“the first stage, when only a few unusually perceptive people believe things will get better, the second stage, when most investors realize that improvement is actually taking place, and the third stage, when everyone concludes things will get better forever.” ― Howard Marks

1. Germany Locks Down Again — Germany will lock down its economy during the coming Easter holiday as it tries to control another surge in coronavirus cases. In the U.S., new Covid-19 case data have decoupled from hospitalizations—in the best possible way. About 40,000 Americans are currently hospitalized with Covid-19 symptoms, down from about 47,000 a week ago. U.S. hospitalizations were north of 130,000 at the beginning of the year. Deaths have been declining too.
2. U.S. Officials Raise Doubts About AstraZeneca Vaccine Trial — the National Institute of Allergy and Infectious Diseases said in a statement that the Data Safety Monitoring Board, an independent body overseeing the Covid vaccine trials, had informed it that the U.K.-based pharmaceuticals group had provided outdated information to U.S. regulators. The news throws into doubt AstraZeneca’s ability to obtain swift approval for emergency use authorization by the U.S. regulator. The vaccine maker published the results of its U.S. trial, showing 79% efficacy against Covid-19 symptoms and 100% efficacy in preventing its most serious developments. The AstraZeneca vaccine, developed with Oxford University, was approved three months ago in the U.K. and Europe and has been the most widely used jab in the world since then.
It has been marred by safety concerns raised by several European governments, and EU officials’ anger over the company’s inability to fulfill its supply contract with the European Commission. Both the U.K. and EU medicines regulators insisted last week after new reviews that the vaccine was safe and should continue to be used.
3. Biden Advisers to Propose $3 Trillion Public Investment Plan — President Joe Biden’s economic advisers are in the process of putting together a multipart $3 trillion plan to boost spending on infrastructure and education, fight against climate change and reduce inequalities. The first part of the package would focus on infrastructure projects Biden touted in his “Build Back Better” plan that was released during his presidential campaign. That plan included funding for roads and bridges as well as climate-change initiatives.
The second part of the proposal would focus more on education and people. It would include extending the expanded child tax credit, tuition-free community college, universal prekindergarten, and a national paid leave program.
The Biden team is expected to recommend breaking up the plan to help it pass more quickly, according to the New York Times, which first reported details of the legislative strategy. Some White House officials believe the first set of proposals might be more appealing to Republicans. The strategy is still preliminary and under discussion.
Still, the proposal is likely to be fiercely debated, notably over its cost and eventual financing. The proposal would come days after Biden’s $1.9 trillion fiscal stimulus package was approved by Congress.
4. Intel’s New CEO Is Spending $20 Billion to Double Down on Chip Manufacturing — Intel CEO Gelsinger said that Intel planned to spend $20 billion to build two manufacturing plants in Arizona. The decision to do so comes amid increased U.S. government interest in securing domestic semiconductor manufacturing supply. Intel also said it plans to launch a stand-alone business unit called Intel Foundry Services that will offer advanced manufacturing capabilities to companies that design chips but don’t fabricate the semiconductors themselves.
Gelsinger, who assumed the CEO duties Feb. 15, said Intel plans to expand its use of third-party manufacturing plants—including for products at the core of Intel’s business, such as chips for personal computers and data centers—beginning in 2023. Some investors had speculated that Intel might leave the chip-making side of the business altogether.
5. New York Gets Ready to Legalize Marijuana for Recreational Use — New York is poised to join 14 other states that have already legalized the sale of recreational marijuana when lawmakers take up the measure next week. Under the proposed deal, anyone 21 and older could possess up to three ounces of pot as well as grow marijuana for personal use. A new Office of Cannabis Management would issue licenses to grow or sell cannabis. Local jurisdictions could also allow businesses to let people consume weed on site.

