Is the Vaccine a Game-Changer for Gold?

In November, Pfizer and BioNTech announced that their mRNA-based vaccine candidate, BNT162b2, had demonstrated evidence of an efficacy rate above 90% against COVID-19, in the first interim efficacy analysis. As Dr. Albert Bourla, Pfizer Chairman and CEO, said:

Today is a great day for science and humanity. The first set of results from our Phase 3 COVID-19 vaccine trial provides the initial evidence of our vaccine’s ability to prevent COVID-19.

Indeed, the announcement is great news! After all, the vaccine is the ultimate weapon against the virus. There’s no doubt that we will get the vaccine one day. Thank God for scientists – they are really clever people who work hard to develop a safe vaccine! Why can’t we have more of them instead of so many economists? As well, the pandemic triggered unprecedented global cooperation to develop a vaccine as quickly as possible. The funds are enormous, while the bureaucrats eventually decided to behave like decent human beings for once and eased their stance in order to speed up the whole process. Great!

But… there is always a “but”. You see, there are some problems related to Pfizer’s vaccine . First, all we know comes from the press release, but the company didn’t provide any data for a review. Second, the efficacy rate announced by the company pertains only to the seven days after the second dose is taken – we still don’t know how effective the vaccine is in the longer term, and how long immunity lasts. Third, we still don’t know the efficacy of the vaccine among the elderly and people with underlying conditions – or, the most affected people by COVID-19. Fourth, the vaccine is based on mRNA technology, and such a vaccine was never approved for human use. There is always a first time, but new technologies always give birth to some concerns, which could ultimately reduce the public’s preference to get vaccinated.

Another problem is that this vaccine requires two doses that are taken 21 days apart. It delays the moment of immunization and again reduces the motivation to take the vaccine – yes, some people are so lazy, and/or they don’t like injections so much (for whatever reason; we’re not debating whether it’s justified or not) that they can refuse to be vaccinated.

Moreover, Pfizer’s vaccine must be stored at a temperature of about -70°C (-94°F), which is quite low indeed, and can be quite chilly in shorts (unless you are Wim Hof ). The problem is transportation and distribution – you see, many hospitals – to say nothing of rural physicians and pharmacies, and healthcare systems in developing countries – do not have adequate freezers to store the vaccine. Last but not least, even if scientists develop the best possible vaccine, it remains useless unless people accept to take it – and this is far from being certain, given the pandemic denial movement and fear of vaccines.

Sure, one could say that all these points are not very problematic. After all, Pfizer is not the only company working on the vaccine. There are actually more than 150 coronavirus vaccines in development across the world. For example, Moderna’s vaccine can be stored at a much higher temperature – a more comfortable -20°C (-4°F), So even if Pfizer’s vaccine turns out to not be the best, other, even better vaccines will arrive on the market – and a lack of any vaccine can transform into a crisis of abundance.

That’s true, but the sad truth is that it’s unlikely that any vaccine will be widely available until mid-2021 . Pfizer, for example, announced that it hoped to produce 50 million doses by the end of 2020. As the vaccine needs two doses, only 25 million people could be vaccinated this year. So don’t count on being among this group – countries will prioritize healthcare workers, social workers and uniformed services first, and the elderly next. It means that we will not return to a state of normalcy very soon, and most of us will still need to wear masks, practice social distancing and… wash hands!

In the meantime, the U.S. is about to enter Covid hell , as Michael Osterholm, one of Biden’s advisers on the epidemic , said . Indeed, the country is nearing 11 million reported COVID-19 cases, and the coronavirus has already killed more than 240,000 Americans. But the worst can still lie ahead for the U.S. As one can see in the chart below, the epidemiological curve is clearly exponential and the daily number of new cases has touched 200,000! Yup, you read it correctly, about two hundred thousand people are infected each day. You don’t have to be a mathematician to figure out that at such a rate of infections, the healthcare system will collapse soon.

What does it all imply for the gold market?

Well, although the arriving vaccines are great for humanity, they are bad for the price of the yellow metal. The pandemic greatly supported gold prices. So, the expected end of the epidemic in the U.S. should be negative for the shiny metal.

However, there are two important caveats to this statement. First, there is still a long way to go before widespread vaccination and a true end to the pandemic. In the interim, we still need to face the COVID-19 challenge, so gold shouldn’t suddenly fall out of favor.

Second, gold reacted not only to the pandemic itself, but also – or even more – to the world response of governments and central banks to the health and economic crisis . The easy monetary policy and accommodative fiscal policy will not disappear only because of the vaccine’s arrival. Actually, the harsh winter or “Covid hell” that awaits America will force the Fed and Treasury to continue or even to expand their stimuli, which is good news for gold prices from the fundamental perspective .

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Arkadiusz Sieron, PhD
Sunshine Profits: Analysis. Care. Profits.

 

Gold Futures Score Fractional Gains Even With Vaccine Expectations

Gold futures scored fractional gains in active trading today, with the February 2021 Comex contract trading to a low of $1831.50 before recovering. As of 3:40 PM EST gold futures are currently fixed at $1839.40 after factoring in a net gain of $1.10 (+0.06%).

Today the U.S. Food & Drug Administration released a statement written by Commissioner Stephen M. Hahn, M.D. which said that the FDA held an advisory committee meeting to discuss the authorization of a Covid-19 vaccine candidate as part of the agency’s review of safety and effectiveness data.

“For nearly 11 months, we have all been learning to live and function in a state of uncertainty, adjusting to a “new normal” as the COVID-19 pandemic has drastically affected the way most of us live, and has also tragically claimed the lives of hundreds of thousands of Americans.”

He went on to address the urgent need for medical countermeasures to diagnose, treat and prevent the coronavirus. To that end the focus of this meeting was “an important step in the process” to grant emergency use authorization for a vaccine for COVID-19 prevention, submitted by Pfizer Inc. in partnership with BioNTech Manufacturing GmbH.

A statement by Pfizer’s Chief Executive Albert Bourla said, “Filing in the U.S. represents a critical milestone in our journey to deliver a Covid-19 vaccine to the world and we now have a more complete picture of both the efficacy and safety profile of our vaccine, giving us confidence in its potential”.

Now it is up to the FDA panel which will vote as to whether or not they recommend the approval of Pfizer and BioNTech’s vaccine for emergency use on Thursday. This means that emergency use of the vaccine could begin as early as Friday.

While it is truly a medical miracle that vaccines with incredibly high efficacy rates have been developed in such a short period of time, the financial damage and economic fallout that will follow cannot be ignored. Besides the extremely accommodative monetary policy by the Federal Reserve, the U.S. Treasury has already spent approximately $3 trillion funding the first fiscal stimulus bill (cares act) passed and implemented earlier this year.

While the Congress, Senate and current administration have been unable to agree upon a new coronavirus relief package, the need for additional fiscal stimulus grows day by day. Approximately 12 million unemployed Americans who have been relying on the extended benefits will end later this month, and the 40 million Americans who have been aided by the eviction moratorium will also expire this month on December 31st.

Which is why many analysts including myself believe that it is not if more fiscal stimulus will be forthcoming, but rather when and how much. Additional fiscal stimulus will add to the economic fallout that will follow after the pandemic has ended. As such the budget deficit for fiscal 2021 could be much greater than the record budget deficit set this year. These necessary actions and expenditures by the government will most certainly devalue the dollar and conversely be highly bullish for gold prices next year.

For those who would like more information on our service simply use this link.

For a look at all of today’s economic events, check out our economic calendar.

Wishing you as always, good trading and good health,

Gary S. Wagner

 

Gold Plummets as Stimulus Negotiations Stall and Vaccine Headway

Today the Wall Street Journal reported that the United States is about to begin, “one of the most daunting public-health efforts in generations: swiftly distributing a Covid-19 vaccine across all 50 states, each of which will determine who gets priority.”

The WSJ also reported that the FDA announced that the first Covid-19 vaccine being considered for use in the United States has, “met the prescribed success criteria in a clinical study, paving the way for the agency to green-light distribution as early as this weekend.” This report also stated that “Pfizer is seeking what is known as an authorization for emergency use, a kind of interim clearance the FDA grants during pandemics to speed up the use of urgently needed medicines.”

