Keeping with 2020's theme of stock price volatility, investors appear to have shifted their forward-looking focus once again in a new Lévy flight event.
The latest Lévy flight was much less dramatic than the previous one that took place in the second week of November 2020, when investors shifted their forward time horizon outward from 2020-Q4 to 2021-Q3. That event was prompted by the news of Pfizer's successful COVID-19 vaccine development, which was quickly reinforced by Moderna's and AstraZeneca's COVID successful vaccine development announcements.
The latest shift in the forward-looking focus of investors came as the Trump administration successfully pushed the U.S. Food and Drug Administration to approve Pfizer's vaccine for emergency use, which came faster than had previously been expected.
The FDA's approval accelerated the timetable for the deployment of an effective vaccine in the United States, which coincides with the new Lévy flight event as the latest update of the alternative futures chart indicates investors shifted their focus from 2021-Q3 inward toward 2021-Q2.
This change pulled stock prices downward, as the expectations for the change in the year-over-year growth rate of the S&P 500's dividends in 2021-Q2 are less positive than they are for 2021-Q3. We characterize this change as "less dramatic" than the previous Lévy flight event because the difference between 2021-Q2 and 2021-Q3 is smaller than the difference between 2020-Q4 and 2021-Q3.
While the FDA's COVID-19 vaccine approval was the biggest news story of the week, other stuff happened to influence investor expectations, where we've captured the main market moving headlines of the week in the list below.
- Monday, 7 December 2020
- Signs and portents for the U.S. economy:
- Pandemic's uneven march across U.S. paved way for wider outbreak
- U.S. Congress to vote on stopgap bill as COVID-19 aid talks continue
- Oil falls amid surging virus cases and U.S.-China tensions
- Bigger trouble as COVID looms, other factories slow:
- China's exports surge on hot demand for PPE, remote working tech
- German factories gloomier about production in coming months: Ifo
- Brazil auto recovery stalls as parts shortages loom
- Germany, U.K. economies see positive signs:
- German industrial output surges on booming car sales
- England's malls attract Christmas shoppers after lockdown ends
- ECB minions being pressured to act:
- Nasdaq closes at record high as growth names get a lift
- Tuesday, 8 December 2020
- Signs and portents for the U.S. economy:
- Oil steady as COVID-19 cases, lockdowns dampen vaccination news
- China's Wang vows to uphold trade deal during Biden administration: U.S. business group
- U.S. Senate's McConnell urges dropping liability, state aid in next coronavirus package
- Bigger stimulus developing in Japan:
- Japan unveils $708 billion in fresh stimulus with eye on post-COVID growth
- Japan stimulus package will likely boost GDP by around 3.6%, Suga says
- Wall Street closes higher on vaccine lift; S&P 500, Nasdaq at records
- Wednesday, 9 December 2020
- Thursday, 10 December 2020
- Signs and portents for the U.S. economy:
- Brent rises above $50/bbl for first time since March on vaccine optimism (reuters.com)
- Spiraling COVID-19 cases driving up U.S. layoffs; inflation still benign
- U.S. Senate vote on spending could slip to Friday, Pelosi suggests longer COVID-19 timeline
- Bigger stimulus finally rolling out in Eurozone:
- ECB minions roll out more stimulus too, but worries about Euro becoming too strong:
- ECB gives euro zone new shot in arm to fight pandemic
- ECB to monitor euro appreciation 'very carefully': Lagarde
- Euro jumps as ECB goes easy, stocks little changed
- Wall Street shakes off labor market data with stimulus in focus
- Friday, 11 December 2020
- Daily signs and portents for the U.S. economy:
- Oil pulls back amid New York coronavirus curbs, gains for a 6th week
- U.S. producer prices rise moderately; COVID-19 seen taming inflation
- Fed minions claim internal disagreements mean U.S. economy is healthy:
- Bigger trouble developing in the U.K.:
- UK PM Johnson says no-trade deal Brexit is "very, very likely"
- BoE's Bailey says 'extensive' work with banks underway on negative rates
- Bigger stimulus still to roll out in Japan:
- ECB minions divided, but will roll out more stimulus:
- ECB's Lagarde bags hard-won deal, but battle with hawks has only begun
- ECB's Villeroy says financing conditions focus of latest stimulus decision
- Stimulus uncertainty hems in Wall Street; Disney soars
The listing of notable headlines is shorter than previous weeks because we've omitted many items related to the impending Brexit event for the United Kingdom and the European Union, which contributed a lot of noise in the week's news stream.
But if you want more, Barry Ritholtz outlines the positives and negatives he found in the week's economics and markets news over at The Big Picture.