Pfizer Raises 2021 COVID-19 Vaccine Sales Forecast to $33.5 Billion

The company said the raised sales forecast of the vaccine is based on signed deals for 2.1 billion doses this year, and that it could increase if it signs additional contracts. Pfizer and BioNTech expect to produce 3 billion doses of the vaccine this year.

Pfizer gained a head start in December with the first U.S. emergency authorization of a COVID-19 vaccine, and has since jumped ahead of rivals that have faced manufacturing hurdles. Johnson & Johnson’s vaccine has also been under scrutiny over safety concerns.

J&J last week estimated full-year COVID-19 vaccine sales of $2.5 billion, while Moderna has forecast $19.2 billion.

Pfizer has said it believes a third “booster” dose of its vaccine will be needed in the future, which could help it bring in more sales in 2022. The company said on Wednesday it could file for an emergency use authorization for a potential booster dose as early as August.

Top infectious disease official Anthony Fauci said on Sunday that Americans who are immune compromised may end up needing booster shots as the United States deals with increasing cases from the Delta variant of the coronavirus.

The United States purchased 200 million more doses of the Pfizer/BioNTech vaccine last week to help with pediatric vaccination as well as possible booster shots – if they are needed.

Pfizer’s previous forecast in May of $26 billion was based on deals signed for 1.6 billion doses. Wall Street was broadly in line with that forecast at $28.51 billion, according to nine analysts polled by Refinitiv.

Expenses and profit from the vaccine are split 50-50 between Pfizer and BioNTech.

(Reporting by Manas Mishra in Bengaluru; Editing by Sriraj Kalluvila)

Top Scientists Question the Need for COVID-19 Booster Shots

By Julie Steenhuysen and Kate Kelland

In interviews with Reuters, more than a dozen influential infectious disease and vaccine development experts said there is growing evidence that a first round of global vaccinations may offer enduring protection against the coronavirus and its most worrisome variants discovered to date.

Some of these scientists expressed concern that public expectations around COVID-19 boosters are being set by pharmaceutical executives rather than health specialists, although many agreed that preparing for such a need as a precaution was prudent.

They fear a push by wealthy nations for repeat vaccination as early as this year will deepen the divide with poorer countries that are struggling to buy vaccines and may take years to inoculate their citizens even once.

“We don’t see the data yet that would inform a decision about whether or not booster doses are needed,” said Kate O’Brien, director of the Department of Immunization, Vaccines and Biologicals at the World Health Organization (WHO).

O’Brien said the WHO is forming a panel of experts to assess all variant and vaccine efficacy data and recommend changes to vaccination programs as needed.

Pfizer Inc Chief Executive Albert Bourla has said people will “likely” need a booster dose of the company’s vaccine every 12 months – similar to an annual flu shot – to maintain high levels of immunity against the original SARS-CoV-2 virus and its variants.

“There is zero, and I mean zero, evidence to suggest that that is the case,” countered Dr. Tom Frieden, former director of the U.S. Centers for Disease Control and Prevention.

“It’s completely inappropriate to say that we’re likely to need an annual booster, because we have no idea what the likelihood of that is,” Frieden, who now leads the global public health initiative Resolve to Save Lives, said of Pfizer’s assertions on boosters.

Pfizer, responding to the criticism, said it expects a need for boosters while the virus is still circulating widely. That could change once the pandemic is more firmly under control, a company spokeswoman said.

Moderna Inc CEO Stephane Bancel aims to produce a vaccine by the fall that targets a variant first identified in South Africa and expects regular boosters will be needed.

The United States is preparing to have such doses on hand for Americans, while the European Union, Britain and Israel have ordered new supplies of COVID-19 vaccines to deploy as protective boosters.

Some health experts, including Richard Hatchett, chief executive of the Coalition for Epidemic Preparedness Innovations (CEPI) that has funded many vaccine projects, say vaccine makers are right to plan ahead for boosters given the uncertainty over what will be needed in the long run.

Governments can then decide for themselves whether to buy the products, he said.

“A LITTLE EVIDENCE”

Pfizer and German partner BioNTech SE have so far found that their shot remains more than 91% effective for six months after people received their second dose, compared with nearly 95% demonstrated in their clinical trial. The companies will track how robust the protection remains over time.

Dr. William Gruber, Pfizer’s senior vice president of vaccine clinical research and development, told Reuters earlier this month the prediction for yearly boosters was based on “a little evidence” of a decline in immunity over those six months.

Pfizer expects the COVID-19 vaccine to be a major revenue contributor for years, and has forecast sales of $26 billion from the shot in 2021. Global spending on COVID-19 vaccines and booster shots could total $157 billion through 2025, according to U.S. health data firm IQVIA Holdings.

Moderna President Stephen Hoge expects boosters will be needed to keep immunity levels high, due in part to vaccine hesitancy, as an estimated 30% of the U.S. population may not agree to be vaccinated. As long as the virus is circulating widely, people at high risk of severe illness may need to boost their immune protection, Hoge said.

“All governments are in conversations with (Moderna) and other companies about boosters,” he said.

BROADER IMMUNITY?

Late last year, scientists were optimistic that highly effective vaccines could quickly curb the global pandemic that has battered economies and killed more than 3.4 million people.

Those hopes dimmed by February with evidence that mutant versions of the virus might evade protection offered by vaccines. Laboratory studies showed that the South African variant could produce six to eight-fold reductions in antibody levels among people vaccinated with the Pfizer or Moderna vaccines.

Clinical trial data also showed that vaccines from AstraZeneca Plc, Johnson & Johnson and Novavax Inc were less effective at preventing infections in South Africa, where the variant is widespread.

