Look Out: Inflation Impact on Earnings, Peloton Treadmills, Cryptocurrency Bubble Concerns to Drive Volatility

Corporate earnings will be the major focus in the week ahead, with investors especially zeroed-in on the impact of rising costs on margins. Investors will be looking for evidence that inflationary pressures are already having a negative influence on corporate profit margins.

CNBC is reporting that from Coca-Cola and IBM to Johnson & Johnson and Netflix, investors will hear from a broad swatch of corporate America. So far, with one week in, companies are beating earnings estimates by a wide margin of more than 84%, according to Refinitiv.

This three-month period is the first to be compared to year earlier profits that were affected by the pandemic. Profit growth for the S&P 500 is a stunning 30.2% for the quarter so far, based on actual reports and estimates. That makes it the best three-month period since the third quarter of 2010, according to FactSet.

In other news, the U.S. Consumer Product Safety Commission (CPSC) on Saturday warned consumers about the dangers of Peloton’s treadmill Tread+ after reports of multiple incidents of small children and a pet being injured beneath the machines.

The price of bitcoin tumbled over the weekend and was down as much as 19.5% from record highs posted by the popular cryptocurrency in the past week. The move comes after new concerns of a bubble in the cryptocurrency market.

US Regulators Warn Consumers on Dangers of Peloton’s Treadmill

Peloton shares could take a major hit on Monday after a warning from a key government safety agency.

“CPSC staff believes the Peloton Tread+ poses serious risks to children for abrasions, fractures, and death,” the safety regulator said in a statement, adding that consumers with children should stop using the product immediately.

Peloton in a response to the regulator’s statement said it was “troubled by the CPSC’s unilateral press release about the Peloton Tread+ because it is inaccurate and misleading.”

The company said there was no reason to stop using the Tread+, but children under 16 should not use the treadmill.

The regulator said it was aware of 39 incidents including one death and was investigating all known incidents related to the Peloton Tread+.

Bitcoin Tumbles from Recent High as Cryptocurrencies Take Weekend Hit

The price of Bitcoin dropped as low as $52,148.98 on Sunday morning, days after reaching an all-time high above $64,800. Ether and Dogecoin also saw their prices drop, following a week in which investors worried that the cryptocurrency market was in a bubble.

An unverified report on Twitter claimed that the U.S. Treasury Department could be looking to crack down on financial institutions for money laundering using cryptocurrency.

Coinbase shares could drop on the news since it could mean the cryptocurrency market could face tougher U.S. regulation. Last week, it became the largest cryptocurrency company to go public.

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

Big Change Could Be Coming in How Stock Investors View Rising Treasury Yields

Investors were expecting a big number and Friday’s U.S. Non-Farm Payrolls report delivered it and then some. It was essentially a reversal of the March 2020 report and sent another powerful message that the U.S. economy is on a strong path to recovery.

Job Growth Booms

The U.S. Labor Department reported job growth boomed in March at the fastest pace since last summer, as increased vaccinations and more pandemic relief money from the government, paved the way for perhaps the greatest economic growth surge in 37 years.

Market Reaction

Stock futures showed a muted reaction to the numbers, though government bonds yields rose. Wall Street wasn’t open for trading on Friday. March E-mini S&P 500 Index futures were open for a brief time. They extended gains and were up 0.43%. But keep in mind that volume was extremely low.

The bond market was on a shortened day due to the Good Friday observance. However, yields on the benchmark 10-year notes rose to 1.7072%. Two-year Treasury yields rose to 0.1782%.

In the Forex market, the U.S. Dollar Index firmed and was up about 0.16%.

Pent up volatility is likely to strike the market early next week after investors take the weekend to digest the data.

Markets Are About to Go into a Transition

What I mean by, “markets are about to go into a transition”, is that what worked in the recent past may not work anymore. This especially refers to correlations. Specifically, the relationship between yields and stocks, yields and the U.S. Dollar and perhaps yields and gold.

There’s no hard and fast rule to follow, it’s just an observation of a sudden change in the price action that will tell us that conditions are transitioning.

Investors tend to be set in there ways when there is a strong trend. However, when conditions begin to shift, there is often a volatile reaction because trend traders have been caught off guard by the change in the fundamentals.

For example, there was a time when all three stock indexes were moving in the same direction. Then the pandemic hit and growth stocks rallied more than value plays. Then the vaccine rollout began and investors sold growth stocks and bought value stocks of companies that would benefit the most when the economy reopened.

Each time the market transitioned, some investors were caught on the wrong side of the trade. What I am trying to do is give you a reasonable chance to catch the transition before the majority of investors do.

For weeks, we have been trained to believe that rising interest rates are bad for stocks. But this outlook may already be changing. Friday’s jobs report showed the economy had definitely turned for the better. If that’s the case then the chances of a surge in inflation will increase, taking yields higher. But it also means the economy is rapidly improving and that’s good for business.

So when you come to work on Monday, don’t be surprised if you see stocks rise along with Treasury yields. Yes, they can both go up at the same time. This will mean that Wall Street has fully accepted the fact that interest rates will rise as the economy strengthens.

It will also mean that stock market investors don’t view higher yields as a detriment, but rather a sign that the economy is heating up.

My point is, don’t become a robot and start selling stocks just because yields are rising. That ship may have sailed. In other words, investors may have already “transitioned” into another set of fundamentals.

If the theme that professionals have been following changed and you’re still stuck with the old theme, you may be licking your wounds by the end of next week.

Finally, if I had to guess at what the next theme will be about, it’s going to be whether the Fed will be willing to admit it’s wrong and finally announce it will have to change policy sooner than expected. Start watching for articles about that. Remember to be a successful investor, you have to be willing to think ahead of the curve.

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

S&P 500 Stays Strong After Successful Test Of The 4000 Level

Stocks Look Ready To Test New Highs

S&P 500 has finally managed to settle above the 4000 level after U.S. President Joe Biden unveiled his infrastructure plan. Cyclical stocks were in demand, but tech shares have also gained ground as Treasury yields pulled back from recent highs.

At this point, the upside trend looks strong. The market has successfully ignored the recent increase in Treasury yields, and bond market fluctuations had limited impact on stock traders’ mood. The economic data points to a strong rebound of the U.S. economy which is boosted by the huge coronavirus relief package.

The situation on the coronavirus front remains challenging, but the market sees the light at the end of the tunnel thanks to the robust mass vaccination program. All in all, S&P 500 looks ready to test new highs after the successful test of the 4000 level.

WTI Oil Stays Above The $60 Level After OPEC+ Agrees To Gradually Increase Production

Yesterday, OPEC+ members decided to gradually increase production from May to July. OPEC+ will raise production by 350,000 barrels per day (bpd) in May and June, and proceed with an increase of 450,000 bpd in July. Meanwhile, Saudi Arabia will gradually decrease its voluntary production cut of 1 million bpd.

While oil traders remained worried about the negative impact of the third wave of the virus, they were satisfied with OPEC+ decision, and WTI oil managed to settle back above the psychologically important $60 level.

Today, the market is closed due to Good Friday holiday, but oil-related equities will have a chance to gain more upside momentum on Monday.

U.S. Dollar Remains Strong

U.S. dollar is one of the main beneficiaries of the relative strength of U.S. economic rebound. This strength is especially visible in comparison with the European economy.  Not surprisingly, the American currency gained plenty of ground against euro in March as European countries were forced to extend virus containment measures until late April.

Interestingly, stronger dollar did not put any notable pressure on stocks. At the same time, stronger dollar and higher Treasury yields served as material bearish catalysts for precious metals like gold and silver, which have recently tested yearly lows.  If the American currency continues its upside move, precious metals and miners’ stocks will find themselves under pressure.

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

An Interview with FP Markets Chief Executive Officer (Europe) – Head of EMEA, Craig Allison

1. The Australian Securities and Investments Commission (ASIC) has announced a change to leverage ratio limits and client protections from April. As an ASIC regulated broker, is this a good move for the industry and clients, and are you prepared for these changes?

We are always supportive of well-intentioned regulatory change which is designed to protect the end user. The only concern when cross-referencing similar regulatory changes globally is that the knock-on effect of over-regulation is inevitably that traders seek to trade with off-shore providers so that they can maintain their current trading conditions. We do not see an issue with clients wishing to trade offshore, as FP Markets also has alternative trading venues, however we caution all traders to ensure that they continue to trade with a reputable brand as trading with an offshore provider may increase the risks that you end up with an unscrupulous offshore provider that does not hold regulation in any jurisdiction and does not practice high compliance standards across their group.

We are well-prepared for these changes. FP Markets is a group of companies and clients have the ability to open an account with our group entities which will maintain current trading conditions. Regardless of the group entity, clients will continue to receive the same products, services, high levels of customer service and powerful technology that they are accustomed to at FP Markets.

Some clients will also be able to continue to trade under the current trading conditions with our ASIC entity, including higher leverage, by opening an FP Markets Pro Account.

2. As well-known regulators are moving in alignment with each other in terms of client protection and leverage limits, there are many unregulated offshore brokers popping up. What advice can you give to clients when picking a broker to trade with this year?