The Covid-19 vaccine developed jointly by Pfizer pharmaceutical and BioNTech is awaiting a decision by the Food and Drug Administration to begin vaccinations and grant this vaccine emergency authorization. Data suggests that this vaccine has a 95% efficacy rate and was well tolerated in a trial composed of 44,000 individuals.

A statement by Pfizer’s Chief Executive Albert Bourla said, “Filing in the U.S. represents a critical milestone in our journey to deliver a Covid-19 vaccine to the world and we now have a more complete picture of both the efficacy and safety profile of our vaccine, giving us confidence in its potential,”.

Concurrently the bipartisan fiscal stimulus proposal has been met with opposition, however, according to Reuters, “U.S. Senate Majority Leader Mitch McConnell said on Wednesday that lawmakers were still looking for a path toward agreement on COVID-19 aid, as the U.S. House of Representatives prepared to vote on a one-week funding bill to provide more time for a deal.”

Reuters also reported that both Speaker of the House Nancy Pelosi and Senate minority leader Chuck Schumer rejected McConnell’s offer and warned that the Republican Trump administration’s $916 billion proposals “must not be allowed to obstruct” the bipartisan talks.

The lack of any real progress which would lead to a fiscal stimulus package acceptable by the House, Senate, and current administration has certainly diminished the bullish market sentiment for gold, which led to today’s strong price decline along with vaccine approval being one step closer. Most analysts including myself are still working under the assumption that it is not if a fiscal stimulus package can be approved. Rather it is how much capital will be allocated and when and aid package can be passed.

For those who would like more information on our service simply use this link.

Wishing you as always, good trading and good health,

Gary S. Wagner

Pfizer Begins UK Rollout; Markets Reverse Midday, Hit Record Highs

After opening the day in the red, markets reversed midday and hit fresh record highs as the UK began its vaccine rollout with doses of Pfizer and BioNTech’s offering.

News Recap

  • The Dow Jones gained 104.09 points, or 0.4%, to close at 30,173.88 and hit an intraday record of 30,246.22. The S&P 500 rose 0.3% to 3,702.25 and closed over 3,700 for the first time ever. The Nasdaq also closed at a record and climbed 0.5% to 12,582.77. The Russell once again outperformed all the indices and closed 1.40% higher.
  • Pfizer began to roll out its COVID-19 vaccine in the U.K. and boosted optimism of an economic reopening in 2021. The U.K. ordered enough vaccines for 20 million of its residents to start getting.
  • The U.S. FDA said Pfizer’s vaccine provides some protection after the first dose, also adding that it found no safety concerns. It could be approved by the weekend.
  • Pfizer (PFE) shares rose 3.3% on this news and reached their highest level in about two years. BioNTech (BNTX), which partnered with Pfizer on the vaccine, also rose 1.8%.
  • Investors sharply monitored stimulus negotiations on Tuesday as well. At this point, legal immunity for businesses and aid for state and local governments are holding up the deal. However, Democrats and Republicans apparently have found consensus in some areas such as PPP loans.
  • Republican and Democrat leaders said Monday that Congress is trying to extend government funding for an additional week to try and strike a deal on the new stimulus before the end of the year.
  • More than 14.8 million coronavirus cases have been confirmed in the U.S., according to data from Johns Hopkins University. The U.S.’s seven-day-average daily infection rate is also at an all-time high.
  • Several states and cities have reimposed stricter measures as a result of the spike in cases. New York Gov. Andrew Cuomo said Monday that New York City could lose indoor dining next week among other more severe restrictions if hospitals become overwhelmed.
  • Dow Inc. (DOW), Johnson & Johnson (JNJ) and 3M (MMM) were among the Dow leaders, rising more than 1% each. Energy led the S&P 500 higher, popping more than 1.5%.

In the short-term, there will be optimistic days where investors rotate into cyclicals and value stocks, and pessimistic days where there will be a broad sell-off or rotation into “stay-at-home” names. During other days like Tuesday’s session, there will be a broad rally due to optimistic catalysts.

In the mid-term and long-term, there is certainly a light at the end of the tunnel. Once this pandemic is finally brought under control and vaccines are mass deployed, volatility will likely stabilize, while optimism and relief will permeate the markets. In fact, CNBC personality Jim Cramer said that beating COVID-19 would feel like “the end of prohibition.” Stocks especially dependent on a rapid recovery and reopening such as small-caps should thrive.

Markets will continue to wrestle with the negative reality on the ground and optimism for a future economic reopening. More positive vaccine news seemingly trickles in by the day despite discouraging COVID-19 news, economic news, and political news. While short-term downside pressure could certainly persist based on days where bad news outweighs good news, due to this “tug of war” between sentiments, any subsequent move downwards would likely be modest in comparison to the gains since the bottom in March and since the U.S. election at the start of November. It is truly hard to say with conviction that another crash or bear market will come. If anything, the mixed sentiment could keep markets trading relatively sideways.

Therefore, to sum it up:

While there is long-term optimism, there is short-term pessimism. A short-term correction is very possible. But it is hard to say with conviction that a big correction will happen.

The analysis of this morning will showcase a “Drivers and Divers” section that will break down some sectors that are in and out of favor. Dear readers, do me a favor and let me know what you think of this segment! It’s always a pleasure to hear from you.

Driving

Materials (XLB)

The materials sector, as represented by the XLB ETF , has been one of the largest beneficiaries of the vaccine rally. Investors have been so bullish on materials and any resulting vaccine prospect, that the XLB ETF briefly touched its 2020 high in November. However, since then, it has traded relatively sideways. Some things in this chart are concerning for me.

Cyclical sectors such as materials are set to be the biggest winners from an economic reopening in 2021. However, ever since peaking at $72.41 a share, the ETF’s volume has plummeted and has stayed very low. There are simply not enough strong fundamentals to justify calling this a BUY. I question the formidability of a short-term rally in materials. If anything, the sector could pull back somewhat, or stay in a sideways pattern. For the materials ETF to come back, exceed its 52-week high, and pierce that $72 resistance level, a COVID-19 vaccine must be proven to be safe and especially scalable. The 2021 economic outlook must also be positive. If this happens and a near-term economic slowdown can be somewhat averted, then materials could benefit.

But for the time being, there is too much uncertainty to make a conviction call. Therefore, this is a HOLD for the short-term. However, I am considerably more bullish on materials in the long-term.

Diving

US Dollar ($USD)

The world’s reserve currency, the US dollar, is still hovering around its two-year low, and has plunged in excess of 12% since March. Since the election alone, the dollar index has also declined approximately 4%. I have been calling this dollar weakness for weeks despite the low level and expect the decline to continue.

Further illustrating the dollar’s decline has been its performance relative to emerging markets. Just compare the performance of the iShares MSCI Emerging Market ETF (EEM) relative to the Invesco DB USD IDX Bullish ETF (UUP) since January.

Many believe that the dollar could fall further as well due to a multitude of headwinds.

If the world returns to relative normalcy within the next year, investors may be more “risk-on” and less “risk-off.” Which means that the dollar’s value will decline further.

Additionally, because of all of the economic stimulus combined with record low-interest rates, the dollar’s value has declined and could have more room to fall. Do not forget that the Fed plans on holding interest rates this low for at least another two years. For the dollar’s value, rates remaining this low for two years is an eternity.

As the world’s reserve currency, this plunge in value is concerning both in the short-term and mid-term for the US economy. A declining dollar means the strengthening of other foreign currencies- and this has already been happening. Since Nov. 2, the New Zealand dollar has surged 7%, the Australian dollar has climbed 5.5%, the Korean won has advanced 4%, and the Chinese yuan has risen 2.5% – and this may not be the end either.

The plunge of the dollar has been so severe that it is currently trading below both its 50-day and 200-day moving averages. Furthermore, its 200-day moving average is considerably higher than its 50-day, further illustrating the sharp decline.

While the dollar may have more room to fall, according to its RSI, it is comfortably in oversold territory. This MAY be a good opportunity to buy the world’s reserve currency at a discount. But I just have too many doubts on the effect of interest rates this low, government stimulus, strengthening of emerging markets, and inflation to be remotely bullish on the dollar’s prospects over the next 1-3 years.

For now, where possible, HEDGE OR SELL USD exposure.