These studies spurred drug companies to start testing booster doses of their vaccines and to develop shots that target specific variants of the virus.

However, more recent research suggests that the Moderna and Pfizer/BioNTech vaccines produce high levels of protective antibodies to create a “cushion effect” against the known variants, said Dr. Anthony Fauci, head of the National Institutes of Allergy and Infectious Diseases (NIAID) and a top White House adviser.

And antibodies – which block the coronavirus from attaching to human cells – do not tell the whole story. Several studies suggest that T cells – a type of white blood cell that can target and destroy already infected cells – may help prevent severe COVID-19 and hospitalization.

NIAID researchers found that T cells in the blood of people who recovered from the original virus could still fight off infections caused by the concerning variants found in the UK, South Africa and Brazil.

“It’s quite possible” that boosters would not be needed, Fauci told Reuters. “It is conceivable that the variants will not be as much a problem with a really good vaccine as we might have anticipated.”

Nevertheless, health authorities in the United States, Britain and Europe are assuring their populations that a new round of shots will be available if needed, with many nations still desperate for vaccine supplies.

“It’s a huge concern that … wealthy countries would begin administering booster doses and further constraining supply of people’s first dose of vaccine,” said Rajeev Venkayya, head of global vaccines for Takeda Pharmaceutical Co.

Dr. Monica Gandhi, an infectious disease doctor at the University of California, San Francisco, said ultimately, decisions on whether boosters will be needed “will best be made by public health experts, rather than CEOs of a company who may benefit financially.”

(Reporting by Julie Steenhuysen in Chicago and Kate Kelland in London; Additional reporting by Michael Erman in Maplewood, N.J.; Editing by Michele Gershberg and Bill Berkrot)

BioNTech to Build mRNA Manufacturing Site in Singapore

The biotech company said the Singapore production facility will have an estimated annual capacity of several hundred million doses of mRNA-based vaccines depending on the specific type, once it is operational in 2023.

BioNTech said its expansion plans were supported by the Singapore Economic Development Board and would increase the global supply of mRNA-based vaccines and establish a production facility in south east Asia to respond rapidly to future pandemics.

“Having multiple nodes in our production network is an important strategic step in building out our global footprint and capabilities,” said Ugur Sahin, CEO and Co-founder of BioNTech.

Governments around the world are looking to build up local vaccine production to secure access to supplies after manufacturing setbacks have slowed the rollout of COVID-19 doses in some countries.

BioNTech plans to open the Singapore office in 2021 and expects the manufacturing site to be operational by 2023, creating up to 80 jobs in Singapore.

The establishment of a southeast Asia regional hub comes after BioNTech, based in Mainz, Germany, set up a U.S. headquarters in Cambridge, Massachusetts in 2020.

(Reporting by Caroline Copley; Editing by Maria Sheahan and Louise Heavens)

Pfizer Bets on COVID-19 Vaccine Demand for Years, Sees Sales of $26 Billion in 2021

By Manas Mishra and Michael Erman

Revenue from the vaccine – developed with German partner BioNTech SE – is expected to account for more than one third of Pfizer’s full-year sales this year.

The forecast is based on already signed contracts for 1.6 billion vaccine doses to be delivered this year. The company said it expects to sign more deals for this year and is in supply talks with several countries for 2022 and beyond.

“Based on what we’ve seen, we believe that a durable demand for our COVID-19 vaccine – similar to that of the flu vaccines – is a likely outcome,” Chief Executive Albert Bourla said.

The two-shot vaccine was Pfizer’s top-selling product in the first quarter. Expenses and profit from the vaccine are split 50-50 between Pfizer and BioNTech.

Given persistent infections globally and ongoing discussions with governments, Mizuho analyst Vamil Divan said the 2021 forecast could increase further and also spill over to latter years.

Pfizer and BioNTech aim to produce up to 2.5 billion COVID-19 vaccine doses this year, 900 million of which are not yet included in the New York-based drugmaker’s sales forecast.

If Pfizer sells that number of doses at similar prices, the vaccine’s sales in 2021 could be more than 50% above the projected $26 billion.

Moderna In has forecast $18.4 billion in 2021 sales of its similar COVID-19 vaccine.

Pfizer has said it expects to profit from the vaccine, while some drugmakers including Johnson & Johnson have said their vaccine will be sold on a not-for-profit basis until the end of the pandemic.

Pfizer aims to manufacture at least 3 billion doses of the vaccine next year. It generated $3.5 billion in revenue in the first quarter, exceeding analysts’ estimates of $3.28 billion, according to IBES data from Refinitiv.

Total revenue for the quarter of $14.6 billion, topped analyst forecasts of $13.5 billion.

Pfizer could use the vaccine profit to invest in research and development of other treatments and on deals to spur future growth, said Edward Jones analyst Ashtyn Evans.

The company already said it is boosting R&D spending to fuel drug discovery using the messenger RNA technology in the COVID-19 vaccine. The company is developing two flu vaccines that are expected to enter clinical trials in the third quarter.

Pfizer shares were about flat in early trading.

(Reporting by Manas Mishra in Bengaluru and Michael Erman in Maplewood, N.J; Editing by Arun Koyyur and Bill Berkrot)

Stocks Move Higher At The Start Of The Month

The Market Is Set To Rebound After Sell-Off

S&P 500 futures are up by about 1% in premarket trading as traders look ready to buy stocks after the recent sell-off.

The U.S. House of Representatives has approved Biden’s $1.9 trillion coronavirus aid package which will now go to the U.S. Senate. The package includes $1,400 stimulus checks which are expected to boost consumer spending and push prices higher.