Make sure you do your homework when choosing a broker. Read online reviews and check ratings on respected websites. First question to ask is are they regulated and if so, where? Further, be sure to check that the same standards will be maintained by the provider regardless of the entity you may be trading with, as is the case with FP Markets.

Execution and trading conditions are also important – look for tight ECN pricing and fast execution so that it is mandatory that your broker fills you at the best possible price for your orders. Good forex brokers will allow you to deposit funds and withdraw your earnings hassle-free with no hidden fees and charges.

24/5 Customer Support is also very important so that you are given the real-time trading support you need.

3. Recent market volatility has caused some stockbrokers in the US to suffer platform outages and even delist some stocks for new positions. As FP Markets offers multiple asset classes to trade on, including more than 10,000 global stocks, do you envisage more stock market volatility to continue this year? How can traders protect themselves in these situations?

COVID-19 vaccine prospects should make 2021 a year of global economic recovery. Markets have priced in some of this positive good news, but more gains seem possible as corporate profits rebound and central banks remain on hold. That said, there is sure to be stock market volatility for the remainder of the year as global economies emerge out of lockdown at different speeds and the uncertainty on the effects of government bailouts continues.

In terms of traders protecting themselves, traders will look to use more robust risk and capital management protocols in volatile markets. When markets are moving swiftly, good traders will look to jump on strong trends with staggered entry trades before then employing some relatively basic profit retention strategies like trailing stop losses to ensure they maximise these profitable trades. Conversely, experienced traders will acknowledge that with volatility wider margins are needed to give positions a chance and we’d therefore expect to see smaller positions run for larger moves. Stop losses are essential on all positions in these kinds of markets and experienced traders will expect to experience the odd tough day amongst the profitable ones..

4. You recently launched the new FP Markets Trading App. Can you tell us a little more about this and what clients can expect from it?

Launching the FP Markets Mobile Trading App was a key deliverable given modern traders need to be able to trade on-the-go and our app is both intuitive and feature-packed.

The FP Markets Trading App is available on all Android and iOS devices, and off trading on Forex and CFDs across shares, indices, commodities and cryptocurrencies. Not only can traders access 60+ Currency Pairs, they can also trade in more than 50 of the world’s biggest Stocks including Facebook, Google, Apple and Amazon. FP Markets also offers leveraged trading on Commodities and more than a dozen Indices from the largest global exchanges. For traders who are interested in trading the emerging asset class that is Cryptocurrency with Bitcoin, Ethereum, Litecoin and Ripple are all part of the product range.

5. It’s well-known that you have achieved some significant growth in the past few years with many awards going your way. Are there any new developments clients can expect from you over the coming year?

We will shortly be launching an exciting new product which will cater for the growing interest in social trading, which we are very excited about. We are also continuing to invest heavily in technology by further improving our platforms and client portal and, as always, the team is working tirelessly to strengthen our product-offering and pushing to improve our already market-leading trading conditions by putting clients’ needs at the heart of our offering. Another important factor as we expand operations globally is that we are continuing to invest heavily in people by building a global team to add to our elite team of industry professionals.

S&P 500 Looks Ready To Test The 4000 Level

Stimulus Hopes And Vaccine Optimism Push Stocks Higher

U.S. markets are closed today in observance of Presidents’ Day but traders will rush back to their screens on Tuesday as S&P 500 looks ready to test new highs.

The stock market is currently supported by stimulus hopes and vaccine optimism. Traders believe that the final version of the new U.S. stimulus package will be close to Biden’s original $1.9 trillion proposal which is bullish for stocks. It should be noted that some of the money from $1,400 stimulus checks may be used by workers to buy stocks, which will provide additional support.

Meanwhile, the U.S. managed to achieve significant progress on the vaccination front, and the number of daily new cases is declining. The recent stabilization on the virus front should provide an addition boost for the economy and markets.

Oil In Focus As Yemen’s Houthis Attack Saudi Arabia’s Infrastructure

WTI oil managed to get above the psychologically important $60 level and continued to move higher after Yemen’s Houthi group stated that it struck Saudi Arabia’s airports with drones.

Saudi Arabia did not confirm this statement at the time of writing. Previously, Saudi Arabia claimed that it destroyed a drone fired by the Houthis.

The oil market is in a bullish mode as crude inventories continue to decline due to Saudi Arabia’s decision to cut oil production by 1 million barrels per day (bpd) in February and March. In this environment, any tensions in the Middle East serve as a positive catalyst for oil and oil-related equities which may enjoy strong support when the market opens on Tuesday.

U.S. Dollar Remains Under Pressure As Traders Stay Focused On Riskier Currencies

Global market optimism has recently put material pressure on the American currency which failed to continue its rebound that began in early January.

Interestingly, the recent increase in U.S. Treasury yields did not provide much support to the U.S. dollar. The yield of 30-year Treasuries have managed to settle above 2.00% as investors prepared for higher inflation as prices could be boosted by the new round of stimulus.

If the American currency moves closer to yearly lows, stocks may get additional support despite rising bond yields.

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

Economic Recovery Will Call the Shots With Central Banks in No Hurry to Curtail Stimulus

With the global economy showing signs of improvement as countries roll-out vaccines to fight the coronavirus pandemic, it’s important to monitor where the major central banks stand on interest rates, quantitative easing and the improvements they would need to see to begin relaxing monetary stimulus measures.

At this time, the major central bank policymakers seem to all agree that the pace of the economic recovery will be tied to the speed at which the vaccinations can be administered. Given that assessment, they all seem to be on the same page when they say that the coronavirus pandemic should ease over the first half of the year and give way to strong economic growth during 2021.

This assessment is also driving the rallies in crude oil and stock markets, but it’s not necessarily good enough for the central bank policymakers to begin the tapering process with some still calling for additional stimulus measures to solidify the recovery, some pledging to keep rates historically low for three more years, and some increasing QE.

Fed Has No Clear Exit Strategy Yet, Basically Staying You’ll Know When Its Time

Since these are unprecedented times, there is not blue print for the timing of a clean exit strategy. A Fed member Loretta Mester said last week, the moment at which policymakers might start to withdraw that support would be apparent to investors because the economy will be in a stronger place.

“We want to avoid a taper tantrum,” Mester said. “It’s going to be based on what’s the outcome in the economy. That’s transparent to everyone.

This suggests the Fed is probably going to wait for the economy to overshoot all of its inflationary targets, not just meet them.

The good news is, the economic recovery will be allowed to continue to call the shots for the central banks. In other words, the economy will set the direction and pace for the stock market over time.

Edward Jones Analysts See Economic Recovery Gaining Momentum

As analysts at Edward Jones stated in their weekly analysis, “This is good news for investors because we believe the economic recovery is poised to gain momentum later this year. Key players like the housing market and manufacturing are performing quite well, while monetary stimulus from the Fed and fiscal stimulus from Washington present powerful tailwinds for GDP this year. The distribution of the vaccine should unlock a lift in household spending in the second half of the year, setting the stage for a multiyear economic expansion.”

RBA Committed to Longer-Term Dovish Policy

Fed policymakers aren’t being too specific about the timing of tapering, but last week, the Reserve Bank of Australia said it will need to maintain “very significant monetary support” for several years, with the cash rate set to say near zero for “as long as is necessary” in the wake of the COVID-19 pandemic.

It also surprised the market by extending its bond buying program by another A$100 billion ($76 billion). RBA Governor Lowe also reiterated interest rates will stay low for quite a while yet even though Australia’s A$2 trillion economy has performed far better than expected after largely controlling its coronavirus outbreak.

“Before increasing the cash rate, the Board wants to see inflation sustainably within the 2% to 3% target range,” said RBA Governor Philip Lowe.

Meeting its goal would require a tighter labor market and stronger wages growth than the RBA has forecast, Lowe said.

“It is difficult to determine exactly when this condition might be met but…we do not expect it to be before 2024, and it is possible that it will be later than this,” Lowe added.

Conclusion

Are economic conditions worse than being revealed in the numbers? Are central bankers afraid of lifting stimulus until the pandemic is completely contained? Are the central bank policymakers having a hard time coming up with exit strategies?

The answer could be all of the above, which is why global equity investors continue to buy even at overvalued levels. But who really knows what overvalued is when we have historically low interest rates and massive amounts of quantitative easing and the possibility of additional fiscal stimulus.

Being long is actually a bet against another resurgence in coronavirus cases and against a quick exit from monetary policy by central banks. As long as the vaccines continue to rollout and be effective, a resurgence is not likely to occur. Meanwhile, as long as the central banks are willing to give sufficient time for their economies to recovery, it may take years before the exit strategies are applied. In the meantime, enjoy the bullish ride.

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

COVID-19 Vaccine Update – New Strains and Supply Issues Remain a Concern

Vaccine News

Over the weekend, the news wires reported that the Johnson & Johnson vaccine could receive approval in just 2-weeks.

Dr. Anthony Fauci’s comments came amidst announcements of supply issues.

With just 2 vaccines currently approved for emergency use in the U.S, an approval of a 3rd vaccine would ease the strain.