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Matthew Levy, CFA
Stock Trading Strategist
Sunshine Profits: Effective Investment through Diligence & Care

* * * * *

All essays, research, and information found above represent analyses and opinions of Matthew Levy, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Matthew Levy, CFA, and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Levy is not a Registered Securities Advisor. By reading Matthew Levy, CFA’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading, and speculation in any financial markets may involve high risk of loss. Matthew Levy, CFA, Sunshine Profits’ employees, and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Stocks Retreat As Traders Are Not Impressed With The Restart Of Stimulus Talks

Stimulus Negotiations Are Back Into Spotlight

U.S. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi talked about the potential stimulus package for the first time after the presidential election.

At first glance, Republicans and Democrats remain far apart. Senate leader Mitch McConnell wants to include a targeted relief bill into the $1.4 trillion funding bill for the government, but Democrats will likely oppose this proposal.

Meanwhile, a group of lawmakers unveiled a new coronavirus aid package plan worth $908 billion, which is aimed at bridging the gap between Republicans and Democrats.

It remains to be seen whether both sides are ready to reach a compromise deal. The market is not impressed, and S&P 500 futures are losing ground in premarket trading.

ADP Employment Data Disappoints

The U.S. has just released ADP Employment Change report which indicated that private businesses hired 307,000 workers in November. Analysts expected that the ADP Employment Change report will show that about 400,000 jobs were added.

The report shows that the second wave of coronavirus has started to put material pressure on the job market. Traders will soon have a chance to take a look at additional employment data. On Thursday, Initial Jobless Claims and Continuing Jobless Claims reports will be released. Analysts expect Initial Jobless Claims of 775,000 and Continuing Jobless Claims of 5.9 million.

On Friday, market’s focus will shift to Non Farm Payrolls and Unemployment Rate reports. The Non Farm Payrolls report is projected to show that the economy added 481,000 jobs in November while Unemployment Rate is expected to decline to 6.9% to 6.8%.

If these reports confirm that the recovery of the job market is slowing down, stocks may find themselves under pressure.

UK Approves Pfizer’s COVID-19 Vaccine

UK has just approved the coronavirus vaccine developed by Pfizer and BioNTech. Vaccinations are expected to begin early next week.

Not surprisingly, Pfizer and BioNTech shares are gaining ground in premarket trading.

The reaction of the broader market is muted. Perhaps, traders wait for the approval of Pfizer/BioNTech and Moderna‘s vaccines in the U.S.

For a look at all of today’s economic events, check out our economic calendar.

COVID-19 Vaccine Update – Moderna Inc. Requests Approval from the FDA and the EMA

Moderna Inc.

Moderna Inc. has submitted its request to the FDA for a EUA approval. With the FDA reviewing the Pfizer Inc. vaccine on 10th December, the Moderna Inc. review will take place on 17th December.

With the race to deliver a COVID-19 vaccine to the U.S and beyond continuing, it has become a two-horse race.

Both pharmas have gone down the same road on the virology front, delivering an mRNA vaccine. Until now, no regulator has reportedly approved such a vaccine.

With COVID-19 efficacy rates of between 94% and 95%, the FDA and other regulators will likely have little choice but to approve the vaccines.

Following impressive results from Pfizer Inc. and BioNTech, Moderna Inc.’s final results were as impressive. An efficacy rate of 94.1% and 100% effectiveness in preventing severe cases of COVID-19 were well received.

Assuming that the FDA approves both vaccines, Pfizer Inc. and Moderna Inc. are likely to deliver vaccines days after the approvals.

According to the European Medicines Agency (“EMA”), it has also received applications for COVID-19 vaccines from Pfizer Inc. /BioNTech and Moderna Inc.

The Agency’s human medicines committee has scheduled extraordinary meetings to conclude the evaluations. In terms of timelines, the scientific committee for human medicines (“CHMP”) will conclude its assessment during an extraordinary meeting scheduled for 12th January at the latest.

Production Projections

Since lodging EUA requests, both have provided details on vaccine production numbers for this year and the next.

Moderna Inc. expects to have 20 million doses of the vaccine available to the U.S by the end of this year. For next year, the target is to manufacture between 500 million and 1 billion doses globally.

BioNTech/Pfizer Inc. is aiming to deliver between 5 million and 50 million doses by year-end.

Both vaccines require two doses. This means that Moderna Inc. and BioNTech/Pfizer Inc. could inoculate as many as 30 million people by year-end.

The Centers for Disease Control and Prevention

On Tuesday, the CDC is due to meet in order to deliver prioritization advice to the U.S states.

Expectations are for the CDC to prioritize health-care workers and residents of long-term care facilities.

The recommendations will come ahead of a Friday deadline for U.S states to submit vaccine distribution plans to the Federal Government.

Once phase 1a of the prioritization is complete, the CDC will then deliver further priority recommendations.

COVID-19 Vaccine Update – AstraZeneca Leaves the Door Ajar for Other Pharmas

AstraZeneca and the University of Oxford

At the start of the week, yet more good news greeted the markets on the COVID-19 vaccine front.

AstraZeneca, teamed with the University of Oxford, announced an efficacy rate of 90% from phase 3 trials.

The devil was in the details, however. Efficacy rates varied depending upon the dosage regimen chosen. The average efficacy rate from the combined regimens was actually 70%.

While this was a particularly weak result, one dosage regiment did deliver a 90% efficacy rate. The dosage regimen would require a half does and then a full dose at least one month apart.

Of greater significance was the reported cost of production of the vaccine. Having already stated that there would be no profits derived from the vaccine, the vaccine is reportedly cheaper than a British cup of coffee.

By comparison, AstraZeneca’s dose is reported to cost around $2.50. Pfizer Inc.’s vaccine is expected to cost around $20 per dose and Moderna Inc.’s between $15 and $25.

Perhaps of even greater significance is the fact the vaccine can be stored at between 36F and 46F.

For Pfizer Inc. and Moderna Inc., the vaccine needs to be stored at particularly low temperatures that increase storage and transportation costs. Storage temperatures of as low as -90F for Pfizer Inc.’s vaccine also raise questions over global delivery.

Back in the Press but for the Wrong Reasons

Following the positive results from earlier in the week, AstraZeneca and the University of Oxford are back in the press. This time around, however, it’s for all the wrong reasons.

Questions have been raised over the vaccine trial methodology. Reports have surfaced that the dosage regimen delivering an efficacy rate of 90% excluding trial participants over the age of 55.

This means that AstraZeneca only included the “most at risk” in the 2nd dosage regiment that resulted in an efficacy rate of just 62%.

Also of concern is the fact that the efficacy rates varied by such a large degree depending upon dosage regimen. A half dose followed by a full dose delivered better results that raised further question markets over clinical trial parameters.

In terms of credibility, things couldn’t get much worse for the partnership. The more effective half dose/full dose regimen was actually in error.

The loss of credibility and lack of trial data for the over 55s in the 90% efficacy rate dose regimen raises too many unknowns for government agencies such as the FDA to approve a EUA.

It’s therefore unsurprising that AstraZeneca has seen its share price fall from a Monday high £83.24 to a Wednesday low £78.00. That’s a 6.3% slide peak to trough in response to the negative news. On Wednesday, AstraZeneca ended the day at £78.08.

The Latest COVID-19 Numbers

At the time of writing, the total number of COVID-19 cases worldwide stood at 60,719,957. The U.S alone accounted for 13,137,692 cases, with India accounting for 9,266,705.

Looking at the most affected EU member states, France, Spain, Italy, and Germany had a combined 6,257,334 total number of cases. Back in mid-September, the 4 member states had a combined total of less than 1 million.

When you include the UK’s 1,557,007 total cases the total number of cases gets much closer to the 10 million mark.

Containment measures across the EU member states and the UK, however, should see the number begin to plateau.

For now, it is a different story for the U.S, which has yet to reintroduce nationwide containment measures.

When considering the U.S numbers, both Pfizer Inc. and Moderna Inc. will likely be inoculating the U.S before many other nations.

Looking Ahead

The markets are now in wait-and-see mode, as the FDA prepares to review clinical trial results on 10th December.

Between now and then, updates on production capacity and logistics will be watched closely.

There is one other factor for the markets to consider, however.

Governments have preordered from Pfizer Inc. and Moderna Inc. and other pharmas. When considering the size of orders from both the U.S and from the EU and Japan, it may take some time for vaccines to reach other countries.

This could lead to a global economic decoupling, which would raise questions over the market optimism of a 1st quarter economic rebound.

