We’ve Got a Vaccine… Sort of… On Monday, BioNTech and Pfizer announced that their COVID-19 is 90% effective.
What it means— The companies have more than 40,000 people in a clinical trial for the vaccine, and so far, they have not reported serious adverse effects. But many questions are still outstanding. How does it work among at-risk populations, how long does it work, and is it safe? The vaccine does not stop people from getting the virus; instead, it allows patients to get a milder case. Because of this, people who get the vaccine can still transmit the disease.
Investors reacted by selling off stay-at-home stocks like Zoom and Peloton and sending the industrial stocks higher. By Wednesday, people were realizing that even if the vaccine is approved and produced by the end of the year, it will be months or even close to a year before it is widely available, which sent equities lower. Hope and reality collided when it was learned that the vaccine must be transported in -80-degree conditions – essentially kept in dry ice until ready for use. Even then, there is only a five-day life after being thawed. Use or lose it, if it arrives still frozen.
Initial Jobless Claims Fall From 751,000 to 709,000, Continuing Claims Dip From 21.53 Million to 21.16 Million… Jobless claims, both initial and continuing, remain elevated.
What it means— Jobless claims are moving the right direction, but not fast enough. Before COVID-19, the record for initial jobless claims before the pandemic, set in 1982, was 695,000. We reached almost 10 times that number in March and haven’t fallen below the previous record since. On continuing claims, it’s good news that we’re below 30 million and close to dropping below 20 million, but today more than 20 million are still filing claims. The recent surge of COVID-19 cases and lockdown measures in places like New Jersey and Utah might be necessary to keep a lid on the virus, but they’re definitely a setback for the economy.
Consumer Prices Remain Unchanged in October… The consumer price index (CPI) didn’t change from September to October and is up 1.2% over last year.
What it means— Core inflation also was flat last month and is up 1.6% over the same period in 2019. The monthly numbers were tame, but some of the annual figures remain out of whack. For the year, energy prices are down 9.2%, while used car and truck prices are 11.5% higher. Apparel prices are down 5.5% and transportation service prices are off 5.1%.
Shelter, which makes up more than 30% of the index, is up 1.7%. Adding more months of low inflation just means that when interest rates eventually rise, the Fed will allow inflation and long interest rates to be higher for longer before it raises short-term rates.
Factory Orders Increased by 1.1%…This was the fifth consecutive monthly gain.
What it means— Factory orders remain strong, pushed higher by orders for cars, computers, electronics, and primary metals. Orders for machinery, furniture, and appliances slipped a bit. New orders reached
their highest level in 17 years. All of this points to one thing, Americans are buying a lot more stuff as they remained cooped up at home. The problem is that we don’t repeat our purchases of goods. If we buy a washing machine in September, we don’t need another one in October. The increased spending on goods has helped the economy recover, but we need to balance that with spending on services to make this level of activity sustainable.
Yes, You Can Cook Chicken in Yellowstone Hot Pots, But That Doesn’t Mean You Should… Last August, a park ranger found several people in the thermal area of Yellowstone National Park with cooking pots and two whole chickens. Responding to a report of people near the thermals, the ranger found a group of 10, including a child, and a burlap sack containing two whole chickens sitting in a hot spring. An Idaho Falls man and two others were cited for being in the area and off the path, as well as for ignoring the closing time of the park. The man pled guilty in September. He was cited $600 for each violation and banned from the park for two years.
So, yes, you can cook food in the hot springs and thermal areas, but it’s a bad idea… unless you want a $600 citation and the possibility of ingesting whatever it is that boils up out of those geysers.
Data supplied by HS Dent Research
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