The yields of U.S. government bonds began to move higher after the recent pullback as traders remained focused on the threat of higher inflation. That said, inflation expectations have failed to put any material pressure on the stock market today. Tech stocks like Tesla or Amazon look ready to rebound after the recent weakness, and the market’s mood is clearly bullish at the start of this month.

Oil Gains Ground On Vaccine Optimism

WTI oil is currently trying to settle back above the $62 level as traders bet that Johnson & Johnson vaccine will provide additional support to recovery in the longer-term.

FDA has recently approved the company’s coronavirus vaccine which is the first one that requires just one shot. This is the third vaccine which has been approved in the U.S. since the beginning of the pandemic. Pfizer/BioNTech and Moderna vaccines are distributed in two doses.

At this point, the supply of Johnson & Johnson vaccine is limited, but it will significantly increase in the upcoming months which is bullish for oil.

Manufacturing PMI Reports Show That The  Manufacturing Segment Continues To Recover

Today, traders will have a chance to take a look at the final reading of U.S. Manufacturing PMI report. Analysts expect that Manufacturing PMI declined from 59.2 in January to 58.5 in February.

Other countries have already published their PMI reports which indicated that the recovery in the manufacturing segment was stronger than expected. Euro Area Manufacturing PMI grew from 54.8 to 57.9 compared to analyst consensus of 57.7. In the UK, Manufacturing PMI increased from 54.1 to 55.1 compared to analyst consensus of 54.9.

If U.S. Manufacturing PMI exceeds analyst expectations, the market may get additional support.

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

The Pandemic Year 2020: Investors Navigating the New Normal with COVID

As we head into the holiday season, investors remain focused on COVID-19 pandemic which has forcefully plunged the world into a “New Normal”. The alarming speed of the spread of the virus across the world has transformed and reshaped the world in a short amount of time but with longer-lasting impact. As everyday life has been impacted, investors have also reassessed and realigned their investment strategies to face the new world.

Stock Market

Quarter 1 – A Trio of Crises & the Great Lockdown

The markets tumbled like dominoes hit by various headwinds at once ranging from geopolitical tensions between the US and China, Hong Kong and Iran, extreme weather conditions, an oil price war, and the novel coronavirus which forced various forms of lockdowns and social distancing across the globe. Faced by an unprecedented health crisis, and an oil crisis, the world was bracing for an unexpected economic crisis.

Volatility soared in the markets to decades high from an average of 20 to a high above 80 around mid-March causing several circuit breakers and trading halts on some stock exchanges. The stock market bottomed down, and major equity indices dropped in bear market territory ending an 11-year bull-run in the stock market. Global stocks experienced the worst week since the global financial markets.

Central banks and governments rushed in to intervene and cushion the freefall in the financial markets and support their economies which brought some degree of calm in the stock market.

Quarter 2 – The Grand Reopening & Roadmap to Recovery in a Pandemic

Investors witnessed the grand reopening in the second quarter after the great lockdown in the first quarter. Massive fiscal stimulus, ultra-low levels of interest rates, central banks interventions and optimism on the reopenings helped the stock market to rebound as fiercely and aggressively as it initially fell.

The government and central banks have absorbed nearly all the shocks of the virus on the financial markets by injecting massive liquidity in the economy, keeping credit flowing and supporting their economy with huge fiscal stimulus plan among many others unconventional plans. On the reassurance that the intervention measures are not going to fizzle out anytime soon, investors have pushed global stocks higher:

  • Major US equity indices rallied and record new highs.
  • European stocks were flaring better. Even though the Eurozone was not economically strong pre-COVID-19 crisis, the better containment of the virus compared to the US and the historic unity European countries have shown during the coronavirus crisis has boosted confidence for European stocks
  • Australian shares also rebounded significantly and reclaimed the 6,000 level to mark the best quarter in over a decade.

Quarter 3 – Vaccine Optimism, Presidential Election, and Tech Rally

While the vaccine updates and the US Presidential elections campaigns were at the forefront of the markets in the third quarter, global stimulus improving economic data, a better-than-expected earnings season and the resilience of the technology sector have lifted risk sentiment. Global equities have been on a staggering rally at the beginning of the quarter allowing the major equity indices to recover the losses made in the first quarter.

However, geopolitical risks – US/China tech war and the ending of the US pact on Hong Kong extradition and reciprocal tax treatment, the US stimulus gridlock, the rising number of coronavirus cases and the uncertainty around the pace of recovery created an environment of caution.

Investors were monitoring closely the interventions by central banks and governments to push stocks higher at the risk of the global economic backdrop and the stimulus-fueled economy. The month of September again lived up to its reputation of being the typical scary month for investors which saw major corrections in the stock market as investors were navigating in a highly uncertain environment.

Once the volatility around the US elections faded, investors were focused on the prospects of another round of national lockdowns and the lack of timely US stimulus support. The tech sector was at the centre of attention as the big tech leaders outshined when the world went into virtual reality mode. The industry biggest players: Amazon, Apple, Facebook, Alphabet, and Microsoft were somewhat well-equipped to rise to the challenges. The resilience and performance of the tech sector year-to-date stood out this year – mega-caps tech companies have tackled the pandemic relatively unscathed by its impact compared to the economic malaise other industries are facing.

  • The Reshuffling of the Dow Jones Industrial Average

Another notable event was the reshuffling of the Dow – Amgen (AMGN), Salesforce.com (CRM) and Honeywell International (HON) were added to the index while Pfizer (PFE), Raytheon Technologies (RTX) and Exxon Mobil (XOM) were removed. The moves were spurred by Apple’s decision to split its stock which will reduce the Information Technology index weight.

Apple made history in August and retakes the market-cap lead from Microsoft to become the first US company to be valued at US$2 trillion.

