The speedup of the Covid-19 vaccine timeline and the legislative progress on another large stimulus program are the dominating storylines for investors. Starting with the vaccine timeline, President Biden declared that the US would produce enough vaccines for all adults by the end of May. What changed? The FDA approved the Johnson & Johnson one-shot vaccine, and Merck agreed to help Johnson & Johnson, its competitor, produce the vaccine. Biden also called for teachers to get vaccination priority. This is a milestone. Only widespread, effective vaccination has the power to end the Covid-19 reign of terror. Wall Street Journal Washington Post Politico
Variants of Covid-19: Variants of Covid-19, combined with premature relaxation of Covid-19 safety protection practices, present the major threat to the more optimistic timeline. If one or more variants become widespread and the various vaccines fail to protect against the variant, we could be back later in the year to where we started. Washington Post Meanwhile, some states are choosing to relax their virus protection safeguards over the advice of public health experts. CNN The Guardian
American Rescue Plan: More economic stimulus is headed our way. The so-called American Rescue Plan, with an additional $1.9 trillion in spending, passed the House. The Senate takes up the debate this week. Washington Post We expect the legislation to pass the Senate by a razor-thin party vote but that modifications necessary to secure sufficient votes will mean that the legislation bounces back to the House for approval (or not).
Will More Stimulus Be Like Pouring Gas on a Fire? First-quarter 2021 economic growth will be strong, perhaps even reaching 10%. CNBC While we believe that the US economy needs one more jolt of federal fiscal stimulus as a precautionary measure, we do not dismiss out-of-hand concerns that the new spending could cause the economy to overheat and reignite inflation. Wall Street Journal Janet Yellen and Jerome Powell both support the additional stimulus but presumably will be vigilant and weigh-in when the US needs to temper fiscal and monetary stimulus to avoid bigger problems down the road.
Infrastructure Up Next: If and when it becomes clear that the US economy is back on a sound footing and Covid-19 has been subdued, look for President Biden to move forward with a proposal to address our nation’s crumbling infrastructure. Few would disagree that we need to rebuild our infrastructure but there will be widespread disagreement and legitimately healthy debates over how to proceed. This one will be quite interesting. With so much public spending at stake, it could scramble up party-line voting. New York Times
Wealth Tax Coming? Are tax increases coming? Some would tax the ultra-millionaires. CBS Janet Yellen, for one, thinks it would be hard to implement. CNN But she might be open to higher capital gains and/or corporate taxes. Bloomberg It is difficult for me to envision President Biden proposing large tax increases on a high percentage of individual taxpayers because it would be political suicide.
More on Bitcoin: Force me to choose the single most interesting development in the financial world, I would say “bitcoin” (and other cryptocurrencies) without much hesitation. Inside the box thinkers dismiss bitcoin as having no intrinsic value. But I believe they are missing something big. Its attributes of cybersecurity and the ability to conduct financial transactions outside the normal banking system are powerful. Drug dealers, bless their little evil hearts, figured it out first. Central bankers are no dummies and view it as a massive threat to the power of central banks and are talking bitcoin down. New York Times MarketWatch China has started down the road of having its own national cryptocurrency and other nations are sure to follow. New York Times Fast forward 10 years and will bitcoin be the preferred currency of choice for global trade? CNBC
The Box That Built the Modern World: Juxtaposed to the esoteric and complex world of cryptocurrency, I came across a fascinating (or to me anyway), long-form article about how the simple standardized steel shipping container revolutionized global trade and impacts our day to day lives more than we all might imagine. Pocket
Teenage Mental Health Claims Increasing: This trend should deeply concern all of us. Hopefully, the trend reverses itself as schools fully reopen providing our students with much-needed social contact, normalcy, and more effective education. But, as they say, hope is not a plan. This may be one of the more important and overlooked metrics to track during the pandemic. Axios
Can You Still Spread the Virus If Vaccinated? There does not appear to be an entirely definitive answer to this question. We are in the early stages of the vaccination process, and this has not been a testing focus. We know that vaccination protects against the disease but does not eliminate the threat of infection. Quoting at length from an excellent Press Herald article: “In general, if vaccination doesn’t completely prevent infection, it will significantly reduce the amount of virus coming out of your nose and mouth – a process called shedding – and shorten the time that you shed the virus. This is a big deal. A person who sheds less virus is less likely to transmit it to someone else.” Press Herald
Worthy Short Takes:
- Ten Best States to Retire in 2021: This list ranked states based on their affordability, quality of life, and healthcare. Spoiler alert: New Hampshire and Florida make the top ten for desirability. Maine does not appear on either the top ten or bottom ten list. New York Times
- Falmouth Makes the News: As a former Falmouth resident and a nearby neighbor, it was great to see this article praising Falmouth in the national press. Wall Street Journal
- DuckDuckGo (A Tool You Can Use?): Tired of having your internet browsing tracked and reflected back to you in ads that miraculously appear? I started searching recently for some used golf clubs and now see ads everywhere for golf clubs. Two thoughtful clients have asked if I have any knowledge about a browser called DuckDuckGo, a browser that purports not to leave cookies. This is not an area of expertise for me but I like the concept. heimdalsecurity.com
- NFTs (Non-Fungible Tokens): If we ever start having parties again and you want to be prepared to discuss the latest in art collecting, you might want to study up on NFTs, which are digital assets representing images, videos, music, etc. It is becoming a big business, believe it or not. Morning Brew
- Five Is Your Lucky Number: When it comes to nutrition, I get easily overwhelmed by competing theories and data and do better with simple guidelines. This easy-to-understand and to implement recommendation based on a recent Harvard Public School of Health study works for me: 2 servings of fruits and 3 of vegetables daily. And no, French fries still do not count as a vegetable. CNBC
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As always, thank you for reading. Stay safe and be well. We look forward to hearing from you and connecting.