Week in Review: December 18, 2020

Markets ended the week higher as investors refocused on the proverbial light at the end of the tunnel with respect to the coronavirus pandemic. The gains occurred even as the current surge in new coronavirus cases showed no signs of abating, a new more virulent strain of coronavirus emerged in the UK, and Congress seemingly continued to find new ways to snatch defeat from the jaws of victory with respect to passing additional stimulus.

After months of on-again, off-again negotiations, and some last minute disagreements over certain Federal Reserve programs, Congress finally reached a deal on additional stimulus on Sunday. Among other measures, the $900B aid package will provide $325B to businesses, including an infusion of $284B for the Paycheck Protection Program (PPP), direct payments of $600 to individuals making less than $75K/year, $300/week of additional unemployment benefits until mid-March, as well as funding for vaccine distribution, food aid, airlines, farmers, and schools.  The bill also extends the federal moratorium on evictions by one month until the end of January.

U.S. daily coronavirus cases and deaths set new records of 249K and 3,600, respectively, during the week. As expected, the FDA approved Moderna’s vaccine for emergency use, which will make millions of additional doses of vaccine available in the coming months. In an effort to instill confidence in the vaccine and encourage people to take it, VP Mike Pence, the Surgeon General, and other high ranking politicians had their vaccines administered on TV. In the UK, officials announced the emergence of a new strain of the virus that appears to be 70% more transmissible. Thus far, there is no evidence that it is more deadly than the current strain, or resistant to recently developed vaccines.