The Department of Health and Human Services and the Department of Defense have reportedly ordered 100 million doses of the Pfizer Inc. and BioNTech SE vaccine. An option for an additional 500 million doses is also available.

The EU has reportedly pre-ordered 200 million doses of Pfizer Inc.’s vaccine.

Pfizer Inc. has reportedly announced plans to produce 50 million doses by the end of this year. The company then has a target of producing 1.3 billion doses for next year.

Pre-orders for Pfizer Inc. alone, alongside manufacturing targets, certainly suggest the need for 2 or even 3 other vaccines.

With AstraZeneca and the University of Oxford vaccine trial results now in question, the door is now ajar for the likes of Johnson & Johnson and Novavax to play catch up.

As mentioned earlier, once the emergency approvals are in place, vaccine production will be the next area of focus.

COVID-19 Vaccine Update – Pfizer Inc. Submits an EUA

Pfizer Inc. Goes to the FDA

Pfizer Inc. made its application for emergency use of it’s clinically trialed COVID-19 vaccine.

Running ahead of the rest of the pharmas, a 95% efficacy rate from 3rd phase trials and safety data-enabled Pfizer Inc. to make its submission today.

The emergency user authorization (“EUA”) submission means that a viable vaccine could be distributable before the end of the year.

Pfizer Inc. and BioNTech expect the FDA to deliver on a EUA request before the end of this year. Prior to last week’s phase 3 clinical trial results, experts had anticipated a viable vaccine by late Q1 of next year.

According to Reuters, the FDA Advisory Committee has made tentative plans to meet on 8-10th December to deliberate on the vaccine. That means that Moderna Inc.’s vaccine could form part of the discussion and approval process.

The Market Response

Riskier assets found support in response to today’s news.

At the time of writing, BioNTech was up by 7.92%. Coming out ahead in the race to an effective and mass-producible vaccine is a huge win.

Pfizer Inc. will likely see more muted gains with Moderna Inc. in the wings, however. From a European perspective, BioNTech now sits in the best position to bring an end to the COVID-19 pandemic across Europe.

In spite of the positive vaccine news, however, the EUR remained in the red. At the time of writing, the EUR was down by 0.02% to $1.18727.

With the EU in the grips of a 2nd wave pandemic, the next piece of the jigsaw is production capacity and logistics.

It remains a 2-horse race for now and, while Pfizer Inc. has submitted its EUA first, Moderna Inc.’s vaccine is far more transport friendly.

All this means that the markets will still need to take a side on who will be able to support a worldwide inoculation.

EURUSD 201120 Daily Chart

Stocks Retreat As Initial Jobless Claims Unexpectedly Increase

Virus Worries Put Some Pressure On S&P 500 Futures In Premarket Trading

Yesterday, New York City made a decision to close public schools as coronavirus cases surged. This decision put significant pressure on S&P 500 which lost plenty of ground in the last few hours of Wednesday’s trading session.

Today, S&P 500 futures are losing some ground in premarket trading, but worries about new anti-virus restrictions are somewhat offset by positive news on the vaccine front.

AstraZeneca has recently stated that its COVID-19 vaccine produced strong immune response in older adults. Interestingly, AstraZeneca’s report had little impact on the company’s shares which are up by less than 1% in premarket trading. Most likely, traders want to see the final results of the ongoing trials before making conclusions.

Earlier, Pfizer/BioNTech vaccine showed 94% efficiency in adults over 65 years old, and it looks like mutliple vaccines may be suitable for the most vulnerable part of the population.

Gold And Silver Move Lower

Unlike stock traders, precious metal traders decided to completely ignore the near-term developments on the coronavirus front and focused on the encouraging vaccine news.

As a result, gold and silver are under material pressure. The current situation is especially worrisome for gold bulls as gold is trying to settle below the key support area at $1850 – $1860. A move below this level may lead to a sell-off.

In this light, shares of precious metals miners will likely move lower at the beginning of today’s trading session in continuation of yesterday’s sell-off.

Initial Jobless Claims Increase To 742,000

The U.S. has just provided Initial Jobless Claims and Continuing Jobless Claims reports.

The Initial Jobless Claims report indicated that 742,000 Americans filed for unemployment benefits in a week. Analysts expected Initial Jobless Claims of 707,000. Continuing Jobless Claims declined from 6.79 million to 6.37 million.

The sudden increase in the number of Initial Jobless Claims shows that the second wave of the virus has started to put material pressure on the job market.

Later, U.S. will provide Existing Home Sales report for October. Analysts expect that Existing Home Sales declined by 1.2% month-over-month after growing by as much as 9.4% in September.

For a look at all of today’s economic events, check out our economic calendar.

Markets Move Higher As Pfizer Vaccine Is 95% Effective

Pfizer And BioNTech Report Final Results Of Their COVID-19 Vaccine Trial

Traders have a reason to be in a good mood today as the efficiency of Pfizer/BioNTech coronavirus vaccine is better than previously reported.

According to the final trial data, the vaccine is 95% effective, compared to earlier indications of “more than 90% effective”. Importantly, the vaccine is 94% effective for people over 65 years old who have the biggest risk of developing severe COVID-19.

Pfizer stated that it would apply for emergency U.S. authorization in the upcoming days.

Not surprisingly, S&P 500 futures are moving higher in premarket trading as traders cheer the positive news on the vaccine front.

At this point, the market is very bullish on riskier assets which is highlighted by the recent underperformance of precious metals.

While the U.S. dollar continues to lose ground against a broad basket of currencies, gold and silver remain under pressure as demand for safe haven assets decreases.

If this mood prevails, S&P 500 will be able to test all-time highs in the upcoming trading sessions.

Oil Gets Back Above The $42 Level Despite Rising Inventories

The recent API Crude Oil Stock Change Report indicated that crude inventories increased by 4.17 million barrels compared to analyst consensus which called for an increase of 1.95 million barrels.

Typically, the increase in crude inventories is bearish for the oil market, but oil traders look ready to focus on longer-term outlook amid encouraging developments on the vaccine front.

As a result, energy-related stocks are set for another strong trading session and are ready to continue their rebound.

Housing Starts Increased By 4.9% In October

The U.S. has just provided Building Permits and Housing Starts reports for October. Building Permits were flat compared to the previous month after growing by 4.7% in September. Analysts expected that Building Permits would increase by 1.3%.

Meanwhile, Housing Starts were better than analyst expectations, growing by 4.9% month-over-month compared to analyst forecast of 2.1%.

The housing market remains strong which is not surprising given the low interest rates and active money-printing from the U.S. Fed. The strength of the housing market is especially encouraging at a time when the economy has to deal with the second wave of the virus.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Pull Back Amid Fears Of New Anti-Virus Restrictions

Coronavirus Is Back Into Spotlight As States Announce New Virus-Related Restrictions

S&P 500 futures are losing ground in premarket trading as traders turn their attention to new virus-related measures in the U.S.

Some states have announced their decisions to limit public gatherings while California decided to close non-essential businesses in many counties.

Yesterday, U.S. reported more than 160,000 new cases of the disease, and the current trend is worrisome. If the situation does not improve in the upcoming days, more restrictions could be introduced.

The market hopes that vaccines from Pfizer/BioNTech, Moderna and other producers will be able to solve the problem, but mass vaccination is still months away.

Meanwhile, negotiations regarding the new coronavirus aid package have completely stalled, and the economy may lack the necessary support during the challenging winter months.

Still, there is plenty of money on the sidelines waiting for a pullback, and it remains to be seen whether short-term virus-related worries will be sufficient enough to put real pressure on stocks.

Tesla Is Set To Join S&P 500

It’s a great day for Tesla bulls as the stock will join S&P 500 before the market open on December 21, 2020.

Tesla had a market capitalization of almost $400 billion at yesterday’s close, and index funds will face a challenging task rebalancing their portfolios to include Tesla.

Not surprisingly, Tesla shares are gaining more than 13% in premarket trading as investors prepare for a wave of forced buying from index funds.

Tesla’s strength also helps other tech stocks, and Nasdaq futures are up in premarket trading while S&P 500 futures are losing more than 0.5%.

Retail Sales Increase By 0.3% Month-Over-Month

The U.S. has just reported Retail Sales data for October. Retail Sales grew by 0.3% month-over-month compared to analyst consensus which called for growth of 0.5%. On a year-over-year basis, Retail Sales increased by 5.7%.

The slowdown in Retail Sales growth may put additional pressure on stocks as the U.S. economy is heavily reliant on consumer activity.

The virus situation got worse in November, so the market may wonder whether Retail Sales will continue to grow in the last two months of the year.

For a look at all of today’s economic events, check out our economic calendar.

Moderna Shares Jump Over 15% After COVID-19 Vaccine Proves 94.5% Effective; Target Price $136

Moderna Inc, an American biotech company focused on drug discovery, said the Phase 3 study of mRNA-1273, its vaccine candidate against COVID-19, showed that it was 94.5% effective in preventing COVID-19, sending its shares up over 15% in pre-market trading on Monday.

This comes just after Pfizer and BioNTech announced last week that the first interim efficacy analysis from the phase-3 study found their jointly developed mRNA-based vaccine candidate to be over 90% effective in preventing COVID-19 among participants.

Based on these interim safety and efficacy data, Moderna said it will submit for an Emergency Use Authorization with the U.S. Food and Drug Administration in the coming weeks.

“This de-risk the platform and should increase visibility on a potential ‘best in class’ vaccine. This is at least line w/topline results from the PFE study which was above 90%. Next big event is whether other vaccines that are not mRNA-technology based can show these very strong initial results,” said Michael J. Yee, equity analyst at Jefferies.

Following this announcement, Moderna shares surged more than 15% to $102.88 in pre-market trading on Monday; the stock is up over 400% so far this year.

Executive Comments

“This is a pivotal moment in the development of our COVID-19 vaccine candidate. Since early January, we have chased this virus with the intent to protect as many people around the world as possible. All along, we have known that each day matters,” said Stéphane Bancel, Chief Executive Officer of Moderna.

“This positive interim analysis from our Phase 3 study has given us the first clinical validation that our vaccine can prevent COVID-19 disease, including severe disease,” Bancel added.

Moderna Stock Price Forecast

Eleven equity analysts forecast the average price in 12 months at $100.00 with a high forecast of $136.00 and a low forecast of $88.00. The average price target represents an 11.87% increase from the last price of $89.39. From those 11 analysts, nine rated “Buy”, one rated “Hold” and one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $100 with a high of $335 under a bull-case scenario and $17 under the worst-case scenario. The firm currently has an “Overweight” rating on the biotechnology company’s stock.

“Overall, we believe these data are strong and support mRNA-1273 as a best-in-class vaccine for COVID-19. We expect further details, including all key secondary endpoints such as the impact on asymptomatic disease, once the study completes. We see Moderna up on today’s update,” said Matthew Harrison, equity analyst at Morgan Stanley.

Several other analysts have also recently commented on the stock. The Goldman Sachs Group set a $105.00 price objective on shares of Moderna and gave the stock a “buy” rating in July. Piper Sandler lifted their price target on shares of Moderna to $136 from $134. Oppenheimer reissued a “buy” rating and issued a $108.00 price target.

Analyst Comments

“We are Overweight Moderna. The company has taken an industrialized approach to developing mRNA-based therapeutics and has rapidly generated a broad pipeline of 21 programs, 11 of which have entered clinical development. We believe Moderna’s mRNA drug development platform is more diversified and scalable compared with competitors, and is validated through broad partnerships with Merck and AstraZeneca,” Morgan Stanley’s Harrison added.

“The COVID-19 vaccine programs provide a significant acceleration of the path to commercialization and validation of the Moderna platform. We are positive on the early data and look forward to the progress. We see vaccines and rare diseases as the key valuation drivers of the company.”

Upside and Downside Risks

Risks to Upside: 1) Supporting clinical data across several modalities. 2) Meeting timelines and continuing to expand a diversified pipeline. 3) Launch vaccines in multiple indications including CMV and COVID-19 – highlighted by Morgan Stanley.

Risks to Downside: 1) Efficacy and/or safety concerns cause investors to write-off subsequent readouts across additional modalities. 2) Delays in Moderna’s ability to generate significant clinical data. 3) Stronger than expected competitor data.

Markets Remain Unsettled

Emerging market currencies and the majors that benefit from world growth outperformed the perceived safe-havens, like the yen and the Swiss franc. The euro rose above $1.19 briefly before selling off to trade below $1.18. Gold collapsed.

Yesterday’s violent moves may have been an overreaction, but today’s action is more consolidative than a reversal. Most Asia Pacific markets rallied, led by 3-4% gains in Singapore, Malaysia, and Thailand. China and Taiwan were exceptions with their losses. Europe’s Dow Jones Stoxx 600 is firm as it consolidating yesterday’s is nearly 4% gain. US shares are mixed with the tech-heavy NASDAQ looking at additional steep losses, while the S&P 500 is trading about 0.5% lower.

Australia and New Zealand saw big jumps (13-15 bp) in their 10-year yields as they catch-up to yesterday’s move in the US and Europe. Europe’s benchmark yields are firm, and the US is firm with the 10-year Treasury yield changed around 0.94%, having reached an eight-month high near 0.97% yesterday. The dollar is trading firmly against most of the major currencies, with sterling a notable exception.

It extended yesterday’s gains and traded around $1.3260, its best level since September 7. The JP Morgan’s Emerging Market Currency Index is snapping a five-day advance. The Turkish lira and South African rand are paring yesterday’s gains. Gold has steadied after yesterday’s 4.5% shellacking, its biggest loss in three months. The attempt to resurface $1900 was rebuffed. Oil prices are holding on to yesterday’s gains. The December WTI is around $40.65 a barrel in the European morning after reaching almost $41.35 yesterday. Recall that early last week, it hit a low near $33.65

Asia Pacific

While Pfizer‘s vaccine and Eli Lilly’s antibody therapy appear promising, Brazil’s testing of China’s Sinovac’s Coronavac was halted due to an “adverse event.” What needs to be kept in balance is that there are still many steps before a vaccine is available, and the most pressing health issue is the surge in the infection. Vigilance is still needed.

Falling pork prices saw Chinese CPI fall below 1% for the first time in three years in October. The 0.5% year-over-year CPI was lower than expected and follows a 1.7% gain in September. Pork prices fell by 7% in October. The 2.8% decline year-over-year is the first since February 2019. Food prices as a whole rose 2.2% year-over-year after 7.9% in September. Non-food prices were flat, and core prices were unchanged at 0.5% from a year ago. Producer prices remained 2.1% lower than a year ago, the same as in September. Economists had expected a little improvement. Chinese officials do not seem ready to respond, and deflationary pressures on consumer prices will likely continue.

Japan reported a smaller than expected September current account surplus of JPY1.66 trillion down from JPY2.11 trillion. On the other hand, Japan’s trade surplus grew, practically doubling month-over-month to JPY918 bln from JPY413 bln. In the past six months, Japan’s trade surplus has swung from a JPY929 bln deficit to the September surplus of nearly the same magnitude reported today. Separately, as has been well telegraphed, Prime Minister Suga ordered the compilation of a third supplemental budget.

The dollar soared against the Japanese yen yesterday, rising from around JPY103.20 to about JPY105.65. It is consolidating in the upper end of that range today (~JPY104.80-JPY105.45). There is an expiring option for $980 mln at JPY105.50 and a smaller option for JPY375 mln at JPY106 that also rolls off today. Initially, it looks like Tokyo sold into the dollar’s surge, but buyers returned, and the dollar was recording session highs in the European morning. The Australian dollar reached nearly two-month highs yesterday near $0.7340 and retreated to almost $0.7265.

It has been unable to distance itself much from those lows today and has held below $0.7300. A break of the $0.7250 area may signal a move toward $0.7200. The PBOC set the dollar’s reference rate at CNY6.5897, near what the bank models expected. The dollar is trading within yesterday’s range (~CNY6.5640-CNY6.6350)

Europe

Germany failed to convince the other EU members to postpone WTO-sanctioned tariffs on US goods in retaliation for improper subsidies for Boeing. The new EU tariffs on $4 bln of US goods will be formally announced today. While it is perfectly within its legal rights to do, the risk is that the US makes good on its threat to boost the levies that it was allowed to impose because of Europe’s improper subsidies for Airbus. Regardless of the election outcome, Trump is still the US President, and the office is still powerful. For example, new sanctions were announced on four more Chinese officials for the dissent crackdown in Hong Kong.

