Saturday, April 10, 2021

Good news: the COVID vaccine has arrived! The worst: the markets are not impressed

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Hello. It’s V Day in Britain: The first nationwide deployment of a clinically tested COVID-19 vaccine is underway. The reaction of the markets? A big yawn.

Pfizer, one of the manufacturers of the vaccine, is stable in premarket trade. Elsewhere, stock markets in Europe and Asia are mostly lower, as are US futures.

Let’s check what’s going on.

Market update

Asia

  • The mainAsia Indexare a little lower in afternoon trade with JapanNikkeidown0.3%.
  • Investors are optimisticAsian assetsin the last weeks of 2020.According to Bloomberg, theMSCI Asia-Pacific Indexhit record territory last week, and bonds are also hitting multi-year highs.
  • Monday,United States House of Representativesespassed a billwhich would give Hong Kong residentsspecial refugee statusliving and working in the United States as tensions between Beijing and Hong Kong become a larger geopolitical issue. In the meantime, moreAmerican sanctions loomfor Chinese officials.

Europe

  • Brexit nervousness weighs on the European scholarships again this morning. the Stoxx Europe 600 is off 0.2% hours in the trading session.
  • Earlier this morning, a 90-year-old woman from the English city of Coventry received the first Pfizer-BioNTech COVID vaccine shot in the United Kingdom, a deployment which will be monitored around the world. This is hardly a boost for the markets. the pound sterling is down and the FTSE is flat.
  • COVID, schm-OVID. 2020 was a record year for the European tech startup scene with the total venture capital investment about to reach $ 41 billion at the end of the year.

WE

  • American Futureslower after the Dow and S&P 500 started the week in the red; theNasdaqpushed higher on Monday.
  • Uber Technologies has fallen1.9%yesterday after announcing he had soldhisautonomous carunit at Aurora Innovation, effectively exiting the business However, it took an investment in the business, valuing Aurora to10 billion dollars.
  • Water– in particular, California water – is thenew exchangeable asset. The precious commodity has made itsGetting Started on Wall StreetMonday, allowing investors to bet on the ups and downs of this invigorating essence. Can the future of clean air be so far behind?

Somewhere else

  • Goldis on the rise, trading close$ 1,870 / ounce.
  • thedollaris flat.
  • Grossis down, withBrentfutures trading around$ 48 / barrel.
  • Bitcoinis down, exchange$ 19,100.

***

The almighty consumer

Would you rather live in a country with high sovereign debt, but low household debt? Or, the reverse – a place of low national debt, but heavily indebted households?

From the 1980s to about a decade ago, household debt in the United States hit an insane extreme. By the time the real estate bubble reached its peak, US household debt reached 130% of disposable income. The bubble burst and Americans became more frugal.

Something similar happened in the wake of COVID: Household debt fell precipitously like today’s chart, thanks to Morgan stanley, watch.

“A unique feature of the current recession,” writes Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, “is that rather than consumers using their credit cards, they’ve paid off their debt, especially against disposable income and to net worth. In fact, current readings are the lowest since the late 1980s and nearly 50 percentage points lower than at the worst times of the global financial crisis. ”

“This suggests that a vaccine deployment could easily trigger pent-up demand for consumer services,” she continues.

This would bode well for some of the poorest investment sectors in the year ahead. These would include travel and recreation, as well as energy and finances, as people book trips, eat out, and start moving again.

This largely explains the thinking about why value stocks (banks and energy, in particular) have been soaring in recent weeks.

To borrow a term from the worlds of venture capital and private equity, US households have a lot of dry powder heading into 2021.

***

Have a very good day everyone. I’ll see you here tomorrow.

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com

As always, you can write tobullsheet@fortune.comor reply to this email with suggestions and comments.



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