The week ahead — Economic data from Econoday.com:

“How? Try to travel into the future and look back. In 2023, do you think you’re more likely to say, “Back in 2018, I wish I’d been more aggressive” or “Back in 2018, I wish I’d been more defensive”? And is there anything today about which you’d be likely to say, “In 2018, I missed the chance of a lifetime to buy xyz”? What you think you might say a few years down the road can help you figure out what you should do today. ― Howard Marks

1. Germany Suspends Use of AstraZeneca Covid-19 Vaccine — Germany said it is temporarily stopping the administration of Covid-19 vaccines made by AstraZeneca. The Netherlands, Ireland and northern Italy became the latest places to temporarily halt the use of the AstraZeneca vaccine—which was developed with the University of Oxford and has been given to more than 17 million people in Europe—as concerns grow about its safety and effectiveness. Reports of blood clots in people who took the AstraZeneca vaccine have caused several countries—including the Netherlands, Ireland, Denmark, Austria, Estonia, Lithuania, Norway, Iceland, Bulgaria, Thailand—to stop or suspend its use. South Africa switched to the Johnson & Johnson vaccine after trials showed the AstraZeneca formula was less effective there.
2. Biden Looks for Ways to Finance Infrastructure, Push Economic Growth — Growing concerns about the U.S.’s rising deficit mean President Joe Biden will need to consider other financing options for future economic proposals—including his infrastructure spending package—like raising taxes. Biden is planning a tax increase that could raise both the corporate tax rate and the individual tax rate for people earning more than $400,000 a year, Bloomberg News reported. Treasury Secretary Janet Yellen said Sunday that the administration “will be putting forth proposals to get deficits under control.”
3. Fed Holds Steady on Interest Rates and Bond Purchases — The Fed said Wednesday that it would keep current policy unchanged but increased its forecasts for economic growth, prompting more officials to predict rate increases in 2023. In response to a question about winding down the central bank’s bond-buying program, Powell said that it is “not yet” time to start considering tapering its purchases. The central bank said in its latest statement that it would keep rates steady near zero, and reiterated it would keep buying $120 billion of Treasuries and mortgage-backed securities until “substantial further progress” is made toward the central bank’s goals of maximum employment
4. World-Wide Streaming Subscriptions Pass One Billion During Pandemic — The number of subscriptions to online video streaming services around the world reached 1.1 billion in 2020, according to data released by the Motion Picture Association. Meanwhile, global box-office revenues plunged by more than $30 billion in the year to $12 billion, as movie theaters were shut in the U.S. and in other parts of the world, according to the association. As new streaming services enter the U.S. market— Comcast Corp.and ViacomCBS Inc. have also launched platforms— Amazon. and AT&T Inc.’s HBO Max are following in Disney and Netflix’s footsteps by ramping up efforts to boost their share of international markets.

The week ahead — Economic data from Econoday.com:

“In investing, it’s easy to achieve performance that is equal to that of the average investor or a market benchmark. Since it’s easy to be average, real investment success must consist of outperforming other investors and the averages. Investment success is largely a relative concept, measured on the basis of relative performance. Simply being right about a coming event isn’t enough to ensure superior relative performance if everyone holds the same view and as a result everyone is equally right. Thus success doesn’t lie in being right, but rather in being more right than others. Similarly, one doesn’t have to be right in order to be successful: just less wrong than others. Success doesn’t come from having a correct forecast, but from having a superior forecast. Can such forecasts be obtained?” ― Howard Marks

