The life and legacy of Ruth Bader Ginsburg, Supreme Court Justice, are atop our thoughts as she is laid to rest today. "Our nation has lost a justice of historic stature," Chief Justice John Roberts said. "We at the Supreme Court have lost a cherished colleague. Today we mourn but with confidence that future generations will remember Ruth Bader Ginsburg as we knew her, a tireless and resolute champion of justice."
As we wrap up September, we approach the six-month mark since COVID-19 turned the world upside down. We are adjusting, but few things feel normal.
Back to Normal Index: Moody Analytics publishes this index, with ‘normal’ being March 1. They use frequency indicators for airline travels, railroad traffic, business confidence, employment, etc. (Moody's Back to Normal) with graphics that show how far off different indicators are vs pre-Covid times:
Flat stock market: The broad stock market, here captured by the S&P 500, is now about the same as early January. Small cap stocks and value stocks have lost money, while growth and tech stocks have made a positive return year-to-date. While returning to January levels is not ideal, it is far better than most would have predicted in a pandemic.
Government stimulus: We are one step closer to another stimulus check, as Treasury Secretary Mnuchin and House Speaker Nancy Pelosi agreed to restart talks. Pelosi plans to have the House draft another, smaller bill than its Heroes proposal from May, likely voting Oct. 2. The IRS could send out new checks and is likely to reopen its portal to register for direct deposit (we’ll keep you posted). (CNET)
Housing-related jobs see better-than-average recovery. 61% of construction jobs lost during the pandemic have been recovered, better than the ~50% jobs recovered in the overall labor market so far. (Reuters)
Americans are hoarding cash - U.S. consumers built up an astounding $12.5 trillion in excess of savings from April through July. Absent a new round of fiscal stimulus, most indications suggest consumers are tightening up on their spending ahead of the holidays. (Ellen Zentner of Morgan Stanley, Yahoo Finance)
Low interest rates create zombies: the percentage of zombie companies approaches 2000-era peak. A company is somewhere between living and dead -- a zombie -- when its profits are less than the interest paid on its debts for at least 3 years. The very low interest rates for many years made it too easy for companies to continue to survive using lots of debt. Their unsustainable operations can lead to bankruptcy and lost jobs. Zombies have been this numerous only once before: just after the dotcom bubble burst in September 2000. (Danielle DiMartino Booth, Financial Times)
Four vaccine finalists: Of course, the logical path to the new normal requires a vaccine. There are four major candidates that vary on everything from refrigeration needs to effectiveness goals and number of doses.
- Johnson & Johnson and AstraZeneca vaccines are viral-vector vaccines. Only one viral-vector vaccine has ever been approved: the Merck Ebola vaccine, approved in December of last year.
- Moderna and Pfizer’s vaccines are messenger RNA vaccines. This type of vaccine has never been approved by the FDA. It is easier to quickly ramp up production of an RNA vaccine, but more difficult to scale.
- J&J’s vaccine entered Phase 3 clinical trials this week, with the largest trial size of 60,000 participants.
More details on these vaccines are available here: MarketWatch Vaccines.
Ohio 529 investment changes: College savers, due to an upcoming change in the investment choices through the Ohio 529 CollegeAdvantage® program, we recommend that you move any current Money Market allocation in your Ohio 529 to the Fifth Third Savings Account option by October 23. Log in to your Ohio 529 (choose Direct Plan) here to change all current and future investment allocations. They are eliminating the money market. We are happy to walk you through this in a brief phone call if you like.
Have a safe and enjoyable weekend!