If immediate attention generally was on the FAANG group, Sea Ltd, the leading internet platform in Southeast Asia and Taiwan drew attention as well. The company outshines Tesla and the FAANG group of companies and emerged as the world’s best performing large-cap stock.

The Last Quarter – First Vaccinations

Amid the election mayhem and a probable contested election, the gridlock in Congress, another wave of hard lockdowns, and Brexit chaos, investors had a breather with promising vaccine updates. The back and forth on the US stimulus coronavirus relief package and Brexit negotiations took the markets on a wild ride in the last quarter. Throughout the last few months, Pfizer and BioNTech, Moderna and AstraZeneca issued convincing statements of the progress of the vaccine trials.

The emergency vaccine approvals and the first vaccinations across major countries like the US and the UK brought some relief following the ongoing surge in coronavirus cases in certain economies. Overall, there was enough optimism in the last few weeks for global equities to recover from October’s plunge.

Source: Bloomberg

US Share Market

Despite a contested election, the lack of timely fiscal support and the raging spread on the virus in the US, the share market was supported by the vaccine updates and first immunizations which took place earlier this month.

Source: Bloomberg

Similarly, the encouraging vaccine news was the bullish trigger for the European markets despite the further lockdowns in major European countries, tough Brexit negotiations and a slower economic recovery compared to its peers. As of writing, a new variant of the virus in the UK triggered a sell-off in the European markets. The CBOE Volatility Index jumped to the highest in a month above the 30 mark.

The new COVID mutation was mainly detected in the UK but the WHO confirmed its presence so far in Denmark, the Netherlands and Australia as well. Investors are closely monitoring statements on whether the new variant is more easily transmissible than the original strain of the disease.

The Australian Share Market – Back in Black

After the release of the Federal Budget, Australian shares started to decouple from US and European stocks as investors endorsed the government blitz which boosted confidence. During the month of November, the Australian share market has rallied significantly on the back of:

  • The easing of lockdown restrictions in the second most populated state and the second’s largest city in the country.
  • The positive vaccine updates coming from Pfizer and BioNTech, Moderna and AstraZeneca.
  • The confidence in the Australian economy as compared to other major countries. Consumer confidence reached a 10-year high.
  • Historically low-interest rates. Even though the RBA slashed interest rates to a historic low, there is a level of reassurance that the lower level of interest rates will stay for a longer period which means that the central bank is not expecting a deterioration in the Australian economy fuelling investors’ confidence.
  • The Asia-Pacific Free Trade Agreement has provided another level of confidence at a time of global trade uncertainty. It has also elevated expectations that both countries might initiate some sort of dialogue after the Chinese Communist Party has frozen all communications with Australian ministers.

In November, the ASX recorded their best month in decades and briefly erased its 2020 losses before retreating lower. As of writing, the index is currently trading at around 6,601.

Forex Market: The King Dollar?

The US dollar went on a roller coaster ride throughout the year. In a classic reaction to an unpredictable and uncertain event like the pandemic, the demand for haven assets triggered a rally in the US dollar. As panic gripped markets, dollar funding pressures drove the US dollar index to a 3-year high above the 102 level. Even though policymakers stepped in to enhance flows, the greenback remained in elevated levels.

Source: Bloomberg

A significantly bigger stimulus package compared to its peers at the beginning fuelled hopes that the US economy would probably recover faster than other major economies. The US dollar was unable to maintain the bullish momentum over the following quarters as risk sentiment improved and the US was still battling hard the spread of the virus with no signs of slowing down and stimulus packages were not flowing in as required.

Major currencies remained stronger than the US dollar in the following quarters. Major central banks like the RBA had to tap into QE for the first time this year and many even contemplate or left the door open for negative interest rates if warranted.

Source: Bloomberg

The Euro gathered strength on the historic unity, some economic recovery, the ECB stimulus program and EU budget. The renewed lockdowns and Brexit woes remain the factors that may drove further volatility in the EUR pairs. The EURUSD pair is trading at a high above the 1.22 level.

The Antipodean currencies were among the top gainers lifted by the additional funding from the central banks, governments, renewed confidence, economic data and the better containment of the virus as compared to other major economies. The AUDUSD pair is trading nearly three-year high around the 0.750 level.

Source: Bloomberg

As the Brexit deadline looms, the Pound swung between gains and losses driven by contradictory headlines and statements from both the EU and the UK. Traders grew more hopeful in the last few days when both parties appear committed to seeing a deal through despite significant differences on three critical issues: level playing fieldgovernance and fisheries. Investors were taken on a roller-coaster ride following intensifying deal negotiations and on-and-off positive and negative announcements.

Brexit hopes drove the GBPUSD pair to an intraday high of 1.3624 last week. The Pound plummeted on the news of a new variant of the virus and as of writing, the pair retreating lower to the 1.33 level.

Gold Rally

At the start of the year, the US dollar and Gold were moving in tandem due to the prevailing uncertainties – QE, low-interest rates, trade frictions, geopolitical tensions, global debt and growth uncertainties, gold hoarding by central banks have driven the gold price higher just below the $1,700 mark.

However, Gold was initially liquidated due to the wider and rapid spread of the coronavirus across the globe. The precious metal is viewed as a highly liquid asset and investors were in a need of cash due to margin calls and other liquidity requirements. COVID-19-induced liquidity issues caused the yellow metal to plunge to a low of $1,451.55.

The yellow metal rallied at the start of the third quarter to a high of $2,075 in the month of July but traded within a narrow range as investors digested some positive vaccines updates, improving economic data and easing lockdown restrictions. The XAUUSD pair plunged below a key psychological level below the $1,900 mark but held on to elevated levels.

