The financial markets received yesterday another injection of optimism in the form of information about another vaccine, this time from Moderna. Nevertheless, the markets seem to be already discounting the economic recovery in the first and maybe even in the second quarter of this year.
Pfizer Inc. has launched a pilot program to supply its experimental COVID-19 vaccine in four U.S. states as the U.S. drug manufacturer seeks to meet the distribution challenges posed by its very low temperature (-70 degrees Celsius) storage requirements, Reuters said. In turn, Pfizer himself expressed the hope that the results of this pilot vaccine supply program will serve as a model for other U.S. states and governments that are preparing to implement effective COVID-19 vaccination programs.
However, it was Moderna that raised morale in the financial markets and general optimism about the economic outlook by saying that the experimental vaccine Moderna Inc. is 94.5 percent effective in preventing COVID-19. It is therefore the second U.S. drug manufacturer to report results that far exceed expectations. As a result, the United States may have two emergency vaccines in December, and as many as 60 million doses of the vaccine may be available this year. Unlike the Pfizer vaccine, Moderna vaccine can be stored at normal temperature in a refrigerator, which will facilitate its distribution, Reuters said.
How big the market is expecting a rebound in the real economy could be proved by the results of the Bank of America monthly survey of global fund managers. The survey shows that never before in history has there been such high expectations that the bond yield curve will be increasingly steep. In other words, respondents expect both GDP growth and inflation to increase. 91% of the Bank of America's Global Fund Manager Survey respondents expect a stronger economy in the next 12 months, which is the highest level in almost 20 years.
Such expectations may, in turn, translate into possible further growth in the equity markets, but most importantly in the commodity markets. The economic recovery along with inflation seems to be an ideal environment for the commodities, but also for stocks and stock indices, which contain many low-priced value companies.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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