Vaccine, Stimulus: O2 Wealth Economic Update, Dec. 18, 2020

U.S. and World News

  • iStock-1266490076_370The 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.
  • Stimulus negotiations in Washington have made significant progress throughout the week, with both sides having a lot invested, it is anticipated that a deal will be done, however it seems that talks will run into the weekend as differences still remain. The size of the stimulus package, as it stands now, is just under $1 trillion and does not include the major sticking points of state and local aid and liability protections for businesses. It is being reported that the stimulus package will include $600 stimulus checks to individuals and unemployment benefits of $300 a week. The latest complication is a Republican Senator’s demand to terminate the Federal Reserve’s emergency lending program by the end of the year, when it was originally set to expire in the CARES Act.

Markets

  • Markets rallied this week. The S&P 500 rose 1.29% and closed at 3,710. The Dow Jones climbed 0.46% and closed at 30,179. Year-to-date, the S&P 500 is up 16.57% and the Dow Jones is up 7.91%.
  • Yields moved higher and the yield curve steepened this week. The 5 year and 10 year U.S. Treasury Notes are yielding 0.38% and 0.94, respectively.
  • The spot price of WTI Crude rose this week. Prices rose 5.24% and closed at $49.01 per barrel. Year to date, Oil prices are down -19.73%.
  • The spot price of Gold rose by 2.18% and closed at $1,880.61 per ounce. Year to date, Gold prices are up 23.94%.

Economic Data

  • Initial jobless claims rose to 885,000 and the 4-week moving average rose by 34,000 to 813,000.
  • Industrial production rose by 0.4% versus expectations for an increase of 0.3%
  • Import prices rose by 0.1% versus expectations for an increase of 0.3%
  • Import prices ex-petroleum was flat for the month versus expectations for an increase of 0.2%
  • Retail sales fell by -1.1% versus expectations for a decline of -0.3%
  • Retail sales core/control fell by -0.5% versus expectations for an increase of 0.2%
  • Business inventories rose by 0.7% versus expectations for an increase of 0.6%
  • The level of housing starts rose by 1.2% to a seasonally-adjusted-annualized-rate of 1.547 million units versus expectations for an increase of 0.3%
  • Building permits rose by 6.2% versus expectations for an increase of 1.0%

Fact of the Week

  • The total rounds of golf played by Americans is projected to increase by 50 million rounds in 2020, the largest year-over-year growth in 23 years. In 1997, spurred on by the appeal of a then 21-year old Tiger Woods, the number of rounds increased by 63 million rounds (source: National Golf Foundation).

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

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