The Market's Dilemma

The State of the Market

Another Monday. Another positive vaccine headline... This is a trend that investors could get used to!

For the third straight week, investors woke up Monday morning to encouraging news. This week, it's the Brits (the Oxford-AstraZeneca partnership) coming through with a highly effective vaccine. Although these results were a little different due to the fact that one approach used (taking a half dose first and a full dose a month later) was more effective than the other (two full doses a month apart), it is still a third vaccine that looks to be able to protect people from this virus. Good news, indeed.

The bad news is this appears to be a "hurry up and wait" situation for both the global economies and anyone anxious to get their lives back to "normal".

Unfortunately, everyone is going to have get through what is expected to be a grim winter with cases, hospitalizations, and deaths currently rising at a parabolic rate. And with more than a million folks hopping on airplanes on Friday alone (which was the largest single-day passenger total since the pandemic began), there are very serious concerns that this week's Thanksgiving holiday becoming a mega-spreader event. As such, some argue the worst of the pandemic may still be ahead of us.

With the knowledge that help is on the way in a matter of months, the other problem is that a fair amount of economic activity will likely be put on hold for a while. After all, lockdowns are happening again and are likely to continue to increase. I got a blaring alert on my iPhone yesterday morning, informing me that my region "is at severe risk from deadly COVID." So, like most folks, my wife and I have decided that since waiting a few months to travel anywhere will make life much safer - why not just hunker down and wait for the vaccine?

This thinking has caused some to reset their outlooks for the economy. Both JPMorgan (JPM) and Moody's Analytics are already out with calls for GDP to shrink in the first and second quarters of next year. And this means a "double-dip" recession is clearly on the table.

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The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should ...

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