Things may not improve near-term for the likes of the EU, however, which is likely to continue to face supply constraints.

In other parts of the world the AstraZeneca vaccine has already received approval for emergency use. This is not the case in the EU and the U.S, however.

While the EMA is scheduled to review AstraZeneca vaccine later this week, the U.S timeline is far lengthier.

The U.S FDA is currently due to review the AstraZeneca vaccine in April.

It goes without saying, however, that the U.S is not alone in needing access to multiple vaccines.

A Johnson & Johnson and AstraZeneca approval in the U.S and the EU will be key, though supply will remain a concern.

We have heard plenty of bullish production numbers floated by the leading three in the race to end the pandemic.

It remains to be seen, however, if the three can play catch up and meet their 1st quarter targets.

If the most recent updates are anything to go by, the need for a single dose vaccine has become all the more urgent.

Vaccinations Rates

According to the Bloomberg Vaccination Tracker, the U.S has administered 22,396,673 doses as at 24th January.

U.S states have only administered 54% of shots delivered, however, leaving the vaccination rate at just 6.8 doses per 100.

Transportation and storage requirements of both Pfizer Inc. and Moderna Inc.’s vaccines have contributed to the low vaccination rate.

By contrast, the UK has seen its vaccination rate jump to 10.21 doses per 100 people. The UK’s approval of the AstraZeneca vaccine enabled the sharp rise in the vaccination rate.

As at 24th January, Israel continued to have the highest vaccination rate at 39.94.

The UAE ranked 2nd, with a vaccination rate of 23.14, with the Seychelles coming in ahead of the UK, with a rate of 19.12.

In terms of actual doses administered, however, the U.S and China were well ahead of other nations.

As at 20th January, China had administered 15 million doses of the vaccine, sitting behind 22.4 million in the U.S.

In spite of supply issues, the EU ranked 3rd, administering 8.6 million doses.

The UK ranked 4th, with 6.8m doses, followed by Israel (3.6m) and the U.A.E (2.5m)

Looking across the EU, the Netherlands had amongst the lowest vaccination rates. As at 22nd January, the vaccination rate stood at just 0.78 doses per 100 people.

For France, one of the worst affected EU member states, the vaccination rate stood at 1.58. While this was up from 1.49 doses per 100 as at 22nd January, the rise was a marginal one at best.

Germany also trailed the EU front runners, with a rate of 1.96 doses per 100 people as at 23rd January.

Spain and Italy had performed somewhat better, with vaccination rates of 2.51 (22nd January) and 2.28 (24th January) respectively.

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 99,774,351 confirmed COVID-19 cases and 2,139,03` related deaths.

By geography, the U.S had reported 25,702,125 cases and 429,490 COVID-19 related deaths.

India reporting 10,668,674 cases, with Brazil reporting 8,844,600 cases.

Sitting behind Russia (3,719,400) remained the UK (3,647,463).

France (3,053,617), Italy (2,466,813), Spain (2,603,472), and Germany (2,147,740) reported a combined 10,271,642 cases.

Looking Ahead

Johnson & Johnson’s vaccine approval by the FDA and AstraZeneca approval by the EMA remain key near-term.

Pfizer Inc. and AstraZeneca, in particular, will also need to address supply issues, however, to support a marked increase in vaccination rates.

Over the weekend, news hit the wires of further lockdown measures to hit France next month.

Of greater concern, however, was reports that vaccinated people can still spread the coronavirus.

For countries with low vaccination rates, this would mean that containment measures may remain in place for longer.

Coupled with the rising number of new and reportedly more virulent strains, border controls could also be seen across a wider number of countries.

For countries with higher vaccination rates, governments will also need to maintain momentum to deliver the 2nd doses.

This will also mean that countries would need to avoid supply constrains to meet the vaccination timelines.

The UK’s British Medical Association Board chair stated last week that there was increased concern that the vaccine would become less effective with doses 12-weeks apart.

It will therefore be all the more important to complete the vaccine dose regimens within optimal timelines.

When considering the supply shortage that the EU currently faces, a quick resolution is going to be needed to avoid making the 8.57 million administered doses redundant.

COVID-19 Vaccine Update – The EU’s Vaccine Woes Worsen and Is Unlikely to Improve Anytime Soon

EU Vaccine News

As the EMA readies to review the AstraZeneca vaccine on 29th January, there was some bad news for EU member states.

AstraZeneca has issued a warning to EU member states to expect limited supply of the vaccine near-term.

The EU has ordered up to 400 million doses of the AstraZeneca vaccine, with up to 100 million due within the 1st quarter.

Last week, the FT reported that AstraZeneca may only deliver less than half of the 100 million doses. That means that less than 25 million would receive full protection by the early part of the 2nd quarter.

It was also reported that there was deep satisfaction within the EU Commission even though the vaccine had yet to be approved.

With the EU having made significantly smaller Pfizer Inc. and Moderna Inc. vaccine orders, the shortfall will raise further concerns over the Eurozone economy and its recovery.

Less than 50 million doses would barely make a dent in inoculating the more than 440 million population.

The bad news followed Pfizer Inc’s cut back in supply to the EU earlier in the month.

Vaccination rates across the EU remain woefully short. The latest news will continue to leave vaccination rates on the lower side that will add further pressure on governments to contain the virus by other means.

Vaccinations Rates

According to the Bloomberg Vaccination Tracker, the EU’s vaccination rate stood at 1.79 doses per 100 people as at 22nd January.

This continued to fall well short of the UK, the U.S and leading nations in the Middle East.

As at 22nd January, Israel had the highest vaccination rate of 37.14 doses per 100 people.

The U.A.E came in a distant second, with a vaccination rate of 21.76 doses per 100.

Bahrain ranked 3rd, with a rate of 9.71 (19th January), with the UK coming in 4th with a rate of 8.76 doses per 100.

With Joe Biden’s drive to vaccinate 100 million in 100 days, the U.S vaccination rate climbed to 6.04 as at 22nd January.

Looking across the EU, France was amongst the worst performers, with a vaccination rate of just 1.49.

Germany also trailed the front runners in the EU, with a rate of 1.81 doses per 100 people.

Spain and Italy had performed somewhat better, with rates of 2.51 and 2.17 respectively.

When considering the fact that these 4 member states are the worst affected, the numbers should have been better.

A lack of supply and currently low rates are a bad combination for the EU. This raises the prospects of even more restrictions to hurt the region’s economy.

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 98,750,103 confirmed COVID-19 cases and 2,116,438 related deaths.

By geography, the U.S had reported 25,390,042 cases and 424,177 COVID-19 related deaths.

India reported 10,640,544 cases, with Brazil reporting 8,755,133 cases.

Sitting behind Russia (3,677,3520) remained the UK (3,583,907).

France (3,011,257), Italy (2,411,854), Spain (2,603,472), and Germany (2,125,261) reported a combined 10,151,844 cases.

Looking Ahead

The reported AstraZeneca supply constraints make Johnson & Johnson’s vaccine availability all the more important.

A single dose vaccine would certainly ease the strain on the EU that will now have to maintain containment measures for longer.

The EU will be able to order up to 400 million doses of the Johnson & Johnson vaccine. This would cover close to the entire EU population should a single dose vaccine receive approval.

For the EU, however, a lack of supply by AstraZeneca and Sanofi troubles mean that the entire population would not receive a vaccine for some time.

The EU had preordered 300 million doses from Sanofi, which won’t be ready until later this year at the earliest.

As the markets respond to supply issues, we can expect focus on vaccination rates, infection rates, supply to become greater near-term.

Johnson & Johnson Vaccine News

News hit the wires this week that late clinical trial results will be available within the coming weeks.

With the U.S FDA ready to review the vaccine, single dose vaccines could be available within the U.S this quarter.

The easier to transport vaccine means that governments would be able to ramp up vaccination rates. For governments lagging behind, the biggest advantage will be the fact that it is a single dose vaccine.

Approvals would need to be given, however, for distribution of the vaccine. A slow moving EMA could see the EU fall further behind its peers.

It’s worth noting that the EU had secured enough vaccine doses to cover 183.5% of the population.

While Johnson & Johnson may be able to ease the pain, it will be some time before vaccination rates hit appropriate levels.

An Economic Recovery in the Waiting. COVID-19 Vaccination Rates Suggest a Longer Wait for Some

Economic Recovery

Following the 2nd quarter economic meltdown of 2020, major economies rebounded in the 3rd quarter.

A reopening of borders and businesses spurred the recovery. Many hoped that the worst of the COVID-19 pandemic had passed.

Going through the 4th quarter, however, conditions deteriorated rapidly once more.

The number of COVID-19 cases soared across the U.S, Europe, and beyond.

Amidst the doom and gloom, the Chinese economy provided a glimmer of hope.

Last week, 4th quarter GDP numbers impressed. While a spike in new COVID-19 cases in China muted the impact of the stats on riskier assets but the recovery was plane to see.

Other economies, have been less fortunate.

Those most at risk of an extended period of contraction are economies most dependent upon consumption and tourism.

