Monday, markets exploded after learning that Pfizer may have a viable and highly effective vaccine for Covid-19. The Dow Jones briefly rose above 1200 points before settling back down to a more respectable 835 points for the day. Similar rallies were seen in Toronto and in overnight trading in Asia and Europe. In all, it’s been a good week for markets even while Covid-19 cases continue to surge.
The arrival of a vaccine remains the only thing that can truly right our social and economic ship, and without it the economic reality is poised to get worse. Despite efforts to use non-pharmaceutical interventions (social distancing and masks), the virus is resurgent almost everywhere, with new cases exploding across Europe, Canada and the United States.
So the news of a potential vaccine offers the first real potentially positive change for economies. And while the Pfizer vaccine may be the first, it likely will not be the last. Eli Lilly has also introduced an antibody treatment that has received emergency approval from the FDA. Again, such treatments will not be the last, and hint that the balance in the fight against the pandemic is beginning to shift back towards us and away from the virus.
Some quick thoughts on these developments:
- Had this announcement come out before the election Trump likely would have won, despite his uniquely poor handling of the pandemic.
- There are still many unknowns about the vaccine, and so we should temper our excitement. This includes how many doses (two, reportedly), how long it lasts in your system, and how effective it will be for the most vulnerable parts of the population.
- How long it will be before we get a vaccine is still up in the air. Nicholas Christakis, author of Apollo’s Arrow: The Profound and Enduring Impact of Coronavirus on the Way We Live, recently spoke on Sam Harris’s Podcast saying that it is no small feet to design, produce and distribute a new vaccine (you can listen to that podcast HERE). It could be several months, perhaps even a year, before we see the full recession of the pandemic.
- Markets should respond positively, but not indefinitely. Volatility will surround progress or delays in the vaccine, but so long as progress remains steady the vaccine should offer stability in markets for a wider recovery.
Finally, as a father, I’m excited to see that prospect of a return to normalcy for my kids. We’ve spent months sheltering patiently, denying my kids aspects of their childhood for the wider protection of our family. Like many parents with family members that have compromised immune systems, we’ve chosen the path of virtual learning, a half measure that allows for some academic progress but without the important social aspect of school. But the toll is visible on our children, and I am deeply saddened that my kids (as I am for everyone) should have to see a part of their lives, and their innocence about the wider world, forfeit to the reappearance of our oldest but most enduring foe. It is welcome news in a year so full of difficulty.
Information in this commentary is for informational purposes only and not meant to be personalized investment advice. The content has been prepared by Adrian Walker from sources believed to be accurate. The opinions expressed are of the author and do not necessarily represent those of Aligned Capital Partners Inc.