From the health crisis point of view, the vaccine updates are fuelling the hopes of a quicker recovery and providing reassurance to investors. However, the amount of stimulus injected into the global economy over the last couple of months is evidence that the economic and financial recovery might take some time. Gold is still trading at a decade-high around the $1,880 mark.

Oil Market

An oil price war and the ongoing pandemic struck the crude oil market at a time where the industry was already faced with a simultaneous demand and supply shock. As the world grapples with the ongoing pandemic, different forms of lockdowns across the globe have severely impacted key industries of consumers of oil. Global activities have slowed down on a massive scale with empty roads, grounded aircraft, plunging car sales and disrupted supply chains abruptly sapping oil demand.

The extent of the disruptions in the energy market caused by the pandemic will probably leave a lasting impact on the oil market which may take years to overcome. Traders are analysing whether the impact of the pandemic will either accelerate the pace in using renewables or delay that process.

Crude oil prices have mostly remained stuck within a range below the $50 after the big plunge earlier this year. With a dire demand outlook from as per the October reports, there are increasing pressure from OPEC members and its allies to balance the supply side and avoid flooding the oil market with extra supply.

In a pandemic-induced environment, investors are navigating a new normal with COVID-19. Despite the painful year on the health front, the stock market had a great year driven by the prompt interventions in the financial markets by central banks and governments around the globe.

While a vaccine provided a sense of relief, we are ending the year with much uncertainty on the geopolitical, economical and health front.

By Deepta Bolaky

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With Dovish Powell, Can Gold Shine Again?

Fed Chair Jerome Powell sounded dovish during his press conference on December 16, where he gave a market update after the Fed’s monetary policy meeting. The Fed will remain accommodative for a long time, which should support gold prices.

Last week was full of important events. First, both the Pfizer/BioNTech and Moderna vaccines received emergency-use authorization from the U.S. Food and Drug Administration . In consequence, the first COVID-19 vaccination in the United States has already taken place, which is great news for America, as it marks the beginning of the end of the pandemic .

It’s high time for that! As the chart below shows, the U.S. has already lost about 314,000 people to the coronavirus.

And what is disturbing, the current wave of infections doesn’t look like it’s going to end quickly. As one can see in the chart below, the number of new daily official cases is still above 200,000 – actually, it has recently jumped to about 250,000.

So, the beginning of vaccine distribution is the light at the end of the pandemic tunnel that brings hope for a return to normalcy in 2021. It’s important to note that, contrary to the groundbreaking November news about the efficacy of the vaccines, the approval of vaccines and first injections didn’t plunge gold prices. This suggests that the bridge to normalcy built by the vaccines has already been priced in. That’s good news for the gold bulls .

Second, there was renewed optimism about the fresh fiscal support . Indeed, there are higher odds now than at least about $750 billion in aid will be passed and implemented by the end of 2020. Theoretically, the fiscal stimulus is considered to be helpful for the economy, so it should be negative for gold, however, the price of the yellow metal may actually go up amid concerns about rising fiscal deficits , public debt , and inflation .

Powell’s Press Conference and Gold

Third, the last FOMC meeting took place this year. I’ve already analyzed it in last Thursday’s (Dec. 17) edition of the Fundamental Gold Report , but then I focused on the monetary policy statement and the fresh dot-plot . As a reminder, the Fed tied tapering in its quantitative easing to the progress toward reaching full employment and inflation at two percent, while the economic projections were more optimistic, but they nevertheless didn’t see any interest rate hikes until the end of 2023.

However, it was Powell’s press conference that was really crucial, so let’s take a closer look at it. The Fed Chair sounded dovish, as he emphasized the U.S. central bank’s commitment to maintaining its very accommodative stance. In particular, Powell reiterated that the Fed will not hike interest rates or reduce its asset purchase program anytime soon. Actually, Powell said that the bank will normalize its monetary policy only after reaching the maximum employment and price stability:

“our guidance for both interest rates and asset purchases will keep monetary policy accommodative until our maximum employment and price stability goals are achieved. And that’s a powerful message. So substantial further progress means what it says. It means we’ll be looking for employment to be substantially closer to assessments of its maximum level, and inflation to be substantially closer to our 2 percent longer run goal, before we start making adjustments to our purchases.”

In other words, Powell clearly stated that he will keep his foot on the gas until at least 2023, and that he won’t pull the brakes even if inflation increases. This is because Powell believes that although inflation may rebound in 2021, it will be a temporary increase, and the Fed now has a flexible average inflation targeting framework, so it wants inflation to overshoot the target:

“What we’re saying is we’re going to keep policy highly accommodative until the expansion is well down the tracks. And we’re not going to preemptively raise rates until we see inflation actually reaching 2 percent and being on track to exceed 2 percent. That’s a very strong commitment. And we think that’s the right place to be”

This means that in 2021 the Fed is likely to be behind the curve. Higher inflation with the nominal interest rates unchanged imply lower real interest rates – further declines in these rates should push the gold prices up . Moreover, Powell will announce in advance when he wants to take his foot off the gas pedal and start reducing the amount of monetary accommodation. The Fed clearly doesn’t want the replay of the 2013 taper tantrum :

“And when we see ourselves on a path to achieve that goal, then we will say so undoubtedly well in advance of any time when we would actually consider gradually tapering the pace of purchases.”

Implications for Gold

What does it all mean for gold prices? Well, although the Fed did not expand its monetary accommodation in December, Powell was really dovish and he pointed out that the U.S. central bank would continue its current easy stance “as long as it takes until the job is well and truly done.” Gold welcomed Powell’s remarks and gained nearly $40 on Thursday, as the chart below shows.