For now, the global financial markets appear to be signaling a more uniform global economic recovery through 2021.

The latest COVID-19 numbers, vaccination rates, and containment measures paint a different picture, however.

The Economic Calendar

Next week, 4th quarter GDP figures are due out of the U.S, Germany, and France to name but a few.

Looking at the forecasts, the U.S economy is projected to grow by 4.4% in the 4th quarter.

It’s a different story for France and Germany, however.

Extended lockdown periods through late 2020 will likely lead to another sizeable quarterly contraction.

Economists have forecasted the French economy to contract by 3.2% and Germany’s by 4.6%.

Relative to the 2nd quarter of 2020, the contractions are relatively mild. By historical standards, however, these are quite dire forecasts.

Vaccinations Rates

According to the Bloomberg Vaccination Tracker, the U.S vaccination rate was 5.23 doses per 100 people as at 20th January.

With President Biden’s aim of 100 million vaccinations in 100 days, this is expected to accelerate in the coming weeks. The numbers have already picked up from quite dire levels just last week. As at 10th January, the U.S had had a vaccination rate of just 2.44 doses per 100 people.

While other countries face supply issues, this has not been the case for the U.S. To put it into perspective, 48% of shots distributed to states in the U.S have been administered. In numeric terms, 17.18 million doses have been administered.

Much will now depend on whether the U.S President meets his 100 million target or needs to reintroduce lockdown measures.

At the time of writing, the total number of COVID-19 cases in the U.S sits at 24,998,975, with the total number of deaths hitting 415,894.

Any acceleration in new cases and the U.S government may have little choice but to contain the spread. With labor market conditions still in dire straits, this would have painful consequences for the U.S economy.

The only goods news is that the Democrats now control both houses. Delivering fiscal support should be easier. Bringing unemployment back to pre-pandemic levels, however, is likely to be a far more difficult task.

Elsewhere, a number of governments have made strong progress in driving vaccinations. This bodes well for more rapid economic recoveries. These nations are few and far between, however.

Israel continues to lead the charge, with a vaccination rate of 32.56 doses per 100 as at 20th January. The U.A.E remains ranked 2 in terms of vaccination rates. (20.11 doses per 100 as at 19th Jan).

As at the 20th January, the UK is also at the top end of the table, with a vaccination rate of 7.59 doses per 100.

The EU

For the EU, however, the slow authorization of COVID-19 vaccines and apparent bad planning has been reflected in the figures.

EU wide, the vaccination rate stood at just 1.51 doses per 100 people as at 20th January. When considering the fact that the total number of COVID-19 cases is more than 10 million, this remains a concern.

Not only are we likely to see economic divergence globally but also within the EU.

Germany’s vaccination rate stood at 1.56 doses per 100 as at 20th January. By contrast, France’s vaccination rate was just 1.07.

Italy and Spain were amongst leading EU member states with rates of 2.07 and 2.21 doses per 100. These rates are also on the lower end for developed nations, however.

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

Supply and Demand

Since the approval of vaccines in the U.S, Europe, and beyond, supply has become a focal point.

Back in December, we had highlighted supply as a key consideration as governments procure vaccines.

Some governments have been able to secure enough vaccines to inoculate 100% of their populations.

Others will barely touch the surface and will have to wait.

When considering the vaccination rates today and the need for 2 doses, it could be a long wait.

Some governments will undoubtedly be wanting to avoid going into another winter once this winter season passes.

Until there are more vaccine options and greater supply, however, this remains a credible risk for some.

As things stand, therefore, we continue to see Johnson & Johnson and AstraZeneca as two key players in the fight against the global pandemic.

Johnson & Johnson is key due to its goal to deliver a single dose vaccine. AstraZeneca remains key due to is affordable and easy to transport vaccine, not to mention manufacturing capabilities.

Government agencies including the EMA will need to authorize the use of these vaccines more hastily to support a speedier economic recovery.

The markets can then begin to look to developing economies that have continued to struggle since the beginning of the pandemic. Failure of the likes of Europe to catch up with the U.S and even the UK, could lead to an economic decoupling.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 97,384,877 confirmed COVID-19 cases and 2,085,507 related deaths.

By geography, the U.S had reported 24,998,975 cases and 415,894 COVID-19 related deaths.

India reporting 10,611,719 cases, with Brazil reporting 8,639,868 cases.

Sitting behind Russia (3,655,839) remained the UK (3,505,754).

France (2,965,117), Italy (2,414,166), Spain (2,412,318), and Germany (2,090,161) reported a combined 9,881,762 cases.

Looking Ahead

Existing vaccine providers are going to need to materially increase supply in order to support the bullish outlook towards the economic recovery.

Market sensitivity to reports of any supply constraints will likely build in the current quarter. Failure to ramp up vaccination rates coupled with supply constraints would have an even more material impact on risk sentiment. All of this is before considering a continued rise in new cases and further extensions to lockdown measures.

For now, the pressure will be on the likes of AstraZeneca and Johnson & Johnson to deliver.

A marked increase in supply from Pfizer Inc. and Moderna Inc. would also be welcome.

At some point, however, the focus may well shift to how well or how badly governments have performed.

COVID-19 Vaccine Update – Some EU Member States Break Ranks

EU Vaccine News

Following the EMA’s decision to bring forward the review of the AstraZeneca vaccine, EU member states are looking to get ahead in placing orders.

Over the weekend, news hit the wires that the Irish government was in talks to secure delivery of the yet to be authorized vaccine.

Pfizer Inc. supply issues experienced across member states has resulted in bid to secure supply from elsewhere.

Ireland expects to receive more than 3 million doses of the AstraZeneca vaccine. By receiving the vaccine ahead of the EMA recommendation and EU Commission authorization, it would mean that the vaccine could be administered immediately upon authorization.

Last week, the EMA had indicated that upon recommendation, the vaccine would be widely available by mid-February.

Ireland would therefore be around 2-weeks ahead of other EU member states. More importantly, Ireland may also avoid jostling with other EU member states for supply.

Having seen Britain go it alone on the vaccine front and approve the AstraZeneca vaccine late last year, Britain’s vaccination rates are well ahead of any of those seen across the EU.

Vaccinations

According to the Bloomberg Vaccination Tracker, Ireland’s vaccination rate stood at 1.90 doses per 100 people as at 13th January.

While well short of the likes of the Israel, the U.A.E and even the UK and the U.S, its well ahead of many other EU member states.

To put it into perspective, the EU has a vaccination rat of 1.41 doses per 100 people as at 19th January.

Italy and Spain had rates of 2.01 and 2.08 doses per 100 as at 19th January.

By contrast, however, France had a vaccination rate of just 0.90 doses per 100. The numbers from the Netherlands were even more alarming. As at 19th January, the Netherlands had a vaccination rate of just 0.45 doses per 100 people.

With the broad spread of rates, it is not wholly surprising that some EU member states are looking to jump the gun in securing vaccine supply.

Ireland is certainly not amongst the worst affected by the COVID-19 pandemic.

At the time of writing, Ireland had a total of 176,839 total COVID-19 cases and 2,708 related deaths.

While well below the numbers reported from the likes of France, Germany, Italy, and Spain, there is some urgency globally to secure more vaccines.

New strains of the coronavirus have proved significantly more virulent and as a result could have a significant impact on economic conditions.

Germany has already announced an extension to its lockdown. Merkel also talked of a possible need to shut down borders in order to protect the country from new strains.

Without an adequate vaccine supply and vaccination drive, the impact of the new strains could be devastating.

COVID-19 numbers from the UK had certainly sent a warning to neighboring countries over the holidays.

Global Numbers

Leading the charge geographically, by vaccination rate, continues to be Israel.

As at 19th January, Israel had a reported vaccination rate of 29.78 doses per 100, up from 25.91 as at 17th January.

The U.A.E continued to trail Israel in 2nd place, with a rate of 19.21 doses per 100.

Sitting behind Bahrain in 3rd was the UK, with a vaccination rate of 7.07 doses per 100. This was up from 6.45 doses per 100 as at 17th January.

Looking at the numbers, A marked increase in vaccination rates is going to be needed to support a speedier economic recovery.

Further extensions to existing lockdown periods could begin to hit the prospects of a 2nd quarter recovery.

While we see economic divergence globally, stemming from marked differences in vaccination rates, the same is likely within the EU.

For the Eurozone economic outlook, France, Germany, Italy, Spain, and the Netherlands will need to materially ramp up vaccinations.

It will be interesting to see whether the issue is raised during the ECB press conference tomorrow. How does the ECB see growth when considering the divergence in vaccination rates across member states?

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 96,625,755 confirmed COVID-19 cases and 2,065,698 related deaths.

By geography, the U.S had reported 24,806,964 cases and 411,486 COVID-19 related deaths.

India reporting 10,596,442 cases, with Brazil reporting 8,575,742 cases.

Sitting behind Russia (3,612,800) remained the UK (3,466,849).

France (2,938,333), Italy (2,400,598), Spain (2,370,742), and Germany (2,071,473) reported a combined 9,781,146 cases.

Looking Ahead

The AstraZeneca vaccine remains the key to bringing the pandemic under control near-term. This is largely due to an expected abundance of supply.

When considering the current vaccination rates, however, there is one other factor to consider.

Pfizer Inc., Moderna Inc., and AstraZeneca’s vaccines are 2-dose vaccines. This means that another round of vaccines is going to be needed for effective protection against the virus.

When considering current vaccination rates, some of the more adversely affected nations may not be anywhere 50% vaccinated before the 2nd quarter.

This is yet another factor for the markets to consider in terms of any economic recovery.

The availability of a single dose vaccine may not be far off, with Johnson & Johnson set to release data imminently. In all reality, however, supply constraints could limit the availability of a single dose vaccine beyond U.S borders.

Johnson & Johnson Numbers

Johnson & Johnson had previously projected to deliver 12 million doses by the end of February and 100 million doses by the end of June.

According to recent reports, however, Johnson & Johnson may a number of months behind.

That suggests that 1 billion doses by the end of 2021 may also be an ambitious target.

Pfizer Inc., Moderna Inc., AstraZeneca, Sputnik V, and China’s two vaccines will be key near-term. Ultimately, however, it will likely be a single dose vaccine that brings an end to the COVID-19 pandemic.

Availability across the globe is going to be needed, however, for the pandemic to truly come to an end.

As we have seen in the early days of the COVID-19 vaccines, richer nations have cornered much of the vaccine supply.

This will also need to change for the number of new cases across the globe to begin falling.

Stock Traders Wait For Clarity On Stimulus

The New Stimulus Package Will Remain In Spotlight In The First Days Of Biden’s Presidency

U.S. President-elect Joe Biden has recently unveiled his stimulus plan which is worth as much as $1.9 trillion. Theoretically, the huge stimulus announcement should have served as a significant upside catalyst for stocks. In practice, traders have doubts about whether the stimulus plan will remain intact during negotiations between lawmakers.

As a result, S&P 500 has corrected from recent highs but remains close to all-time high levels. The recent Retail Sales report showed that Retail Sales decreased by 0.7% month-over-month in December as the second wave of the virus put pressure on consumer activity. On a year-over-year basis, Retail Sales were up by 2.9%.

The U.S. economy clearly needs another round of stimulus, and markets may give more weight to this topic compared to the earnings season as companies’ reports reflect past performance while the new stimulus package will have a major impact on the future performance of the economy.

The U.S. Dollar Continues To Rebound

The U.S. dollar finished the previous year on a weak note and looked ready to continue its downside move. However, the American currency has found support in the early days of this year and continues to rebound against a broad basket of currencies.

The main driver of this rebound was the sell-off in the U.S. Treasury market which pushed Treasury yields to multi-month highs. However, Treasury yields have pulled back from recent highs while the U.S. dollar continued to move higher.

The continuation of the current rebound may have a significant impact on commodities and stocks so traders should watch this situation closely. If traders and investors continue to increase their purchases of the safe-haven dollar, riskier assets may find themselves under pressure.

Oil Will Try To Move Higher Despite The Extension Of Lockdowns In Europe

Oil has slipped from recent highs as traders took some profits after a major upside move which was supported by declining inventories and Saudi Arabia’s decision to cut production by 1 million barrels per day in February and March. Oil-related stocks also corrected from multi-month highs.

The recent data from China which indicated that the country’s Industrial Production increased by 7.3% year-over-year in December may provide additional support to oil as it showed that the main driver of the current oil demand rebound was in decent shape.

The main risk for oil and oil-related stocks in the near term is the situation in Europe which will likely have to leave significant virus containment measures until the end of the first quarter. However, traders have previously managed to ignore the negative developments in Europe so oil has decent chances to continue its upside move.

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

COVID-19 Vaccine Update – Brazil and India Look to Ramp up Vaccinations

Vaccinations

According to the Bloomberg Vaccination Tracker, more than 42,2m vaccines have been administered as at 17th January.

This figure is likely to be higher, with numbers from China, a number of EU member states, and other parts of the world yet to be updated.

By doses administered, the U.S leads the way, having administered 14.31m doses, as at 17th January.

As at 13th January, China had administered 10 million doses as the government looks to prevent another wave of the pandemic.

While the EU sits behind China, with 5.27m doses administered, the UK ranks 4th, with 4.31m doses administered.

Vaccination Rates

When looking at vaccination rates, however, it is a different story.

China had a vaccination rate of just 0.71 per 100 people, with the EU having a vaccination rate of 1.19 per 100.

It was slightly better for the U.S after the weekend, with the vaccination rate rising to 4.36 per 100.

This number remains particularly low, however, when considering the continued rise in new cases and related deaths. For incoming president Joe Biden, the bigger concern, however, will be the fact that only 46% of doses distributed have been administered.

Biden has pledged the vaccination of 100 million in 100 days. A greater vaccination drive is going to be need to, not only meet the pledge, but to bring the pandemic under control.

New strains of the virus have contributed to the pickup in infection rates.

The good news is, however, that the vaccination rate is well above 2.44 doses per 100 as at 12th January.

Global Numbers

Leading the charge geographically, by vaccination rate, continues to be Israel.

As at 17th January, Israel had reported a vaccination rate of 25.91 per 100 people.

The U.A.E was narrowing the gap, with the vaccination rate climbing from 15.50 to 17.52 per 100 as at 17th January.

From the UK, the government’s vaccination drive was reflected in the latest figures. As at 17th January, the vaccination rate stood at 6.45 doses per 100 people. This was up from 5.51 doses per 100 as at 15th January.

By contrast, the EU continued to fall well behind the U.S and the UK.

As at 17th January, the EU had a vaccination rate of 1.19 per 100.

Amongst the 4 worst affected member states, Italy continued to lead the way with a vaccination rate of 1.90 doses per 100 as at 17th January. This was up from 1.66 as at 15th January.

17th January figures for Spain, Germany, and France were not yet available.

France continued to disappoint, however, with a vaccination rate of just 0.65 per 100 as at 16th January.

The latest figures from Germany and Spain were somewhat better.

As at 16th January, Germany had a vaccination rate of 1.26 per 100, with Spain a vaccination rate of 1.65 as at 15th January.

When considering the ongoing lockdown measures and continued rise in new cases, however, more is going to be needed.

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 95,480,678 confirmed COVID-19 cases and 2,039,607 related deaths.

By geography, the U.S had reported 24,482,050 cases and 407,202 COVID-19 related deaths.

India reporting 10,572,672 cases, with Brazil reporting 8,488,099 cases.

Sitting behind Russia (3,568,209) remained the UK (3,395,959).

France (2,910,989), Italy (2,381,277), Spain (2,252,164), and Germany (2,050,099) reported a combined 9,594,529 cases.

Looking Ahead

This morning, we saw 4th quarter GDP numbers from China fail to support demand for riskier assets. In spite of upbeat numbers, a recent pickup in new COVID-19 cases in China muted the effect of the numbers.

This was in spite of the ongoing vaccination drive across the country.

With vaccination rates at the lower end for China and other major economies, the continued rise in new COVID-19 cases is likely to slow any economic recovery.

Fiscal and monetary policy support may be in place but without an easing of lockdown measures, consumption will likely continue to wane.

Last week, December retail sales figures from the U.S fell further. This was in spite of the government holding off reintroducing a nationwide lockdown.

As governments look to ramp up vaccination rates, vaccine supply will soon become a focal point.

For the EU, in particular, approval of the AstraZeneca vaccine is likely to be key. At the time of writing, however, the EMA is not due to review the vaccine until 29th January.

This means that the EU would likely continue to see a reduced supply of COVID-19 vaccines until mid to late February.

Extended lockdown measures across France, Germany, and Italy in particular would also question the ECB’s growth forecast for 2021…

India and Brazil

For Brazil, which has seen a spike in new COVID-19 cases as a result of new strains, Anvisa approved both the AstraZeneca and Sinovac vaccines.

Two medical centers in the country are reportedly set to manufacture the vaccines to meet national demand.

India, which ranks ahead of Brazil in terms of total COVID-19 cases, is also on a vaccination drive. The government reportedly delivered millions of doses of approved vaccines across the country in just a matter of days.

Alongside Brazil, India is using the AstraZeneca vaccine. In addition, India is also administering its very own Covaxin vaccine.

As at 17th January, India had a vaccination rate of just 0.02 per 100. At the time of writing, there were no figures available from Brazil.

COVID-19 Vaccine Update – Vaccination Rates and COVID-19 numbers

Vaccination Rates

As at 15th January 2021, the U.S had administered the largest number of doses worldwide, totaling 12,962,550.

While leading by doses administered, vaccinations per 100 remained particularly low at 3.95 doses. This was up from just 2.44 doses per 100 people as at 12th January, however.

Leading the charge by vaccination rate continued to be Israel with a rate of 24.24 per 100 people as at 15th January.

The U.A.E remained in 2nd place, with a vaccination rate of 15.50 doses per 100 people.

While Bahrain ranked 3rd, with a rate of 8.28 doses per 100, the figures from the UK were also impressive.

As at 15th January, the UK had recorded a vaccination rate of 5.51 doses per 100 people.

Totaling 3,678,180 vaccines, the rate was up from 2.99 doses per 100 as at 12th January. The figures reflected the British Government’s vaccination drive in a bid to bring the pandemic under control.

For the EU, the numbers were marginally better but certainly not at levels needed to ease lockdown measures.

Amongst the 4 worst affected member states, Italy continued to lead the way with a vaccination rate of 1.66 doses per 100.

Spain and Germany were aligned with rates of 1.66 and 1.65 per 100. France, however, continued to trail, with a vaccination rate of just 0.60 doses per 100 people.

For a full breakdown of vaccination rates by country, please visit Bloomberg Vaccination Tracker page here.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 94,324,566 confirmed COVID-19 cases and 2,108,103 related deaths.

By geography, the U.S had reported 24,102,429 cases and 401,856 COVID-19 related deaths.

India reported 10,543,659 cases, with Brazil reporting 8,394,253 cases.

Sitting behind Russia (3,520,531) remained the UK (3,316,019).

France (2,872,941), Italy (2,352,423), Spain (2,252,164), and Germany (2,023,802) reported a combined 9,501,330 cases.

Looking Ahead

With new COVID-19 cases continuing to rise, COVID-19 vaccine supply and vaccination rates will remain key areas of focus near-term.

New variants of the coronavirus are being identified across the globe, with each more virulent than the original strain.

The new strains have added further pressure on governments to take more aggressive steps to combat the pandemic.

Supply remains a constraint for many countries, however, which could lead to extended lockdown measures.

For the EU that trails the UK and the U.S, approval of the AstraZeneca vaccine would ease the strain.

Last week, news hit the wires that AstraZeneca had submitted a request to the EMA for conditional marketing authorization.

According to the EMA website, an opinion could be issued by 29th January during the meeting of the EMA’s scientific committee for human medicines (“CHMP”).

The EMA has caveated, however, that data submitted on the quality, safety, and efficacy of the vaccine must be sufficiently robust and complete.

Upon a CHMP recommendation, the European Commission would then fast track its decision-making process. The time lines suggest that the AstraZeneca vaccine would be available for use across the EU by mid-February.

With Pfizer Inc. supply to the EU reportedly coming up short of expectations, AstraZeneca will need to make up the shortfall.

The EU has a contract with AstraZeneca to purchase up to 400 million doses of its vaccine.

COVID-19 Vaccine Update – China’s Sinovac Comes under Scrutiny

Sinovac

This week, clinical trials of China’s Sinovac vaccine delivered particularly disappointing results.

In Brazil, late-stage clinical trial results showed that Sinovac had an efficacy rate of 50.4%. Sinovac had announced previously announced an efficacy rate of 78%.

The sizeable difference between the two sets of results has raised questions over China’s data.

While the efficacy rate sits just above the WHO’s 50.0% threshold, there will likely be the need for a more detailed review for the vaccine to be accepted.

A large number of countries are reliant upon the Sinovac vaccine, having failed to make timely orders of the more effective vaccines available at present.

Brazil, is among countries that have placed orders with Sinovac.

With a larger percentage of healthcare workers in the U.S refusing to take the Pfizer Inc. vaccine, governments may face a harder task convincing its populations to take the Sinovac vaccine.

Such differences in results could raise concerns over vaccine safety, in particular.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 92,767,845 confirmed COVID-19 cases and 1,986,696 related deaths.

By geography, the U.S had reported 23,616,345 cases, with India reporting 10,512,831 cases.

Brazil reported the 3rd highest, with 8,257,459 cases, followed by Russia (3,471,053) and the UK (3,211,576).

France (2,830,442), Italy (2,319,036), Spain (2,176,089), and Germany (1,980,861) reported a combined 9,306,428 cases.

Looking Ahead

As a result of Brazil’s clinical trial results, we can expect Pfizer Inc., Moderna Inc., and AstraZeneca to come under pressure to deliver more doses worldwide.

On Wednesday, Johnson & Johnson provided some positive news to ease the strain, however.

As clinical trials continue, the firm’s chief scientist provided a positive view of the single dose vaccine.

The company’s chief science officer also announced that the single shot vaccine remains on target for rollout in the 1st quarter. Clinical trial data is due out later this month or in early February.

Johnson & Johnson has set a goal of 1 billion doses of the vaccine to be manufactured this year. There were reports, however, that Johnson & Johnson has experience manufacturing delays that would impact the 2021 target.

With China’s numbers now in question, Russia’s Sputnik V vaccine may also begin to draw greater interest.

COVID-19 Vaccine Update – UK Government Ramps up Vaccinations

U.K Vaccination Rates

Late last week, the British Government announced an initiative to ramp up vaccination rates in a bid to combat the COVID-19 pandemic.

A reintroduction of lockdown measures over the holiday season was a severe blow to the economic outlook.

Approval of the AstraZeneca vaccine, however, provided the UK economy more than a glimmer of hope.

Armed with a UK manufactured vaccine, rather than dependent upon supply from overseas, the UK government changed its battle plan.

As at 12th January, the UK vaccination rate climbed to 4.26 doses per 100 people. This was up from 2.99 as at 10th January.

Expectations are for the number of new cases and COVID-19 related deaths to begin easing.

Coupled with a marked increase in vaccinations, the UK could be in a position to begin easing containment measures before the end of the 1st quarter.

When considering disappointing vaccination rates elsewhere, the UK economy could be one of the 1st out of the blocks…

Vaccination Rates

Over the weekend, the vaccination rate in the UK had stood at 2.99 per 100 people. While the number looked low, only a handful of nations were ahead.

These included Israel at 20.08 per 100, the UAE at 10.11 doses per 100, and Bahrain at 6.01 doses administered per 100.

For the U.S, skepticism towards the vaccine saw the vaccination rate lag at just 2.44 doses per 100 people.

Of greater concern for the incoming Joe Biden, however, will likely be the vaccination rates of below 50% in the worst affected states.

Over the weekend, California and Florida had reported vaccination rates of 31.7% and 44.0% respectively. These fell well short of Connecticut, which had reported a vaccination rate of an impressive 71.8%.

As at the time of writing, the U.S had administered 9.4 million, according to Bloomberg’s vaccine tracker. This is up from 8.02m that had been administered from 14th December until 10th January.

While we have seen an uptick over the last few days, just 36% of shots distributed to states have been administered. This was unchanged from the weekend.

For a full state-by-state breakdown of vaccination rates, please click here.

Impressively, however, COVID-19 vaccines administered globally has shot up from 25.84m doses to 30.57m doses.

As at 12th January, Israel continues to lead the way, with the vaccination rate climbing to 20.67%.

The UAE remains a distant second, with 11.87 doses per 100, with Bahrain’s vaccination rate standing at 6.24 per 100 as at 11th January.

EU Vaccination Rates

While we have seen vaccination rates on the rise in the UK, the EU remains a major laggard.

As at 12th January, the EU’s rate of vaccination stood at just 0.72 doses administered per 100 people.

The figures are according to the Bloomberg COVID-19 tracker.

Amongst the worst affected member states, France continued to trail significantly. As at 12th January, France had a vaccination rate of 0.29 doses per 100 people. This compared with a vaccination rate of 1.25 for Italy and 1.05 for Spain.

Comparing the rates to 11th January, the latest figures should remain a concern.

France had a vaccination rate of a woeful 0.14 doses per 100 people over the weekend. With the French Presidential Election next year, pressure on Macron is building.

Trailing the EU on vaccination rates will likely deliver more economic woes. While voters have a short memory, few will likely forget the burden of the COVID-19 pandemic.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 92,126,741 confirmed COVID-19 cases globally and 1,972.902 related deaths.

By geography, the U.S had reported 23,369,732 cases, with India reporting 10,495,816 cases.

Brazil reported the 3rd highest, with 8,195,637 cases, followed by Russia (3,471,053) and the UK (3,164,051).

France (2,806,590), Italy (2,303,263), Spain (2,137,220), and Germany (1,960,915) reported a combined 9,207,988 cases.

Looking Ahead

The market remains relatively insensitive towards the relationship between vaccination rates and rise in COVIV-19 cases.

In reality, however, we can expect the relationship to assert itself should certain governments fail to ramp up vaccination rates.

Near-term, the U.S and the Eurozone must be the main areas of focus.

In consideration must be the upward trend in new COVID-19 cases versus vaccination rates.

At present, the numbers are certainly not in favor of a marked economic recovery through the 1st quarter…

Will Pence Turn from VP to Judas in the President’s Eye?

Impeachment or the 25th?

The simplest solution to the latest political scandal to mar U.S politics is for President Trump to be removed from Office.

Following last Wednesday’s domestic terrorism, there are now concerns of further domestic terrorist acts on U.S soil.

Inauguration Day is just over a week away. Security agencies have already raised concerns over the threat of further violence.

If the Republicans don’t deal with the situation now, they could end up in the political wilderness.

While voters were poll-shy in admitting to voting for Donald Trump, not dealing with the situation now could make voters poll-shy about voting for the Republican Party.

