U.S. and World News
The city of Hong Kong has announced a lockdown that will begin at midnight local time as a result of 61 new coronavirus cases. The lockdown will include about 150 residential buildings in the Yau Tsim Mong district and will be enforced by almost 2,000 “disciplined services officers”. The 7.5 million people living in these residential buildings will be restricted from leaving the area until the lockdown is lifted. There have been scattered reports that China has been enforcing localized lockdowns in several areas with outbreaks, as it tries to protect the city of Beijing. China has pointed to the imports of frozen foods as the reason the that the virus was brought into the country.- Following Inauguration Day, President Joe Biden is moving forward with a series of executive orders. Joe Biden signed an executive order on Thursday instructing U.S government agencies to use the Defense Production Act to increase supplies of COVID tests, N95 masks, and vaccine syringes, citing the lack of critical supplies to fight the pandemic. The Biden administration is planning for an order that would require people to wear masks in airports and on planes which is similar to the order that was signed on Wednesday requiring people to wear masks on all federal properties. President Biden is also pushing for schools to open in the first 100 days of his presidency.
Markets
- Markets rebounded sharply this week. The S&P 500 jumped 1.96% and closed at 3,841. The Dow Jones rose 0.63% and closed at 30,814. Year-to-date, the S&P 500 is up 2.35% and the Dow Jones is up 1.37%.
- Yields are little changed from last week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.43% and 1.08%, respectively.
- The spot price of WTI Crude fell this week. Prices were down -0.53% and closed at $52.14 per barrel. Year to date, Oil prices are up 7.22%.
- The spot price of Gold rose by 1.39% and closed at $1,853.82 per ounce. Year to date, Gold prices are down -2.35%.
Economic Data - Initial jobless claims fell to 900,000 and the four-week moving average rose by 23,000 to 848,000
- The level of housing starts rose by 5.8% to seasonally-adjusted-annualized-rate of 1.70 million units versus expectations for a reading of 1.56 million
- Building permits rose by 4.5% versus expectations for a decline of -1.7%
- Existing home sales rose by 0.7% to a seasonally-adjusted-annualized-rate of 6.76 million units versus expectations for a decline of -1.9%
Fact of the Week
- Through 9/30/20, 65% of the mortgages that were originated in the United States YTD were refis of existing mortgages (source: Inside Mortgage Finance).
Rich Gartelmann CFP® – (630) 844-5730 rgartelmann@oldsecond.com
Steve Meves CFA® – (630) 801-2217 smeves@oldsecond.com
Brad Johnson CFA®, CFP® – (630) 906-5545 bjohnson@oldsecond.com
Jacqueline Runnberg CFP® – (630) 966-2462 jrunnberg@oldsecond.com
Ed Gorenz – (630) 906-5467 ejgorenz@oldsecond.com
Mike Demski – (630) 966-2430 mdemski@oldsecond.com
Mike Cava CFA®, CFP® – (630) 281-4522 mcava@oldsecond.com
Visit Old Second Wealth Management
Non-deposit investment products are not insured by the FDIC nor any govt agency; not a deposit of, or guaranteed by, the bank; may lose value.
On Thursday evening, President-elect Joe Biden revealed his proposal for a $1.9 trillion fiscal relief package. The proposed spending includes $1,400 stimulus payments to all Americans, an extension of expanded unemployment benefits through September of 2021 that would include an additional $400 a week, $370 billion of aid to state and local governments, and $190 billion for public health funding. Additionally, an increase of the federal minimum wage to $15/hour has been included in the bill which has been strictly opposed by Senate Republicans. Due to the overwhelming size of the relief bill and the inclusion of a minimum wage hike, it is expected that the fiscal relief bill will face opposition in the Senate, where 10 Republican votes will be required.
The year 2020 ended with the United States remaining far behind its goal of 20 million vaccinations, sitting at just 6.25 million vaccinated. There has been criticism of the Trump administrations strategy of withholding 50% of the available supply, so that they can then distribute the second wave of doses for the second round of vaccinations that is needed for immunity. Further, the FDA has backed this up by stating that there is no evidence that immunity can develop with just a single dose, and that both are needed. President Elect Joe Biden stated his intention to accelerate the distribution of the vaccine, releasing every available dose when he takes office. While this strategy will certainly speed up the process of distribution, it will not solve the issue that hospitals currently have with government regulations recently put in place. New York Governor Andrew Cuomo and New York City May Bill de Blasio have had their trouble as they argue the effectiveness of Cuomo’s penalties for New York hospitals missing vaccination targets.