The UK employment report was weak. The unemployment rate jumped to 4.8% from 4.5%. It is the highest for a three-month period in four years. Employment has fallen by 164k in the three-month through September. The government’s extended furlough program was not announced in time to impact this time series. Separately, the House of Lords removed the most controversial clauses in the government’s Internal Market Bill, but it will be reinserted by the House of Commons.

There is some speculation the new US administration is considerably more skeptical of the merits of Brexit that it could impact the UK-EU negotiations, as the Irish foreign minister suggested. However, it seems like a stretch, and the deadline for the trade deal is less than a week away.

The euro briefly traded above $1.19 yesterday before selling off and dipping below $1.18. After struggling to sustain even modest upticks, it has been sold in the European morning to around $1.1780. The halfway point of the rally from the test on $1.16 last week to yesterday’s high is near $1.1760, and the next retracement (61.8%) is closer to $1.1725. There is an option for 1.5 bln euro at $1.18 that expires today and another for about 665 mln euros at $1.17. Sterling is the strongest of the major currencies.

While sterling was firm the Asia Pacific session, it pushed higher in the European morning. The next chart target is near $1.33. Sterling strength appears to be coming from the cross against the euro. The euro broke down yesterday, and the follow-through selling has driven the single currency below its 200-day moving average (~GBP0.8925) for the first time in six months. The next target may be the September low near GBP:0.8865.

America

The US quickly took credit for the Pfizer vaccine, but it got no funds from Operation Warp Speed for the trial, testing, and manufacturing. Pfizer’s partners, BioNTech SF, did receive almost $450 mln from Germany. What the US did was agreed to pay $2 bln for 100 mln vaccines and an option for another 500 mln doses. The US does get to decide who gets the vaccine first. Reports suggest Pfizer will handle the distribution directly and has designed reusable contained to keep the medicine at the cold temperature necessary. Moderna uses an approach similar to Pfizer’s, and the results are expected in the coming weeks.

While the JOLTS report is the economic data highlight, no fewer than five Fed officials will talk through the day today. Governor Brainard, who is seen as a possible candidate for Treasury Secretary, discusses the Community Reinvestment Act and could draw extra attention. Mexico and Canada also have light economic calendars today. Mexico’s slightly higher than expected headline inflation but slightly lower core inflation keeps the market favoring a rate cut late this weeks.

The US dollar was sold to new lows for the year yesterday against the Canadian dollar (~CAD1.2930), but the greenback recovered to close above CAD1.30, which is now support. It is firm today, having reached CAD1.3040 in the European morning. Yesterday’s high was near CAD1.3070. The greenback is was testing CAD1.34 at the end of October, and some near-term consolidation is likely. The US dollar fell to almost MXN20.00 yesterday after finishing last week near MXN20.60. It, too, is consolidating today. It is near the middle of today’s range in late morning dealings in Europe (~MXN20.35)

For a look at all of today’s economic events, check out our economic calendar.

This article was written by Marc Chandler, MarctoMarket.

Pfizer and BioNTech Shares Rally After Jointly Developed COVID-19 Vaccine Proves Over 90% Effective

Pfizer and BioNTech said that the first interim efficacy analysis from the phase-3 study found their jointly-developed mRNA-based vaccine candidate to be over 90% effective in preventing COVID-19 among participants, sending shares higher in pre-market trading on Monday.

However, the company said the submission for Emergency Use Authorization (EUA) to the U.S. Food and Drug Administration has been planned for soon after the required safety milestone is achieved, which is currently expected to occur in the third week of November.

“We look forward to tolerability and safety details, which have not yet been disclosed. The trial will continue through a final analysis at 164 confirmed cases. The trial has enrolled 43,538 participants to date, and of these, 38,955 had received a second dose as of Nov 8. PR noted that there will be a new secondary endpoint evaluating efficacy based on cases accruing 14 days after the second dose,” said David Risinger, equity analyst at Morgan Stanley.

“Pfizer expects to produce >50M vaccine doses in 2020 and up to 1.3B doses in 2021. We plan to update our financial model; please see Oct 7 report titled “All eyes on COVID vaccine timeline” which includes our published Pfizer vaccine risk-adjusted model,” Risinger added.

Following this announcement, Pfizer shares surged about 14% to $41.4 in pre-market trading on Monday; however, the stock is down about 7% so far this year. Additionally, BioNTech shares climbed over 25% to $115.13 in pre-market trading; the stock is up over 170% so far this year.

Executives’ comments

“The first interim analysis of our global Phase 3 study provides evidence that a vaccine may effectively prevent COVID-19,” said Prof. Ugur Sahin, BioNTech co-founder and CEO. “We will continue to collect further data as the trial continues to enroll for a final analysis planned when a total of 164 confirmed COVID-19 cases have accrued. I would like to thank everyone who has contributed to make this important achievement possible.”

”After discussion with the FDA, the companies recently elected to drop the 32-case interim analysis and conduct the first interim analysis at a minimum of 62 cases. Upon the conclusion of those discussions, the evaluable case count reached 94 and the DMC performed its first analysis on all cases. The case split between vaccinated individuals and those who received the placebo indicates a vaccine efficacy rate above 90%, at 7 days after the second dose,” said Dr. Albert Bourla, Pfizer Chairman and CEO.

“This means that protection is achieved 28 days after the initiation of the vaccination, which consists of a 2-dose schedule. As the study continues, the final vaccine efficacy percentage may vary. The DMC has not reported any serious safety concerns and recommends that the study continue to collect additional safety and efficacy data as planned. The data will be discussed with regulatory authorities worldwide.”

Pfizer Stock Price Forecast

Eight equity analysts forecast the average price in 12 months at $42.88 with a high forecast of $53.00 and a low forecast of $38.00. The average price target represents a 17.80% increase from the last price of $36.40. From those eight analysts, four rated “Buy”, four rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $42 with a high of $48 under a bull-case scenario and $31 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the pharmaceutical company’s stock. Pfizer had its price target upped by investment analysts at SVB Leerink to $43 from $42. The firm presently has a “market perform” rating on the biopharmaceutical company’s stock.

Several other analysts have also recently commented on the stock. Royal Bank of Canada set a $43.00 target price on shares of Pfizer and gave the company a “buy” rating. Truist assumed coverage and set a “buy” rating and a $42 target price on the stock. At last, Atlantic Securities downgraded shares of Pfizer from an “overweight” rating to a “neutral” rating and cut their price target to $39 from $44.

We think it is good to buy at the current level and target at least $53 as 100-day Moving Average and 100-200-day MACD Oscillator signal a buying opportunity.

Analyst Comments

“We project solid growth prospects, and the company’s COVID vaccine candidate offers optionality. Pfizer’s financials and dividend are set to adjust in 4Q20 when it completes the Viatris transaction,” Morgan Stanley’s Risinger added.

“Pipeline execution will be key to investor perception, given late-decade patent expiration exposure.”

Upside and Downside Risks

Risks to Upside: Upside risks are COVID vaccine success, better COVID vaccine data than competitors, core business financial upside, positive pipeline developments, and encouraging strategic action – highlighted by Morgan Stanley.

Risks to Downside: Downside risks are COVID vaccine failure, COVID vaccine underperforms competitors, financial shortfalls, pipeline disappointments, disappointing strategic action, and negative US drug pricing developments.

Pfizer Vaccine Breakthrough Boosts Markets

Pfizer And BioNTech Report Great Results From Their Large-Scale Study Of COVID-19 Vaccine

S&P 500 futures have recently received a major boost after Pfizer and BioNTech COVID-19 vaccine was found to be more than 90% effective in the first analysis of the large study.

Vaccine news provided significant support to stocks, and S&P 500 futures are gaining more than 4% in premarket trading. Not surprisingly, shares of vaccine developers are gaining a lot of ground ahead of the market open – Pfizer shares are up by 12% while BioNTech stock is up by more than 23%.

Meanwhile, WTI oil managed to return back above the $40 level as vaccine news increased hopes for a successful rebound of oil demand. At the same time, precious metals like gold and silver are under pressure as traders dump safe haven assets amid optimism about the vaccine.

Stay-At-Home Stocks Suffer On Vaccine News

While the vaccine news are positive for most stocks, shares of some companies are under major pressure in premarket trading.

Zoom and Peloton, which were one of the major winners during the pandemic, are down by almost 13%, and even Amazon is under pressure in premarket trading. As a result of the pressure on stay-at-home stocks, the tech-heavy Nasdaq is set to open higher by a modest 0.5%.

