After months (or arguably 4 years) of build-up, Trump has been voted out of the White House, even if he and some of his most ardent supporters will not accept it. Biden will be inaugurated on the 20th on January next year, giving Trump only another 60ish days in office. This time is called the 'Lame Duck' session, as Trump will be leaving office soon so had reduced ability and influence. Biden has already begun to organise his transition team, although Trump’s administration is refusing to recognise Biden’s win and release the money set aside for the transition [1]. This reduces Biden’s ability to prepare for becoming president and is preventing him from accessing key information about national security.
A smooth transition between presidents is important at the best of times, but even more so when a country is facing a major crisis such as SARS-CoV-2. The U.S. has now passed 11.2 million cases and ¼ of a million deaths [2]. Daily new cases hit an all-time high at 188,000 and the 7-day moving average of deaths can be seen increasing. Worldwide, records are being set with 54 million cases, 660,000 daily cases, 1.3 million deaths, and over 10,000 daily deaths, with no signs of slowing down. There are now 10 countries with more than 1 million cases, of which 5 are European- France, Russia, Spain, the U.K., and Italy. Despite these rising numbers, people are still breaking and even protesting restrictions [3, 4, 5].
However, in positive news, Pfizer has announced that their vaccine candidate is 90% effective in preventing infection by SARS-CoV-2, in the initial analysis [6]. No serious safety concerns have been raised for this vaccine yet. While this is good news and hopefully a sign of things to come, expectations must be tempered with several points. First, 90% effectiveness is very high, and this number may fall (although it may also increase) with further analysis. Second, the vaccine must be stored at ultra-low temperatures of -70 to -80°C, which brings up significant problems in the transport and storage logistics. Third, the vaccine requires two doses to be effective, with protection being properly achieved 28 days after the initial dose. Fourth, the study only indicates that the vaccine has an efficacy rate above 90% at 7 days after the second dose but does not indicate how long the protection last for. Finally, the production of the vaccine may not be easily scaled up to produce enough for the world, or even many countries, as the technology used is new.
Despite these concerns, the vaccine news has cause many beaten-down stocks to rise on the hope that the world can start returning to normal and, by the same token, caused many of the ‘stay-at-home’ stocks to fall. This news has been a massive boost to the US industrial/defensive stocks and to Europe as a whole. The STOXX 50 Europe index had a 7.12% gain, the FTSE 100 gained 6.88%, and the Dow Jones gained 4.08%. On the flip side, the tech-heavy NASDAQ fell 0.55%, pulled down by the stay-at-home stocks such as Netflix.
In NZ, the NZX 50 was up 2.9% for the week, with cases of community transmission of SARS-CoV-2 being found in Auckland causing fears of restrictions. Initially, the case was of an unknown origin and the government shutdown the Auckland CBD [7]. However, the case was quickly linked through genomic testing to the border, allowing the CBD to be reopened and the contract tracing to be performed thoroughly.
In my portfolio, the biggest losers were Nvidia (-11%) and Alibaba (-16%). Alibaba fell after the Ant Group’s record-setting IPO was halted by Chinese regulators, causing investors to fear increased regulation [8]. On the upside, NZ energy companies Meridian and Mercury increased by 10% and 9%, respectively, and Mainfreight and Steel and Tube increased by 10% and 8%, respectively. Overall, my portfolio increased by 3.3% for the week.
Short Roundup
ASB and ANZ banks in NZ have reimposed Loan-to-Value Ratios (LVR) restrictions on lending [9]. This comes after the Reserve Bank of New Zealand (RBNZ) removed the LVR due to the impact of SARS-CoV-2. However, due to the boom in the property market, these restrictions are being reimposed to attempt to it cool down.
Dominic Cummings- U.K. PM Boris Johnson’s top aid, former head of the Vote Leave campaign, and an incredibly divisive figure- has left No. 10 Downing Street [10]. This follows the resignation of Cummings’ right-hand man and leaves something of a power vacuum that could significantly change the power structure of the U.K. government.
U.K. GDP grew a record 15.5% for the third quarter, but the GDP is still 9.7% below where it was at the beginning of the year [11].
In the U.S., the unemployment rate fell to 6.9% in October, a decrease of 1% from September [12]
There have been cases of SARS-CoV-2 transmission from humans to minks and then back to humans [13]. Not only this, but the virus manages to mutate in the mink population and could, potentially, result in less effective vaccines.
References
[1] B. Klein, "Trump agency tasked with transition process has yet to recognize Biden's victory," CNN, 10 November 2020. [Online]. Available: https://edition.cnn.com/.
[2] Worldometer, "Unitest States Coronavirus," Worldometer, 14 November 2020. [Online]. Available: https://www.worldometers.info/.
[3] A. Ledsom, "New Europe Travel Bans (And Protests), As Covid-19 Surges," Forbes, 8 November 2020. [Online]. Available: https://www.forbes.com/.
[4] J. Kelly-Linden, "Arrests after anti-lockdown protests sweep through Bristol and Liverpool," The Telegraph, 14 November 2020. [Online]. Available: https://www.telegraph.co.uk/.
[5] France 24, "France records sharp rise in Covid-19 deaths as Europe tightens restrictions," France 24, 14 November 2020. [Online]. Available: https://www.france24.com/.
[6] Pfizer, "Pfizer and BioNTech announce vaccine candidate against COVID-19 achieved success in first interim analysis from phase 3 study," 2020.
[7] N. Jones, "Covid 19 coronavirus: Contacts of 'weak positive' case who lives by Auckland student urgently traced," New Zealand Herald, 15 November 2020. [Online]. Available: https://www.nzherald.co.nz/.
[8] J. Yang and L. Wei, "China's President Xi Jinping Personally Scuttled Jack Ma's Ant IPO," Wall Street Journal, 12 November 2020. [Online]. Available: https://www.wsj.com/.
[9] Radio New Zealand, "Evening business for 13 November 2020," YouTube, 13 November 2020. [Online]. Available: https://www.youtube.com/.
[10] Channel 4 News, "Dominic Cummings leaves No 10 after days of public infighting," YouTube, 14 November 2020. [Online]. Available: https://www.youtube.com/.
[11] Channel 4 News, "UK chancellor Rishi Sunak admits: 'We are spending a lot'," YouTube, 13 November 2020. [Online]. Available: https://www.youtube.com/.
[12] U.S. Bureau of Labor Statistics, "Unemployment rate falls to 6.9 percent in October 2020," 12 November 2020. [Online]. Available: https://www.bls.gov/.
[13] A. Murray, "Coronavirus: Denmark shaken by cull of millions of mink," BBC, 11 November 2020. [Online]. Available: https://www.bbc.com/.