It makes sense – after all, the Fed promised that its monetary policy would remain highly accommodative for a long time. So, although the potential for further accommodation and, thus, a great rally in gold prices is limited (at least until we see a further weakening in the US dollar or an increases in inflation and decrease in the real interest rates), the risk of a sudden tightening in the Fed’s monetary policy , that could plunge the gold prices, has diminished. Therefore, gold could shine again – at least until the markets start to worry about the normalization of monetary policy and start to forecast increases in the interest rates.

If you enjoyed today’s free gold report , we invite you to check out our premium services. We provide much more detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. In order to enjoy our gold analyses in their full scope, we invite you to subscribe today . If you’re not ready to subscribe yet though and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

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

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

 

Nasdaq Hits Yet Another Record Close

The major indices closed mixed on Wednesday (Dec. 16), as the Nasdaq hit yet another record close amidst stimulus optimism and the Fed’s dovish tone.

News Recap

  • Although the Dow Jones closed lower by 44.77 points, or 0.15%, the S&P 500 gained for the second day in a row and rose by 0.18%. The Nasdaq closed once again at a record high and gained 0.5%.
  • Sentiment for the day started negatively after the Commerce Department reported a steeper-than-expected drop in U.S. retail sales. The department stated that retail sales fell by 1.1% in November compared to estimates of 0.3%.
  • Cautious optimism that some sort of stimulus could be passed before the end of the year encouraged investors.
  • According to Politico , Congress was on the brink of a $900 billion stimulus deal that would include a new round of direct payments to consumers. However, that package would exclude the more contentious areas of liability shields for businesses and state and local aid.
  • We have reached the deadliest weeks of the COVID-19 pandemic. More than 300,000 total COVID-19 related deaths have now been confirmed in the U.S., with over 16 million confirmed cases. Additionally, US officials reported 3,400 new COVID-19 deaths – a daily record.
  • After an FDA panel officially endorsed Moderna (MRNA) – following a review which confirmed safety and efficacy earlier in the week – the big day is finally here. On Thursday (Dec. 17), the FDA will officially vote on Moderna’s vaccine. This will strongly complement the mass deployment of Pfizer (PFE) and BioNTech’s (BNTX) vaccine.
  • The Federal Reserve ’s announcement on monetary policy was largely as dovish as expected. The Fed vowed to continue its asset purchase program at the current rate, “until substantial further progress has been made toward the committee’s maximum employment and price stability goals.”
  • Microsoft (MSFT) and Salesforce (CRM) led the Dow with gains of 2.4% and 1.6%, respectively, while Walgreens (WBA) was the laggard and declined 2.15%.
  • Moderna (MRNA), despite its big week ahead, dropped 6.9%.

While there is some short-term uncertainty and mixed sentiment, there is some general consensus: While the short-term may see some pain and/or mixed sentiment, it may be worth it for the medium-term and long-term optimism.

The overwhelming majority of market strategists are bullish on equities for 2021- despite near-term risks. Outside of the pandemic raging to out of control levels, another near-term risk that has been largely overlooked is the Senate runoff election in Georgia. Investors have largely already priced in a divided government – however, if Republicans end up losing both seats in Georgia, this could potentially upend everything.

According to Jimmy Lee, CEO of the Wealth Consulting Group ,

“I think that we can get a little bit of consolidation before year-end just due to normal selling at the year-end for rebalancing or tax loss harvesting. Also, depending on where the pulse is for the Senate race in Georgia, investors might want to get ahead of that if they think that capital gains taxes may go up in the future…So that could cause some additional selling before year-end and we could get a little bit of a pullback. But I am very bullish on equities at this point. And I do think we may get a little bit more of a rotation into the economy-opening sectors.”

Meanwhile, progress on the stimulus package appears to be more optimistic than many expected in the near-term.

“The odds of a fiscal deal before year’s end have been improving,” Goldman Sachs economists led by Jan Hatzius wrote in a note Tuesday (Dec. 15). “While we had expected a smaller package to pass now with a larger package waiting until early 2021, it appears increasingly likely that most of this could pass this week.”

While markets for the rest of 2020 (and perhaps early 2021), will wrestle with the negative reality on the ground and optimism for an economic rebound, the general consensus appears to be looking past the short-term painful realities, and focusing more on the longer-term – a world where COVID-19 is expected to be a thing of the past and we are back to normal.

In the short-term, there will be some optimistic and pessimistic days. On other days, such as Wednesday (Dec. 16) (and in my opinion this will be most trading days), markets will trade largely mixed, sideways, and reflect uncertainty. Therefore, it is truly hard to say with conviction what will happen with markets in the next 1-3 months. However, if a stimulus deal passes within the next week, it could mean very good things for short-term market gains.

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 to the general public, volatility will stabilize, and optimism and relief will permeate the markets. Stocks especially dependent on a rapid recovery and reopening such as small-caps should thrive.

Due to this tug of war between sentiments, it is truly hard to say with any degree of certainty whether another crash or bear market will come.

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.

Nasdaq Hits Another Record Close – Too Good to Be True?

Is the Nasdaq’s performance since its sharp sell-off last Wednesday (Dec. 9) too good to be true? Truthfully, I don’t know. But it’s very possible – especially if shut down measurements become harsher and stricter and investors return to the “stay-at-home” trade that led markets from April through the end of October.

Additionally, I still have many concerns about tech valuations and their astoundingly inflated levels. Last week’s IPOs of DoorDash (DASH) and AirBnB (ABNB) reflect this and invoke traumatic memories of the dotcom bubble era. I believe that more pullbacks along the lines of last Wednesday (Dec. 9) could inevitably come in the short-term. Frankly, it would make me feel far more confident about initiating tech positions as well for the long-term.