1. CDC Announces Vaccinated Americans Can Socialize Without Masks — People who have been fully vaccinated against Covid-19 can socialize in small groups without wearing masks or social distancing, the CDC said Monday. They can also visit unvaccinated people from a single household who are at low risk for the disease without masking.
Vaccinated adults should still keep their distance, wear masks and take other precautions in public, however, since less than 10% of Americans have been fully vaccinated to date. With new infections falling more slowly over the past few weeks and more dangerous variants taking hold, worries are rising over a resurgence just as young, mostly unvaccinated people are set to head to spring break hot spots in places like Florida, which has never had a statewide mask mandate.
2. A Likely Consumer Spending Boom with a Bigger Stimulus Checks & Reopenings — The third round of stimulus more directly targets lower earners, who are also more likely to spend their checks than others. Considering that consumer spending rose 2.4% in January after checks were issued, the larger, $1,400 checks could increase spending even more.
A rise in personal income, paired with more reopenings, could “unleash substantial pent-up demand” in service sector consumption, Jefferies chief economist Aneta Markowska said. She expects personal consumption spending to rise 7% in 2021 and 4.1% in 2022. However, a third of respondents said they planned to save more of their third stimulus check, with just 5% saying they planned to use it for a vacation or trip.
3. GE Announced Plans for an 8-for-1 Reverse Stock Split — company’s shares outstanding to roughly 1.1 billion from almost 9 billion, resulting in a stock price of about $112 a share, from $14. A scan of GE’s peers shows stock prices roughly between $100 and $200 a share and share counts in the hundreds of millions. GE also sold its jet-leasing business to AerCap and financial forecasts for 2021.
4. Biden to Sign Third Stimulus Package Into Law Friday, With Checks Following Soon — The House approved the bill Wednesday by a vote of 220-211, with all but one Democrat, Maine’s Jared Golden, supporting the bill and all Republicans opposing it. The $1,400 stimulus checks will start arriving this month and will not include Biden’s signature. The bill also extends supplemental federal unemployment benefits and provides $350 billion in aid to state and local governments. A proposed increase in the federal minimum wage didn’t make it into the final bill. Biden also said Wednesday that the U.S. plans to buy 100 million more doses of Johnson & Johnson’s one-shot vaccine and that it will share any surplus with the rest of the world. The U.S. is also giving $4 billion to an international program aimed at vaccinating the poorest countries.
5. Moderna Tests Booster Aimed at South African Variant on First Human — Moderna has started giving booster doses using a formula aimed specifically at targeting a coronavirus variant first found in South Africa. The variant appears to be 50% more contagious than earlier forms of the virus and Moderna has said its current vaccine is six times less effective at neutralizing it.
Pfizer, whose vaccine was shown to be two-thirds less potent against the same strain in a study published in the New England Journal of Medicine in February, is studying the effectiveness of giving patients a third dose of its existing vaccine. A study released this week found the Pfizer vaccine was highly effective against a strain first found in Brazil. The Food and Drug Administration recently revised its rules to let pharmaceutical companies run smaller trials to shorten the time for modified vaccines to get authorized for widespread use, which could shave months off the approval process.

The week ahead — Economic data from Econoday.com:

“It’s particularly important in this vein to note the extent to which economic expectations can be self-fulfilling. If people (and companies) believe the future will be good, they’ll spend more and invest more . . . and the future will be good, and vice versa. It’s my belief that most companies concluded that the Crisis of 2008 wouldn’t be followed by a V-shaped recovery, as had been the rule in the last few recessions. Thus they declined to expand factories or workforces, and the resulting recovery was modest and gradual in the U.S. (and even more anemic elsewhere).”
― Howard Marks

1. Democrats Can Get Stimulus Signed Into Law by March 14 — the Senate will introduce its version of President Joe Biden’s $1.9 trillion stimulus plan as soon as Wednesday, kicking off the final push to get the legislation signed into law before federal unemployment benefits expire for millions of Americans. Senate Majority Leader Chuck Schumer (D, N.Y.) will present the bill—which includes $1,400 direct payments to most Americans, aid to state and local governments, and other spending measures—on the Senate floor. That starts the clock on 20 hours of debate followed by time for senators to introduce amendments and challenges. A floor vote could happen Friday morning, and is expected to fall along party lines with Vice President Kamala Harris casting the deciding vote in favor of the bill.
2. Biden Says U.S. Could Have Enough Vaccine Doses for Every American in May — President Joe Biden announced that the U.S. will have enough coronavirus vaccine doses for every American by the end of May thanks in part to Merck working with Johnson & Johnson to ramp up vaccine supplies after production delays caused the company to miss its initial target. The U.S. has a $1 billion contract with J&J for 100 million doses at a price of $10 per dose, about half of what it is paying for the Pfizer drug. J&J now expects to have 20 million doses ready by the end of March and 100 million by June.
3. Tighter Eligibility for Stimulus Payments Could Exclude 12 Million More Americans — unlike the House bill approved last week, which lets individuals earning up to $100,000 and married couples making $200,000 receive reduced payments, the Senate version will give nothing to individuals who make more than $80,000 or couples making more than $160,000. The change, which has Biden’s support, means as many as 12 million fewer adults will get checks, according to the Institute on Taxation and Economic Policy, and could shave $15 billion to $20 billion off the bill’s total cost, which must come in under $1.9 trillion.
4. 30-Year Mortgage Rate Tops 3% for First Time Since July — The average rate on a 30-year fixed-rate mortgage rose to 3.02%, mortgage-finance giant Freddie Mac said Thursday. It is the first time the rate on America’s most popular home loan has risen above 3% since July and the fifth consecutive week it has increased or held steady. Mortgage rates tend to move in the same direction as the yield on the 10-year Treasury, which has been rising. Treasury yields rise when investors feel confident enough in the economy to forgo safe-haven assets such as bonds for riskier ones including stocks.

