may not survive this bleak winter to benefit from the effect of the vaccine next summer.  We are seeing mixed news on the labor market front.  Job Openings ticked up last month, coming in ahead of expectations at nearly 6.7 million.  This was driven by Manufacturing, as you can see in this chart, and by pandemic-related demand in Healthcare, as you can see in the next chart.  However, as you might expect, job openings in the Retail Trade fell as brick and mortar shops struggle to remain open.  And a big jump in Initial Jobless Claims on Thursday doesn’t bode well for the overall employment picture, putting pressure on Congress to agree quickly to extending special unemployment assistance programs.  Again, it’s going to be a tough holiday season for many Americans.

So, what does it all mean?  As Winston Churchill said in 1942, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”  And so it is with the first coronavirus vaccinations in the United Kingdom.  We have a long way to go but we are on the road out of this pandemic mess.  We will get through this, and in the meantime many of your companies have adapted and even thrived in these challenging times.  So, please relax, have a great weekend and join us again next week for the RFA Weekly Market Update.

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