It remains to be seen whether vaccine news will trigger a real rotation from tech stocks into more cyclical stocks, but stay-at-home stocks will certainly have a very challenging trading session today.

Airline And Cruise Line Stocks Jump In Premarket Trading

Today, investors look ready to bet on beaten stocks like airlines and cruise lines. For example, American Airlines Group is up by 25% while Delta Air Lines  is gaining 18% in premarket trading.

Investors are even more optimistic about cruise lines like Carnival Corp. or Norwegian Cruise Line Holdings as an effective vaccine against COVID-19 may make the difference between bankruptcy and profitable business for these companies.

Traders should expect plenty of volatility in these stocks in the upcoming trading sessions as the market will try to find new price levels which take vaccine news into account.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Stocks Set To Open Higher As U.S. Approves Remdesivir For Use Against COVID-19

U.S. Approves Gilead’s Remdesivir As COVID-19 Drug

Shares of Gilead are gaining about 4% in premarket trading as U.S. approved remdesivir as a treatment for COVID-19. While many drugs have been tested to fight against the disease, only Gilead’s remdesivir managed to get regulator’s approval.

This approval will likely provide support to other companies in the sector. Vaccine developers Pfizer, BioNTech, Moderna are also gaining ground ahead of the market open.

The first drug approved for the use against coronavirus could provide additional support to the general market as traders are eager to buy stocks on any hint that the world will be able to solve the coronavirus crisis.

Traders Remain Focused On Stimulus Negotiations

This week’s news flow was dominated by reports about the ongoing stimulus negotiations. The market action was choppy as traders tried to evaluate whether Republicans and Democrats will be able to reach a compromise deal before November elections.

House Speaker Nancy Pelosi has recently stated that negotiations continued to progress. However, it remains to be seen whether Republicans will be ready to vote for a huge stimulus package that is proposed by Democrats.

Today, S&P 500 futures are gaining ground in premarket trading as traders are in optimistic mood ahead of the weekend. However, the situation may change quickly if evidence emerges that aid negotiations have stalled.

All Eyes On Flash PMI Data For October

Today, U.S. will release Flash PMI reports for October. Manufacturing PMI is expected to increase from 53.2 in September to 53.4 in October while Services PMI is projected to stay unchanged at 54.6.

Reports from other countries signaled that the services segment was struggling amid a second wave of the virus.

Euro Area Services PMI declined from 48 in September to 46.2 in October compared to analyst consensus of 47. Numbers below 50 show contraction. In the UK, Services PMI declined from 56.1 to 52.3 while analysts expected Services PMI of 54.

A weaker-than-expected U.S. Services PMI report will signal that economic recovery is losing steam and may put some pressure on stocks, although stimulus negotiations will remain the most important driver for the market.

For a look at all of today’s economic events, check out our economic calendar.

Markets’ Weather Weekly: Сloud-Computing and Office Software Business Missed Quarterly Estimates.

Overview and trends

U.S. weekly jobless claims hit 1.4 million, the first increase since March, as spiking virus cases halt reopening plans.

Microsoft shares tumbled as much as 2.8% on Thursday after its cloud-computing and office software business missed quarterly estimates. The share price slump caused nearly $46 billion dollars erased from the company’s market capitalization. Intel Corporation (INTC) shares were trading lower yesterday despite the company reported better-than-expected second-quarter EPS and earnings results.

As a result, the tech-heavy Nasdaq Composite finished down 2.3%. The S&P 500 closed down 1.2%. It was their worst performance since June 26. The Dow (INDU) fell 1.3%, or 354 points, its worst day in two weeks.

Stocks weren’t the only assets in the red. The US dollar, as measured by the ICE US Dollar Index, fell 0.2%. The index hit its lowest level since September 2018.

So far quarterly earnings come very mixed. On positive side there are good reports and good responses to the earnings reports from IBM (IBM), Texas Instruments (TXN), Biogen (BIIB), KeyCorp (KEY), as well as yesterday’s miracle from Tesla (TSLA) and upbeat sales commentary from Best Buy (BBY).

Then again, a close candidate for why things are “bad” would be the negative responses to earnings reports from Bank of America (BAC), Netflix (NFLX), Snap (SNAP), Capital One (COF), United Airlines (UAL), and Interactive Brokers (IBKR). Microsoft (MSFT) stock sank over 2% after reporting earnings that beat Wall Street expectations in most ways except in a key business. All these stories prompt us to be extremely vigilant, resourceful and contemplative – correct instrument selection and trade direction is key to trading success through this period!

The week was full of important news. US stocks climbed on Wednesday on positive earnings numbers from Microsoft and Tesla and as traders weighed raging tensions between the U.S. and China, a potential legislative extension to unemployment benefits, and coronavirus vaccine news. Donald Trump’s administration ordered the abrupt closure of China’s consulate in Houston, and official Beijing promptly responded with its intention to close the U.S. consulate in Wuhan in a tit-for-tat game condemned by Beijing as outrageous and unprecedented.

The U.S. government has struck an agreement with Pfizer (PFE) and BioNTech (BNTX) for up to 600 million doses of their COVID vaccine candidate should it be approved. This optimistic expectation and early preparation effort have created positive sentiment in terms of thinking about light at the end of the tunnel down the road.

Trading ideas

The Gold/Silver complex has caught renewed bids this week, which was tipped off by the major gold ETF – SPDR Gold Trust – showing up on the “Doji Week” scan back on Monday. The Doji Week scan is designed to find stocks that are in narrow ranges compared to prior week’s activity that is geared up for a stronger directional move.

There are a number of Gold/Silver – related ETFs and stocks appearing on the Wide Range Breakouts, Power Up, and Overbought results today as the market gets behind their momentum against a sliding US Dollar. As investors’ classics – Barrick Gold (GLD) and Newmont Corp. (NEM) – look increasingly overvalued by both investment multiples and technically, new kids on the block, such as Agnico Eagle Mines (AEM) and Kinross Gold (KGC) look increasingly promising. The two latter stocks unveil single digit price-to-sales ratios as opposed to double-digit ones for Barrick and Newmont.

AT&T (T)

The largest American telecom AT&T (T) beat estimates by 4 cents a share, with quarterly earnings of 83 cents per share. Revenue was in line with forecasts. The company said the COVID-19 pandemic impacted results across all its businesses. Thus, WarnerMedia revenue fell 23% to $6.8 billion as the pandemic shut down film production and movie theaters. Group revenue was down 9% YoY to $41 billion, roughly in line with the $41.1 billion consensus. In contrast, AT&T’s HBO Max boasted by around 36 million active customers (including legacy HBO subscribers), picking up 3 million in the quarter. Cash from operations was $12.1 billion with free cash flow of healthy $7.6 billion.

Total dividend payout ratio remains slightly below 50%. Nevertheless, we must not forget about this telecom’s two extremely important properties: number one, it is the value high dividend stocks. And number two, it is classic defensive countercyclical stock. Given increasing odds of exacerbating recession and noting almost ridiculously cheap valuations at P/E of less than 15, dividend yield of 7% and price-to-cash-flow of just 8 (yes, this is a single-digit number, eight), at the current price level AT&T is perhaps one of very few smart medium term buys.

Vladimir Rojankovski, Grand Capital Chief Analyst

US Stock Market: Multiple States Investigate Apple, Disney Delays Major Film Releases, Fear Gauge Rises

Thursday’s U.S. stock market losses led to investors seeking protection in options and Treasurys. This drove the Cboe Volatility Index (VIX) – seen by Wall Street as the market’s best “fear gauge” – to 26 and benchmark 10-year Treasury yields to 0.57%.

Some of the volatility was fueled late in the session by extreme “whipsaw” action. The wild, two-sided trade that steepened the late session selloff was triggered by a report from a watchdog group that said Apple Inc faces consumer protection investigations in multiple states. Apple traded 4.5% lower after the report.

Apple Faces Deceptive Trade Practices Probe by Multiple U.S. States:  Axios

Multiple U.S. states are investigating Apple Inc for potentially deceiving consumers, according to a March document obtained by a tech watchdog group, Reuters reported.

The Texas attorney general may sue Apple for violating the state’s deceptive trade practices law in connection with the multi-state investigation, according to the document, which was obtained by the Tech Transparency Project.