Pay close attention to the RSI. While an overbought RSI does not automatically mean a trend reversal, I called keeping a very close eye on this for the Nasdaq. Last Wednesday’s (Dec. 9th) Nasdaq pullback after it exceeded a 70 RSI reflects that.

The Nasdaq has sharply rallied in the week since then. But its RSI is nearly 69. Monitor this . If the index goes on another bull-run and hits more record closes, it could surely exceed an RSI of 70 by the end of market close on Thursday (Dec. 17). I did not make a conviction call last week but I will now- if the RSI exceeds 70 this time, take profits- but don’t fully exit .

One thing I do like is how stable the volume has been this week and since the sharp sell-off last week. Stable volume is a good thing, especially if one is concerned about volatility. Low volume, especially a declining trend, means that there are fewer shares trading. Lower volume also means less liquidity across the index, and an increase in stock price volatility.

On pessimistic days, having NASDAQ exposure is crucial because of all the “stay-at-home” trade. However, positive vaccine-related news always induces the risk of downward pressure on tech names – both on and off the NASDAQ. What concerns me most are sharp sell-offs due to overheating and mania. Don’t ever let anyone tell you “this time is different” if fears of the dot-com bubble are discussed. History repeats itself, especially in markets.

It is very hard to say with conviction to sell your tech shares though. However, as I said before – if the RSI exceeds 70 again – consider selling some shares and taking profits. For now, however, the NASDAQ stays a HOLD .

For an ETF that attempts to directly correlate with the performance of the NASDAQ, the Invesco QQQ ETF (QQQ) is a good option.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Thank you.

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.

 

Markets End Week (Dec. 11) in the Red, Uncertain Short-term Sentiment

What Happened Last Week:

  • Markets throughout the week continued wrestling with short-term pain and long-term optimism.
  • After fresh record highs were reached the week before, the major indices ended the week lower due to a multitude of headwinds. Between Monday December 7th and Friday’s close December 11th, the Dow closed down 0.08%, the S&P closed down 0.77%, and the NASDAQ closed down -1.13%. The small-cap Russell 2000, however, notched another weekly gain, and closed up about 1.00%.
  • Sentiment is mixed, and the rally since election week invokes concerns of overheating, with bad fundamentals. Commerce Street Capital CEO, Dory Wiley , advised caution. He pointed to 90% of stocks on the NYSE trading above their 200-day moving average as an indication that valuations might be stretched. “Timing the market is not always well-advised and paring back can miss out on some gains the next two months, but after such good returns in clearly a terrible fundamentals year, I think taking some profits and moving to cash, not bonds, makes some sense here,” he said.
  • Judging by the jobless claims report which came in on Thursday (Dec. 10), the jobs recovery appears to have stalled. Weekly jobless claims increased by 853,000 last week versus the estimate of 730,000, representing a sharp increase from the 716,000 figure a week ago. This was also the highest number since September 19.
  • Although the Senate unanimously passed a temporary spending bill to avoid a government shutdown and buy more time to negotiate a stimulus package before the end of the year, stimulus negotiations between Republicans and Democrats continue to drag-on and weigh on sentiment.
  • The week before brought some initial signs of stimulus progress, however, Democrats and Republicans still have some critical differences. Much of the division stems from liability protections for businesses, the scope of state and local aid, and weekly unemployment benefits.
  • It is possible that there could be a minor compromise reached before the end of the year, but a larger-scale comprehensive package may not be agreed upon until 2021. The longer these talks continue, the stronger the headwinds will be for stocks, and the more damaging it will be for the U.S. economy.
  • DoorDash (DASH) and AirBnB (ABNB) both made their public debuts last week to much fanfare. Airbnb spiked 115% when it began trading publicly for the first time on Thursday (Dec. 10) while DoorDash closed 86% higher in its Wednesday debut (Dec. 9). However, according to Paul Schatz , president and chief investment officer of Heritage Capital, these debut rallies may indicate that the IPO market is getting ahead of itself, and invoke fears of “euphoria and greed” last seen in the market during the dot-com bubble.
  • The pandemic continues exceeding the previous records. After hitting 3,000 deaths a day for several days last week, Friday’s (Dec. 11) tallies, according to NBC News , showed 2,890 deaths and 226,024 new cases.
  • In the last week the U.S. has averaged 211,324 cases and 2,381 deaths per day, which is quite an increase from 168,493 cases and 1,419 deaths four weeks ago.
  • Not all is bad, though. The vaccine(s) remain a positive tailwind. After the U.K. became the first country in the world to approve the usage of Pfizer and BioNTech’s vaccine the week before, the U.S. F.D.A. ended the week by officially clearing the vaccine for emergency use. Millions of doses are expected to be shipped right away.
  • Since the vaccine was first announced on November 9, a broadening of the market’s rally began, largely led by small-cap stocks, and cyclical value stocks dependent on an economic recovery.
  • Consumer sentiment posted a surprising increase in December due to vaccine optimism. Although the economic recovery may stutter in the near term, a vaccine changes everything for 2021’s outlook. Corporate profits, for example, are forecast to grow more than 20% in 2021 .
  • According to Robert Dye, Comerica Bank Chief Economist , he is: “pretty bullish on the second half of next year, but the trouble is we have to get there…As we all know, we’re facing a lot of near-term risks. But I think when we get into the second half of next year, we get the vaccine behind us, we’ve got a lot of consumer optimism, business optimism coming up and a huge amount of pent-up demand to spend out with very low interest rates.”
  • According to a JPMorgan note to clients released on Wednesday (Dec. 9), a widely available vaccine will lift stocks to new highs in 2021: “Equities are facing one of the best backdrops for sustained gains next year…We expect markets to be driven by recovery from the COVID-19 crisis at the back of highly effective vaccines and continued extraordinary monetary and fiscal support.”
  • JPMorgan’s S&P 500 target for 2021 is 4,400. This implies a nearly 20% gain from where the index closed on Wednesday (Dec. 9).

