The Week Ahead – Vaccication Time

Welcome to “The Week Ahead” where we take a moment to provide our thoughts on what we can expect in markets and the economy during the upcoming week.

Last week, I joined the 140 million other Americans (one-third of adults) who have received at least one dose of the Covid-19 vaccine. I was given my first dose of the Pfizer BioNTech medicine at a local CVS. The whole process was relatively easy and completely free. The United States has done an incredible job with the vaccine rollout, which bodes well for our economy in the second half of 2021. During President Biden’s recent press conference, he doubled his goal to 200 million inoculations in his first 100 days. This goal appears easily achievable given rapidly increasing supply and the current 2.5+ million average daily injection rate.

As vaccines become more readily available, people are already starting to plan summer vacations, or “vaccications” if you will. While Europe has been much slower to vaccinate its citizens, and is still suffering lock-downs, Italian Premier Mario Draghi said it makes sense to start booking summer holidays. Italy plans to reach 80% vaccine coverage by the end of September, and Draghi has said the country will triple daily vaccinations to about 500,000 in mid-April, exceeding that pace in May-June. Slower economic growth in Europe has helped keep interest rates under control. We believe that as the global economy re-opens, we should expect interest rates to normalize and move higher. It is very important to keep in mind that rates are moving higher for the right reason – positive growth expectations. The stock market can continue to be well supported as long as corporate earnings stay robust, which is our call.

Many economic indicators were negatively impacted by the winter storms last month, but are setting up for a strong snapback as the economy continues to surge on the back of massive stimulus, easy money policy, and pent-up demand being unleashed as the lockdowns are being rolled back. This week we will see many key economic indicators, starting with the Case-Shiller national home price index. By all accounts, we are seeing the housing market appreciate at a mid-teens annual rate. This factor alone has added tremendous strength to our economy. Even with 30-year mortgage rates moving back to 3.2%, there seems to be no sign of slowing down. We will also see the Chicago Purchasing Managers Index, which is an indicator of economic health. We expect another strong reading this week as over 127 million $1,400 stimulus checks have been issued, setting the stage for an upside surprise.

Data deck for March 29–April 2: