As always, thank you all for picking up today’s edition of Overbit News, where we try and highlight some of the more significant stories midway through the week.
Our first story of the day is one that many people are probably hoping for - a light at the end of the tunnel after the COVID-19 Pandemic ravaged the world for nearly a year.
Right now, vaccines are starting to be distributed in many countries around the world. These vaccines will not mark the end of economic challenges brought on by the coronavirus, as federal, state, and nation officials must figure out the most efficient & equitable way to distribute the vaccine. Still, it is undoubtedly a step in the right direction.
Last week, the US Food and Drug Administration (FDA) approved the Pfizer coronavirus vaccine, which jumpstarted an initial shipment of 2.9 million doses across the United States. Since then, the FDA has approved the second coronavirus vaccine manufactured by Moderna, increasing the federal government’s supply of vaccines to several more million.
The US and its “Operation Warp Speed” initiative are definitely to thank for such a shortened time frame for the vaccine’s development. Still, these positive results are not confined to the United States’ borders. On Monday, 21 December, the European Union followed suit, approving the Pfizer vaccine for its 27 member countries and 410 million constituents.
Some criticized the EU for its slow approval process, as both the UK and the US beat them to approval and distribution, so many eyes will be on the European Union and how they handle one of the most considerable collective efforts ever undertaken.
As if this vaccine-related news wasn’t enough for investors to increase their risk preference, we have better news looming, this time coming out of the United States.
According to reports, lawmakers in Washington, DC, have finally agreed on a stimulus package for the American public. After months of gridlock, lawmakers finally came together on Sunday, 20 December, and decided in principle to a $900 billion stimulus package.
This new stimulus package will contain $600 direct stimulus payments to qualifying Americans, which is half of the $1200 that American citizens received from the CARES Act, the initial stimulus package passed earlier in the year.
In addition to direct cash payments, there is also a $300/week supplemental aid for federal unemployment. Finally, the new stimulus package includes a new round of subsidies for the businesses and people hit hardest; restaurants, schools, health care providers and renters facing eviction, to name a few.
Most Americans were probably hoping for a much larger direct cash payment, so this deal is likely to be a bit of a let-down for many. However, Treasury Secretary Steven Mnuchin did mention this package was a much more “targeted” one, focusing directly on the disaffected Americans. Senate Majority Leader Mitch McConnell echoed this sentiment, saying “It is packed with targeted policies to help struggling Americans who have already waited too long.” One favourable outcome this time around will be the speed at which these payments are delivered. According to Secretary Mnuchin, he can get out “50 million payments really quickly. A lot of it into people’s direct accounts”.
Despite the less-than-ideal cash amounts, and whatever other gripes someone might have with this stimulus package, it seems obvious this is a bullish sign for the markets.
The global Pandemic has decimated economies and markets across the world, except for some safe-havens like Gold and Bitcoin. However, with vaccine distribution ongoing, and significant politicians in the US, EU, UK, and others working together after months of differences, traders and investors should keep an eye out for macro, potentially bullish flips in market structure within these last two weeks of the year.
As the year closes out, please stay tuned to next month’s Overbit.com Monthly Newsletter to catch up on all the exciting things we’re working on, and of course, the best market summaries delivered three times a week.