Companies are turning their backs on the U.S President. Even Deutsche Bank announced that it would end all dealings with the U.S President. Capitol Hill should do the same in order to end the threat of further violence.

Trump may have come away unscathed from the #Me Too movement but he is unlikely to be so fortunate on the #United States Movement.

It would be almost ironic that Trump’s gravest act unites America and makes it great again. Republican support for ousting Trump would certainly send a message that the Republicans are not supportive of domestic terrorism.

Refusing to oust Trump may send the wrong message. Some would call that check mate…

What’s Next?

According to the latest chatter from Capitol Hill, the House of Representatives is set to vote on asking Mike Pence to invoke the 25th and remove Trump from office.

How much weight the vote will have remains to be seen.

Tomorrow, more interestingly, there will be a vote on impeaching the U.S President.

Republicans have already started jumping ship so it could be a game changer…

From a market perspective, however, there should be limited influence.

U.S President Donald Trump has now become immaterial to the markets. If he is ousted, he will also become immaterial to U.S politics.

A Cautionary Tale

One does have to wonder what the Republican Party will take away from the last 4-years.

From Mike Pence’s perspective, he is Donald Trump’s running mate. Ousting the President out of office is a big move.

Ultimately, however, it would remove any chance of a Trump return in 2024 and give Pence a shot at the Big Job…

Capitol Hill will be abuzz over the next couple of days.

While the markets should be relatively immune to the chatter, it will be an interesting time…

Bitcoin Down 20% from Top; Any Technical Experts Brave Enough to Call it Bearish?

Cryptocurrencies are down sharply across the board on Monday, with Bitcoin dropping more than 15% to a one-week low. Some traders are saying rising U.S. yields are hurting the non-income paying assets. Others are saying the bubble has burst on its parabolic rise, putting it in a position to plunge substantially.

At 07:25 GMT, Bitcoin is trading 33850, down 5670 or -14.35%.

Before I go on, I just want to mention that I don’t own Bitcoin at the moment and in fact, I don’t and never have owed any cryptocurrencies. I mention this because I want to give those who think I’m not qualified to comment on the market since I don’t have any skin in the game to stop reading any further.

I don’t analyze Bitcoin on a daily basis, but since it is a competing asset with stocks, bonds and gold to name a few, I am aware of the price action in the market. So I wouldn’t call myself completely naïve to its movement.

In 2020, I wrote only one article on Bitcoin. It was published on October 23 on FXEmpire.com. I didn’t just wake up that day and decide to write about. I saw some movement in the market on the chart that raised my interest and I decided to investigate it further.

I concluded at that time that PayPal’s entry into the cryptocurrency market was behind the move. This wasn’t a guess, but rather my knowledge and experience behind what moves a market. I am mainly a technician, but after years of experience, I think I have a good grasp on how the fundamentals and technicals work together.

I believe the technicals precede the fundamentals, which is why the 5% spike in prices encouraged me to delve into the fundamental reason behind the move.

What really surprised me about Bitcoin wasn’t the price action, but the lack of really good technical and fundamental analysis. I acknowledge that I’ve seen the articles on halving and mining, and such, but I’m confused by most of the analysis.

I read comments and analysis but I don’t know if these experts are long-term investors or short-term traders. I do know this, just about every Bitcoin analyst slaps a few percentage retracement lines on a chart and thinks they are helping an investor decide what to do. But my biggest beef is that very few every day analysts are telling me if I should buy it or sell it. But mostly, what’s my exit if I’m wrong.

Prior to the big rally from about $12,000 to $42,730, there were very few fresh articles published on FXEMPIRE, but once it started to climb sometimes thousands of dollars per day and it took out the $20,000 level, many articles were published. And of course, the obligatory $100,000 target pieces were written.

What I’ve concluded is that Bitcoin analysts love momentum when its breaking out to the upside, but when it comes to sell-offs, very little is written. I mean, who doesn’t like a volatility breakout when all you have to do is throw out targets.

Daily Bitcoin

The Challenge

As of early Monday, Bitcoin is down more than 20% from its top. My question for Bitcoin experts, are we in a bear market? I mean on the way up, you seem to think conventional technical analysis works so why wouldn’t it work on the downside. Do you have the courage and conviction in your analysis to say that Bitcoin is now in a bear market since it has corrected more than 20% from its top?

Maybe 20% isn’t the figure. Perhaps it is 30% or 40%.

My point is, it’s easy to whip out the Elliott Wave when Bitcoin is rising. It’s easy to make predictions like it’s going to $100,000 when it’s moving higher exponentially, but what about the downside when investors need you most.

Where are the longs wrong? If you think Bitcoin is overvalued, where is the value zone for the next buy? Does technical analysis really work for Bitcoin since it is supposed to be such a unique financial instrument?

I don’t have the answers, but if I was pressed to make a prediction, I would say that $24203 to $19830 is a good place to start looking for value.

Bull market or bear market, it doesn’t matter to me, but what I would like to see is some decent analysis when Bitcoin is going down, not just crickets.

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

COVID-19 Vaccine Update – Vaccination Rates and the Road Ahead

U.S Vaccination Rates

Sentiment towards the available COVID-19 vaccines has been mixed across the U.S.

Over the weekend there were reports of frontline healthcare workers refusing the vaccine. The numbers refusing are far from small, with some reports indicating that as many as 80% are refusing the vaccine in some centers.

The refusal to receive the vaccine comes as the U.S continues to fight an uphill battle against the COVID-19 pandemic.

According to Bloomberg, the U.S has administered 8.02m doses of the vaccine since 14th December. To-date. at least 272,429 recipients have completed the 2-dose regimen.

In all reality, however, the number of vaccinations is low relative to the number of distributed shots.

At the time of writing, Bloomberg reported that 36% of the shots distributed to states have been administered.

Having achieved the target distribution of 20 million doses by the early part of this month, the next goal must be to ramp up the vaccination rate.

At the time of writing, Nevada had the lowest vaccination rate at 23.8%, with Connecticut the highest at 71.8%.

Looking at a number of the more adversely affected states, the number of vaccinations administered are just not enough.

California and Florida had reported vaccination rates of just 31.7% and 44.0%, with New York at 45.9%.

For a full state-by-state breakdown of vaccination rates, please click here.

Concerns over the speed of availability of the vaccine has led to skepticism and an unwillingness to vaccinate in the U.S.

This is in spite of the continued spike in new COVID-19 cases across the U.S.

Global Vaccination Rates

On a global basis, Bloomberg has reported that a total of 25,839,924 vaccines have been administered as at 10th January.

Per 100 people, the U.S has vaccinated 2.44 doses per 100 people.

Elsewhere, the numbers do vary significantly.

Across the EU, number of vaccines administered are particularly disappointing when considering the reintroduction of lockdown measures.

France has reportedly administered just 93,000 doses, which translates to 0.14 per 100 people.

Germany and Spain have done marginally better, with 0.64 and 0.60 vaccine doses administered per 100.

Leading the 4-most adversely affected, however, is Italy, with 1.04 doses administered per 100 people.

Looking at the UK, 2,000,000 doses have been administered, which is equivalent to 2.99 doses per 100 people.

From the weekend, news hit the wires that the UK government plans to open mass vaccination centers in England to ramp up the daily vaccination rate.

This does bode well for Britain and its fight against the COVID-19 pandemic.

Looking further east, Israel leads the charge, by doses per 100 people, in the fight against the pandemic. As at 10th January, Israel had administered 20.08 doses per 100 people, translating to 1,817,000 doses.

The U.A.E came a distant 2nd, with 10.11 doses per 100 people.

Bahrain was also a front runner, with 6.01 doses administered per 100 people, though the population size is significant smaller.

Figures were not available for Brazil and India that sit behind the U.S as the worst hit by the COVID-19 pandemic.

The Economic Recovery

In terms of nations bringing an end to the COVID-19 pandemic, once vaccination rates exceed infection rates, we can expect economies to begin reopening.

Looking at the global numbers, we continue to expect marked divergence in economic recoveries.

Vaccination rates across some advanced economies remain significantly low, suggesting longer than expected containment measures.

The longer that governments need to maintain containment measures, the greater the economic fallout.

This suggests that EU member states may well lag the U.S, the UK, and parts of the Middle East.

We will need more figures, however, to get a fuller picture. From Asia, China’s low vaccination rate of just 0.64 per 100 people, as at 8th January, has not impeded the economic recovery.

China is an anomaly, however, with the government having managed to curb COVID-19 infection rates.

This is not the same story for the U.S, the UK, the EU, and other parts of the world.

We would therefore need to see a marked increase in vaccination rates across the the U.S and the EU at a minimum to support a sharper global economic recovery.

The Latest COVID-19 Numbers

At the time of writing, there were a total of 90,693,444 confirmed COVID-19 cases and 1,943,171 related deaths.

By geography, the U.S had reported 22,917,334 cases, with India reporting 10,467,431 cases.

Over the weekend, the U.S hit another record high number of new cases. On Saturday, the U.S had reported 278,920 new cases, which sits well above the national daily vaccination rate.

Brazil reported the 3rd highest, with 8,105,790 cases, followed by Russia (3,401,954) and the UK (3,072,349).

France (2,783,256), Italy (2,276,491), Spain (2,050,360), and Germany (1,929,353) reported a combined 9,039,460 cases.

Looking Ahead

As governments look to ramp up vaccination rates, availability of doses will become a factor.

At present, the UK is one of few nations that has access to AstraZeneca, BioNTech/Pfizer Inc. and Moderna Inc.’s vaccines.

For the EU, approval of the AstraZeneca vaccine may be pivotal in its fight against the COVID-19 vaccine.

Other parts of the world have begun to accept China’s COVID-19 vaccines, while waiting on delivery AstraZeneca, BioNTech/Pfizer Inc., and Moderna Inc.

Some governments were too slow in placing orders, resulting in lengthy lead times.

The number of doses that China’s two vaccine producers will be able to manufacture are low, however.

Sinovac will reportedly be able to produce just 300 million doses per year. Sinopharm, by contrast, is looking to produce more than 1 billion doses this year.

With the Chinese government having pledged to support Africa and LatAm, more is needed, however.

It, therefore, becomes all the more essential that a 1 dose vaccine is made available. This would ease manufacturing capacity pressures and materially increase the number of people protected from the coronavirus.

Johnson & Johnson

As things stand, Johnson & Johnson remains the front runner in delivering a much-needed single dose vaccine.

According to recent reports, the vaccine could be available as early as next month.

Safety, efficacy, and production capacity will be key considerations along with cost. For nations lagging behind in the fight against the pandemic, a single dose vaccine would certainly ease the pain.

U.S Civil Unrest Shocks the World, as Trump Looks to Dismantle the Foundations of Democracy

The Promise

Back in 2016, Donald Trump’s victory surprised the world. The polls had Hillary Clinton out in front and the U.S was set for 4 more years of Democrats in office.

President Obama had paved the way for economic prosperity. With the support of now President-Elect Joe Biden, the Obama administration had navigated the U.S out of the Global Financial Crisis.

While there had been many sceptics over Trump’s ability to run the U.S, optimism of a red-tape free 4-years favoring economic growth supported riskier assets.

Throughout Trump’s campaign and in the early days of his presidency, there was plenty of talk of making America Great Again. The U.S President had planned to reunite the U.S.

Fast forward four years and the world is in shock. This time around, however, the shock is for all of the wrong reasons.

Capitol Hill and Democracy

On Wednesday, protesters stormed Capitol Hill in a bid to reverse the U.S Presidential Election outcome from November.

This was not a peaceful protest that delayed the certification of Joe Biden as the President of the United States.

One woman reportedly died amidst the chaos, with law enforcement having to lockdown Capitol Hill.

Once considered the bastion of democracy and capitalism, the United States appeared to be in a time warp.

Worse yet, dire labor market conditions and the continued rise in new COVID-19 cases have left people helpless.

With nothing to lose and a U.S President goading supporters into action, things could have been far worse.

Many who voted for U.S President Trump back in 2016 and this time around will question the logic behind the vote.

At no point has Trump accepted the voice of the American people. Instead, he has falsely claimed fraud.

It is almost ironic that the very same claims had been laid out against Trump back in 2016.

Either way, it is time for the U.S President to leave and to leave quietly.

Leaving Quietly?

Leaving quietly does not appear to be on the cards, however, with yesterday’s events stemming from Trump’s attempts to break down the democratic process.

Even Twitter and Facebook have reportedly had to block Trump.

Unfortunately, it’s too little too late for U.S democracy, with pro-Trump protestors reflective of the “Trump effect” over 4-years.

Looking back over Trump’s presidency, a marked shift in U.S foreign policy should have been the warning sign.

Canoodling with the likes of Vladimir Putin and Kim Jong-un, while putting world peace at risk by withdrawing from the Iran Nuclear Agreement. It was a questionable start that left world leaders in limbo. Few wanted to upset the applecart so early into the U.S Presidency.

An extended trade war with China that resulted in a dubious phase 1 trade agreement was also a question mark.

And, after having survived and impeachment scare, Trump mishandled the COVID-19 pandemic.

U.S unemployment, an economic meltdown, and 369,990 COVID-19 related deaths are among Trump’s low points.

Wednesday’s incitement of violence that ultimately led to action from social media sites was a culmination of 4-years of Trump messaging.

International Horror

It’s hardly surprising that world leaders responded in horror to the scenes broadcasted from Capitol Hill.

Whether this puts the U.S on a weaker footing on the international stage remains to be seen. In Joe Biden’s favor is a lifelong career in U.S politics and his two terms as Obama’s running mate.

Addressing the social and civil unrest and restoring America’s image will be a must for the Biden administration.

A continued rise in tension and more unrest over the next 4-years would distract the administration from delivering on campaign pledges.

Such an eventually would be a disaster for a nation that needs to restore diplomatic ties not to mention reunite a nation.

Failure to achieve both would further remove the U.S from the international stage. With China taking more control of its future, many will be looking for Biden to turn it around.

Getting through the next 2-weeks and Inauguration Day will now be key. Following yesterday’s scenes, there is certainly cause for concern, with more civil unrest plausible.

Policy and Market Risk

For the global financial markets, the hope of more U.S stimulus has fueled demand for riskier assets. A distracted administration grappling with domestic unrest would be an issue.

The good news for now is that the Democrats have control of both houses and don’t need Republican votes to push policy.

The bad news, however, is that it may take more than 4-years to repair the damage.

There are likely to be a number of nations that will look to take advantage of America’s apparent weakness. This will need to be another area to monitor in the weeks and months ahead.

At the time of writing, the U.S Dollar Spot Index was down by 0.57% to 89.422 for the current week. An escalation from yesterday’s protests would likely add further pressure on the Greenback near-term.

US Dollar Index 070121 Weekly Chart

COVID-19 Vaccine Update – U.S Vaccination Rates Should be of Concern

The Latest

Late last year, the global equity markets found further upside, supported by the rollout of multiple vaccinations.

Unprecedented progress by global pharmas towards COVID-19 vaccines has given governments a choice of 5 vaccines to date.

A 6th vaccine is expected shortly, with Johnson & Johnson expected to be the next pharma to deliver a vaccine.

While the availability of multiple vaccines is certainly a positive, availability of vaccines and vaccination rates remain key to bringing an end to the COVID-19 pandemic.

This week, the U.S government published the best and worst vaccination rates across U.S hospitals.

When considering the impact of the COVID-19 pandemic on the U.S economy and beyond, low vaccination rates should be of some concern.

While the U.S government has enforced containment measures, there has been no enforcement on vaccinations.

To make matters worse, limited supply of COVID-19 vaccines have added to a slow rate of inoculation across the country.

According to the U.S government, the number of vaccines administered have fallen well short of the 20 million that the Trump administration had projected before the end of 2020.

Supply and demand have both contributed to the lower rate of vaccinations across the country.

All of this ultimately means that the vaccination of phase 1 groups a, b and c will take far longer than initially predicted.

The Latest COVID-19 Numbers

At the time of writing, the total number of confirmed COVID-19 cases stood at 86,834.916, with the total number of related deaths rising to 1,875,520.

In the U.S, the total number of cases now stands at 21,578,606, with 356,620 related deaths.

The total number of cases in the U.S is double that of India’s 10,375,478, which is the 2nd most affected nation.

Across the 4 most adversely affected EU member states, the total number of cases stood at 8,658,967, with 230,551 related deaths.

The Outlook

An introduction of AstraZeneca’s vaccine to the U.S and a successful end to Johnson & Johnson’s clinical trials would ease supply issues.

This won’t address issues that governments face in terms of demand, however.

For those that don’t fall within priority groups, the bigger question is whether the slow rollout will further delay mass vaccinations.

With many nations now going through the winter months, vaccinations would need to be completed before next winter.

This gives governments as little as 9-months before seasonal changes kick and raise the prospects of another pickup in new cases.

From a market perspective, bringing an end to the COVID-19 pandemic before the summer would support a strong economic recovery.

A post-summer end, however, could result in a slower pace of recovery or even bring into doubt a recovery.

Looking at the U.S, U.S labor market conditions remain woeful. Failure to take control of Operation Warp Speed would weigh heavily on consumption.

At some point, therefore, we could see a greater influence of vaccination rates and supply on the global financial markets.

Daily vaccination rates and new daily COVID-19 cases will need to be monitored near-term. At a minimum, we will need to see an improving trend between daily vaccinations and new daily cases

No Enforcement at Federal Level

Across the U.S, more than 200,000 new COVID-19 cases are being reported each day. At the current rate of spread, the number of COVID-19 vaccines administered fall short of the number of new daily cases.

Less than 10% of the U.S population have caught the COVID-19 virus to date. The number of new cases would, therefore, likely continue to spike.

Such an eventuality would have a far more material impact on the U.S economy and labor market conditions.

It is, therefore, in the best interest of the U.S government to enforce vaccinations. Particularly in more adversely affected U.S states.

Until now, there has yet to be any talk of enforcement at federal or even state level…