The document did not provide additional details.

The office of the Texas attorney general declined to comment. Apple did not immediately respond to a Reuters request for comment.

Apple has faced class-action lawsuits from consumers alleging that it deceived them about slowing the performance of iPhones with aging batteries. The company agreed to pay up to $500 million to settle one such lawsuit earlier this year.

Apple is also facing lawsuits alleging that it knew and concealed how the “butterfly” keyboards on its MacBook laptops were prone to failure.

Treasury Yields Fall Slightly After Jobless Claims Come in Worse Than Expected

Treasury yields dipped on Thursday after data showed U.S. jobless claims rose more than expected last week. The yield on the benchmark 10-year Treasury note fell one basis point to 0.584% and the yield on the 30-year Treasury bond were also lower at 1.274%. Yields more inversely to prices.

US Companies Making Headlines After Thursday’s Bell

Intel’s stock dropped 8% in extended trading after the company offered disappointing third-quarter guidance. Intel released its second quarter earnings, beating predictions of analysts surveyed by Refinitiv.

After Intel said the company’s 7mm-based CPU product timing is delayed, shares of Advanced Micro Devices climbed 7% in after hours.

Moderna’s stock dropped 2% in extended trading after falling 9.49% earlier in the day. The drop comes after the U.S. Patent and Trademark Office ruled Moderna does not have a claim to a patent held by a rival company.

The ruling could potentially delay Moderna’s race to produce a coronavirus vaccine. Shares of BioNTech jumped 2% while Novavax’s stock fell 1% in after hours.

Disney’s stock fell 1% after the closing bell. The company announced Thursday afternoon that its movie “Mulan” is delayed indefinitely and all Star Wars films and Avatar sequels have been pushed back a year due to theater closures and production shutdowns spurred by the coronavirus pandemic.

For a look at all of today’s economic events, check out our economic calendar.

Pfizer and BioNTech to Get $1.95 Billion from U.S. Govt for COVID-19 Vaccine Doses

Pfizer Inc, an American multinational pharmaceutical corporation headquartered in New York City, and its German partner BioNTech will receive $1.95 billion from the United States government for delivering 100 million doses of a COVID-19 vaccine, sending Pfizer shares up over 5% pre-market.

The U.S. government will pay both the companies $1.95 billion upon the receipt of the first 100 million doses, following FDA authorization or approval. The agreement allows them to acquire an additional 500 million doses.

Americans will receive the vaccine for free consistent with U.S. government’s commitment for free access for COVID-19 vaccines, the Department of Health and Human Services and the Department of Defense said.

U.S. Big Pharma Pfizer and German biotech partner BioNTech expect the COVID-19 vaccine to be ready to seek Emergency Use Authorization or some form of regulatory approval as early as October 2020. Both the companies anticipate producing globally up to 100 million doses by the end of 2020 and potentially more than 1.3 billion doses by the end of 2021.

“We don’t know how many competing vaccines will be sold in the U.S. in 2021, but if BNT162 is administered to 100 million people, the two-dose series would yield US revenue of $3.9 billion. To put it in perspective, dividing half of that figure by Pfizer BioPharma global revenues of approximately $43 billion in 2021e implies 4.5% revenue upside. Pfizer also has 50-50 rights ex-US, where volume potential is much greater but pricing likely lower,” said David Risinger equity analyst at Morgan Stanley.

“We look forward to BNT162 and competitors’ Phase 3 data in 2H:20 and evolution of the competitive landscape over time. Regarding US pricing potential beyond the pandemic period, Pfizer has suggested that it could ultimately charge higher prices for a COVID vaccine. We believe long-term pricing would depend upon 1) relative efficacy & safety of Pfizer’s vaccine vs. others, 2) magnitude of competition, and 3) government negotiations.”

Pfizer’s shares jumped over 5% pre-market, while BioNTech’s NASDAQ-listed shares were up over 10%.

Executives’ comments

“We’ve been committed to making the impossible possible by working tirelessly to develop and produce in record time a safe and effective vaccine to help bring an end to this global health crisis,” said Dr Albert Bourla, Pfizer Chairman and CEO.

“We made the early decision to begin clinical work and large-scale manufacturing at our own risk to ensure that product would be available immediately if our clinical trials prove successful and an Emergency Use Authorization is granted. We are honoured to be a part of this effort to provide Americans access to protection from this deadly virus.”

“We are pleased to have signed this important agreement with the U.S. government to supply the initial 100 million doses upon approval as part of our commitment to address the global health threat. This agreement is one of many steps towards providing global access to a safe and efficacious vaccine for COVID-19,” said Ugur Sahin, M.D., CEO and Co-founder of BioNTech.

“We are also in advanced discussions with multiple other government bodies and we hope to announce additional supply agreements soon. Our goal remains to bring a safe and effective COVID-19 vaccine to many people around the world, as quickly as we can.”

Pfizer stock forecast

Fourteen analysts forecast the average price in 12 months at $41.41 with a high forecast of $55.00 and a low forecast of $35.00. The average price target represents a 12.86% increase from the last price of $36.69. From those 14, six analysts rated ‘Buy’, eight rated ‘Hold’ and none rated ‘Sell’, according to Tipranks.

Morgan Stanley target price under a bull scenario is $41 and $27 under the worst-case scenario. We second Morgan Stanley on Pfizer’s stock outlook. We also think it is good to buy at the current level and target $40 as 50-day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity.

Analyst view

“We project solid growth prospects, but we note that Pfizer’s financials and dividend are set to adjust. We project solid single-digit long-term growth. Pipeline execution will be key to investor perception,” said David Risinger equity analyst at Morgan Stanley.

Upside and Downside risks

Upside risks are core business upside, positive pipeline developments, strategic action creates shareholder value, and multiple expands due to improving growth prospects, Morgan Stanley highlighted as upside risks to Pfizer.

Downside risks are financial shortfalls, P/E contracts due to pipeline shortfalls, strategic action is disappointing, litigation problems, and negative US drug pricing developments, Morgan Stanley highlighted as downside risks.

Vaccine Hopes, EU Deal Drive Asia Pacific Shares Higher; Alibaba’s Ant Group Announces Dual-Listing

The major Asia Pacific stock indexes rebounded on Tuesday following Monday’s mixed performance with some hitting five-month highs after European Union leaders agreed on a massive stimulus plan for their coronavirus-blighted economies.

The indexes opened higher following Wall Street’s lead on hopes that vaccines against the COVID-19 disease might be ready by the end of the year, following promising early data from trials of three potential vaccines.

On Tuesday, Japan’s Nikkei 225 Index settled at 22884.22, up 166.74 or +0.73%. Hong Kong’s Hang Seng Index is trading 25527.10, up 469.11 or 1.87% and South Korea’s KOSPI Index closed at 2228.83, up 30.63 or +1.39%.

China’s Shanghai Index is trading 3321.38, up 7.23 or +0.22% and Australia’s S&P/ASX 200 closed at 6156.30, up 154.70 or +2.58%.

Asian Shares Boosted by EU Recovery Fund Deal

European Union (EU) leaders reached a deal on a 750 billion Euro ($857 billion) recovery fund to help the region recover from the coronavirus crisis.

European Council President Charles Michel said he believes this deal will be seen as a “pivotal moment” for Europe. “We did it! Europe is strong. Europe is united,” he said in an early Tuesday press conference announcing the agreement. “These were, of course, difficult negotiations in very difficult times for all Europeans.”

Positive Coronavirus Vaccine News Buoys Market Sentiment

Asia Pacific markets were supported early in the session on Tuesday after investor sentiment was supported by a slew of positive news on the coronavirus vaccine front.

Pfizer and BioNTech reported early positive data on a joint coronavirus vaccine Monday and another candidate from Oxford University and AstraZeneca also showed a positive immune response in an early trial.

Alibaba’s Ant Could Be Bigger than Some Wall Street Banks

Ant Group, an affiliate of Alibaba, announced plans for its long-awaited dual listing in Shanghai and Hong Kong on Monday. E-commerce giant Alibaba Group Holding’s Hong Kong shares jumped 6.59% on the news.

Ant Group runs Alipay, one of China’s most popular mobile payment apps, but has also been expanding into products such as wealth management and loans.

Ant Group has not priced its shares yet but one analyst said the company could be valued at over $200 billion.

For a look at all of today’s economic events, check out our economic calendar.