In the short-term, there will be some optimistic days and pessimistic days. Other days, and in my opinion, which will be most trading days, markets will trade largely mixed, sideways, and reflect the uncertainty. However, if a stimulus deal passes before the end of the year, it could mean very good things for short-term market gains. It is possible that there could be a minor compromise reached before the end of the year, however, a more large-scale comprehensive package may not be agreed to until 2021.

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 stabilize, and optimism and relief will permeate the markets. Stocks especially dependent on a rapid recovery and reopening, such as small-caps, should thrive.

Due to this tug of war between sentiments, it is truly hard to say with conviction whether another crash or bear market will come.

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.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Thank you.

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.

 

COVID-19 Vaccine Update – Pfizer Inc. Approval Imminent Amidst a Virus Surge

The Latest

On Thursday, U.S FDA advisors had voted 17-4 in favor of the BioNTech/Pfizer Inc. mRNA vaccine. The vaccine vote was for the FDA approval to be inclusive of 16 and 17-year-olds. Some FDA advisors were reportedly uncomfortable including the lower age bracket, however, which resulted in 4 votes against.

Over the course of the week, a continued rise in new COVID-19 cases and 3,000 related deaths each day mounted pressure on the FDA for rapid approval.

The markets had anticipated an FDA approval in a matter of days.

On Friday, however, the FDA notified BioNTech/Pfizer Inc. that it plans to authorize the use of the mRNA vaccine in the U.S.

There were reports, following the panel vote on Thursday that White House pressure was needed to force a swift FDA response to the panel vote.

Trump was back on Twitter on Friday, this time targeting the FDA.

It was another big week on the vaccine front. With an FDA green light now imminent and the UK already in vaccination mode, Canada’s health regulator also approved the Pfizer Inc. vaccine in the week.

Canada joined Bahrain, Britain, and Saudi Arabia as the first nations to approve the vaccine, with the U.S likely to be next to join a rapidly growing list.

What’s next?

For the U.S, the federal government’s vaccine distribution program will begin within 24-hours of approval. Known as Operation Warp Speed, the government will liaise with Pfizer Inc. to deliver the vaccine to the most vulnerable by the early part of next week.

As the FDA readies to formally approve the BioNTech/Pfizer Inc. EUA, the FDA is also due to review the Moderna Inc. vaccine next week.

There will be mounting pressure for more rapid review times as other pharmas begin to complete clinical trials.

With around 21 million healthcare personal and approximately 3 million long-term care facility residents (“LTCF”), Pfizer Inc. and Moderna Inc. will not have sufficient doses produced to vaccinate phase 1a recipients this year.

Following BioNTech/Pfizer Inc.’s supply chain issues, the U.S is now reportedly due to receive just 6.4 million doses this month. That falls well short of the 24 million phase 1a recipients prioritized by the CDC, let alone the 330 million U.S population.

The Latest COVID-19 Numbers

At the time of writing, the total number of confirmed COVID-19 cases stood at 71,414,262. The total number of U.S cases has risen to 16,290,412, with the total number of related deaths rising to 302,727.

Things are not much better in other parts of the world, with new cases continue to spike in the winter months.

This continued rise in new cases will place additional pressure on other nations to catch up with Britain and the few others that have already approved the vaccine.

For the EU, the EMA is not due to review the vaccine for another month…

Other Pharmas

With the BioNTech/Pfizer Inc. vaccine now being delivered and orders mounting, Moderna Inc. is next.

Last week, news of Sanofi and GlaxoSmithKline’s vaccine showing inadequate immune response in clinical trials was a blow.

This comes off the back of issues raised over AstraZeneca and the University of Oxford’s clinical trial parameters. With AstraZeneca having kicked off a global clinical trial just weeks, hopes are that a 3rd vaccine could be approved in early January.

With the pressure to deliver an effective vaccine building, news hit the wires on Friday of AstraZeneca joining Russian scientists in a bid to improve efficacy rates. British and Russian scientists are reportedly planning to see whether combining the respective shots would deliver better results.

Clinical trials are due to start at the end of the year. AstraZeneca will also be combining its vaccine with the BioNTech/Pfizer Inc. vaccine, with clinical trials set to start in January.

Based on the latest news, Johnson & Johnson is also aiming to deliver a vaccine in early 2021.

Expectations are that inoculations beyond high priority recipients would begin towards the end of the 1st quarter. This would be aligned with Johnson & Johnson and AstraZeneca’s conclusion of clinical trials and regulatory approvals.

The Global Financial Markets

While country approvals of BioNTech/Pfizer Inc.’s vaccine are positive, too few countries have approved the vaccine to-date.

Production capacity issues also mean that countries will not receive enough doses to vaccinate entire populations.

This leaves countries and economies at the mercy of the COVID-19 pandemic for longer than would be liked.

Once there are 3 to 4 effective vaccines available in the market place, however, conditions should improve.

An end to the winter flu season coinciding with widely available COVID-19 vaccines would allow governments to begin to fully reopen economies.

We should then see a more meaningful economic recovery, supported by both fiscal and monetary policy measures.

Some nations will lag, however. Delays in ordering vaccinations and the high price of the BioNTech/Pfizer Inc. and Moderna Inc. vaccines means that some nations will have to wait.

These economies will suffer for longer before any recovery can begin in earnest.

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 .

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter . Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

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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.

Thank you for reading today’s free analysis. I encourage you to sign up for our daily newsletter – it’s absolutely free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to the premium daily Stock Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

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

Thank you.

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.