The week ahead — Economic data from Econoday.com:

“One of the great sayings about poker is that “in every game there’s a fish. If you’ve played for 45 minutes and haven’t figured out who the fish is, then it’s you.” The same is certainly true of inefficient market investing.” ― Howard Marks

1. J&J Vaccine a Step Closer to Authorization — the FDA is currently considering the company’s application for emergency-use authorization for the vaccine, which would be the third Covid-19 vaccine to receive FDA authorization. Efficacy against moderate to severe Covid-19 was 66.1% after 28 days, but efficacy against severe Covid-19 was far better, at 85.4% after 28 days. What’s more, across the entire study, there were only two cases of Covid-19 hospitalization in the vaccine group, and none after 28 days, compared with 29 cases in the placebo group. There were no Covid-19-related deaths in the vaccine group, compared with seven in the placebo group.
2. Moderna Says Covid-19 Vaccine for South Africa Strain Is Ready for Human Testing — Moderna said it shipped the new shots to the National Institutes of Health to conduct the first human study of the variant vaccine, which could start within weeks. The new vaccine, code-named mRNA-1273.351, is designed to better match the virus variant that was first identified in South Africa but has since spread elsewhere. Other companies including Pfizer Inc. and Johnson & Johnson have said they are tweaking their vaccines or working on boosters that better match variants. Older vaccines don’t appear to work as well against the strain first identified in South Africa, and difficult new strains could also emerge.
3. Ten-year Treasury Yields Reach the Highest In a Year — ten-year Treasury yields spiked after tepid demand at an auction for government bonds, surging as much as 23 basis points to 1.6%, the highest since last February. The increase forced a crucial group of investors such as holders of mortgage securities to sell Treasuries, which in turn led to further increases in yields. The 10-year U.S. yield adjusted for inflation rose to its highest level since June, a warning sign for riskier assets that have benefited from exceptionally loose financial conditions amid the pandemic.
4. J&J’s One-Shot Covid Vaccine Receives FDA Advisers’ Backing — experts advising the U.S. Food and Drug Administration voted 22-0, with no abstentions, that the benefits of the vaccine outweigh its risks in adults 18 and older, a decision that could help bolster the vaccine supply as new variants continue to spread. The J&J shot is highly anticipated because it can be kept in a refrigerator for three months, an advantage over the mRNA vaccines that must be frozen when stored for longer periods, and its single-shot regime. Overall, the rate of side effects was low. However, there were more cases of deep vein thrombosis and pulmonary embolism in people who got the vaccine compared to the placebo group, said Yosefa Hefter, a medical officer in FDA’s Center for Biologics Evaluation and Research.
5. Senate Democrats to Drop Minimum Wage From Relief Package — Senate Democrats will drop a plan to introduce an amendment to the Senate stimulus bill that would have used tax penalties and incentives to raise wages for the lowest-paid workers at big companies. Lawmakers are aiming to the pass the relief package before federal unemployment benefits run out on March 14. That was too tight of a time frame to try to use the tax code to raise wages, according to sources The Wall Street Journal spoke with.

The week ahead — Economic data from Econoday.com: