Pfizer announced this AM that the Covid-19 vaccine being developed by Pfizer Inc. and BioNTech SE prevented more than 90% of infections in a study of tens of thousands of volunteers, the most encouraging scientific advance so far in the battle against the coronavirus.
Eight months into the worst pandemic in a century, the preliminary results pave the way for the companies to seek an emergency-use authorization from regulators if further research shows the shot is also safe.
US Treasuries? The 10-year Treasury Note rose 10.8 basis points.
For commodities, gold is down 4.52% while silver is down 6.46%.
A possible cure to the infection caused by Covid or a career bureaucrat that has been in DC for 47 years with little to show for it? I’ll go for the Covid cure!
Politicians and economists are seemingly all on board with Modern Monetary Theory. MMT translates to “American has the world’s biggest printing press and they can print as much currency as the want.” The logic is that if Japan can do it, the USA can do it.”
Government debt as a percent of GDP was under 40% until the Reagan Administration tried outspending the Soviet Union eventually leading to its collapse. But the growth of government debt to GDP abated briefly under Clinton when House Speaker Gingrich refused to go along with Clinton’s spending fantasies, so Clinton paid off some of the long-term debt outstanding. But as soon as Gingrich was outed as House Speaker and Bush I got us in a war with Iraq, government debt growth resumed at a modest pace (around 60% public debt as a % of GDP). Then came the housing bubble burst and the ensuing financial crisis and bank bailout that saw public debt to GDP rise from 62.7% in Q3 2007 to 100.45% in Q4 2012.
Politicians figured out that the voters don’t care or are too uninformed. Starting in 2000 you can see the concern of investors about out-of-control government spending and debt issuance. Gold rose from $270 per ounce in 2001 to almost $2,000 per ounce today.
Biden is proposing $11 trillion in brand-new spending over the next decade. Among his biggest-ticket items are $1.4 trillion to expand Obamacare; $2 trillion for his version of the Green New Deal; $1 trillion in new Social Security and Supplemental Security Income spending; and 1.5 trillion more dollars for preschool, K-12, and higher education. He has also signed on to a $3.3 trillion stimulus spending plan pushed by House and Senate Democrats.
That all comes after nearly $7 trillion in federal spending this past year, up from a then-record $4.4 trillion in 2019. To pay for this new largess, Biden has laid out $3.6 trillion in tax hikes over the coming decade, resulting in what the Manhattan Institute’s Brian Riedl calls “the largest permanent tax increase since World War II.” But Biden’s spending plan, as laid out in his campaign, is so out of control that it would still manage to increase the national debt by about $5.6 trillion by 2030, according to the Committee for a Responsible Federal Budget.
The Federal Reserves is the largest holder of US Treasury debt and it looks like they are here to stay.
Both commercial and residential real estate have benefited from the massive expansion of The Fed’s intervention in financial markets since late 2008. Zero interest rate policies and massive balance sheet expansion ALMOST went away under Powell (2019), but Covid killed their exit plan.
Covid struck in late 2019, but really hit markets hard in March. The Federal Reserve’s reaction to the Covid crisis (cutting of their target rate and expansion of The Fed’s balance sheet) has led to a crash in the US Dollar.
How do you hedge the negative effects of Covid and Fed intervention (two potentially lethal viruses?? Gold and Bitcoin, although gold has been trailing off lately.
Cryptocurrencies are taking it on the chin this morning, especially EOS.
This morning, the US Dollar (green for greenbacks) is up, Bitcoin (white) is down and gold (gold?) is recovering from an early decline.