$600 stimulus checks from the new COVID Relief bill are currently being distributed to bank accounts, according to Treasury Secretary Mnuchin. Tuesday evening, the Treasury Secretary tweeted that payments to those who have direct deposit would state going out, and some might have received them as early as Tuesday night. Payments will continue to roll out through next week, and payments to those who do not have direct deposit began shipment on Wednesday.
The Federal Drug Administration advisory panel has confirmed on Thursday that the benefits of approving Moderna’s COVID-19 vaccine outweigh the risks, putting the ball in the FDA’s court for approval, which could come as soon as tomorrow. According to Bloomberg, as of this morning, over 1.1 million people across four countries have been vaccinated. In the United States, the vaccine has been given to health care workers, as public workers on the front lines are first in line. Pfizer has publically expressed its happiness throughout the week with the success of the vaccine rollout, though there have been some scattered reports of supply chain issues. Given the approval from the FDA, Moderna’s vaccine distribution is expected to run smoother, as the vaccine does not require special storage equipment to keep it at extreme cold temperatures.
Brexit negotiations have made no progress while the December 31st deadline is only weeks away, increasing expectations that the United Kingdom will leave the European Union without a deal potentially resulting in major supply chain disruptions throughout Europe. The “no deal” scenario would include the U.K. leaving the European Union without a comprehensive trade deal covering the $1 trillion in annual bilateral trade. Among the issues of disagreement involve the U.K. seeking independence regarding climate, specifically fishing rights, as well as labor standards. The European Union, however, does not want to give up a certain level of judicial oversight of the U.K. Prime Minister Boris Johnson and President of the European Commission Ursula Von Der Leyen both warned that the probability of a “no deal” is high and have pointed to Sunday as a deadline for negotiators.
The biggest shopping weekend of the year is here, with bargain hunters across the U.S. planning to spend the next few days searching for discounts in stores and online despite the coronavirus pandemic. With rising wages and increasing consumer confidence, U.S. holiday sales are expected to grow between 3.6% and 5.2%, compared with the 4% growth last year, while online sales are seen rising 20% to 30%, according to the National Retail Federation.
The United States reported a record 180,000 new cases of coronavirus yesterday, prompting the CDC to urge Americans to stay home for the Thanksgiving holiday. Also, the level of hospitalizations has doubled in the past two weeks, causing the level of deaths to increase as well. Several individual states throughout the week have put in place additional restrictions that include curfews for non-essential businesses, a ban on gatherings with people outside of your household, and capacity limits for retailers. Additional positive vaccine data rolled in this week from Moderna and Astrazeneca as Pfizer submits its application to the FDA for their emergency-use designation. Dr. Anthony Fauci has expressed concern about skepticism as it relates to vaccines, he told reporters this week that “if we have an effective vaccine and 50% of the population refuses to take it, you still have a considerable public-health challenge”. Pfizer CEO Albert Bourla stated that the first doses of the vaccine could be distributed within hours of approval.
Pharmaceutical giant Pfizer Inc. and its German biotech partner BioNTech released data Monday morning showing that its vaccine is 90% effective. The effectiveness rate of the Pfizer vaccine is far higher than the 44% effectiveness rate of the flu vaccine and is comparable to the rates seen for Mumps and Chickenpox. Pfizer CEO Albert Bourla told reporters that the trial will be finished by the end of November and is expected to gain emergency-use approval by the end of this year. Dr. Scott Gottlieb stated that the timeline for mass vaccination is late February/early March and that it may not be broadly available until the end of the second quarter/beginning of the third quarter of next year. The distribution of the vaccine is expected to be complex and expensive, as it has a short shelf life and must be stored at -94 degrees Fahrenheit. Dr. Anthony Fauci told reporters that biotech company Moderna’s vaccine might exhibit similar results to Pfizer’s.
The roller coaster ride that is the 2020 presidential election continues today, as absentee ballots in battleground states Nevada, Pennsylvania, Georgia, North Carolina, Alaska, and Arizona are still being counted. Contrary to what the polls suggested, the results on Tuesday night indicated that President Trump was likely to win the election, however as absentee ballots were counted throughout the week, Joe Biden took the lead in several key states. As it stands today, there is a large indication that Joe Biden will win the election, and he is expected to address the nation tonight. This is not without threatened litigation by President Trump, who claims that the election is being stolen due to orchestrated Democrat voter fraud in key battleground states. Also contrary to polling, Republicans have picked up six House of Representatives seats and have lost one Senate seat, pending further results. More clarity on results is expected going into the weekend, but anticipated litigation by the President could lead to some more uncertainty in the longer run.