On the first day of the new week, the markets are bracing for mixed news regarding the coronavirus pandemic, which has now infected more than 99.8 million people worldwide and will likely hit the 100 million mark by tomorrow.
There is good news on the coronavirus front coming from the United States, arguably the most heavily affected region. Cases there have surpassed 25.7 million and inch closer to 430,000 deaths. However, hospitalizations are going down, as are the numbers of new infections per day. The infection rate in the US is currently closer to November levels, indicating that the peak of the latest wave of Covid-19 might finally be over for America.
In light of this news, some of the coronavirus restrictions are likely going to be dropped this week. Most notably, California will end its lockdown, allowing a breather for the struggling businesses that have remained closed for weeks on end.
However, the tune is very different across the ocean. France, where there is currently a 12-hour curfew to limit people’s activities and keep the virus at bay, might be heading for a national lockdown, having failed to consistently bring daily infections under 15,000. Germany is staying in a lockdown situation until mid-February at best, and the Netherlands is also tightening its measures.
The United Kingdom is also raising some concerns, because the government announced it wants to give people 12 weeks between the first and second dose of the Pfizer vaccine.
The drug manufacturer recommends a gap between three and four weeks between the two doses, while the World Health Organization stated it can be stretched up to six weeks at most without seriously affecting the vaccine’s effectiveness.
The UK government reportedly wants to use the longer gap to distribute the first dose of the vaccine to more people, instead of spending the jabs for the second dose of those already inoculated.
Meanwhile, the newly-sworn-in President of the United States Joe Biden is hard at work with his plans to revive the economy. Today he will most likely issue an executive order to further help American businesses by making it more difficult for the government and its branches and agencies to buy foreign products. This will create more demand for locally produced goods, for instance, food or technology.
This week Biden is also set to take on the challenge to win support for his $1.9 trillion bill, which is essential to his plan to combat the coronavirus pandemic and the economic crisis it has caused. Without that funding, the President’s hands will be tied.
It is very likely that Senate Republicans will oppose the bill, at least partially, due to its hefty price tag. The direct payments to households, which Biden plans to boost, is probably going to be one of the most contested points of the bill.
Further complicating matters is that the House of Representatives will send the documentation for Trump’s second impeachment trial later today. The Senate will have to schedule Trump’s trial but the Republican Party is still painfully split on the issue. Some believe Trump does not represent Republican values properly and would like to get rid of him (a successful impeachment trial will prevent Trump from running for President in 2024), while others still respect Trump’s immense following and see him as the best chance for the party to win the next election.
If the Democrats and Biden push too hard for their stimulus bill and refuse to make compromises, Senate Republicans could get stubborn about Trump and refuse to impeach him.
Both the stimulus bill and the impeachment trial seem to be about whether the new administration will be able to unite the government and preside in a bi-partisan way.
Still, optimism prevails in the financial markets today, so stock indices and risky assets are doing well. Safe havens are neglected.
