Freezing temperatures and a blanket of snow cover much of the country

The Road to Recovery

Happy President’s Day! We know many of you have been in a deep freeze for the past several days.

As investors, hopefully you’re celebrating the incredible start to the year. All the major stock market indices are up significantly after just 6 weeks. The market is clearly inspired by the accelerating distribution of vaccines for COVID-19; the decline in new cases, hospitalizations and deaths related to the virus; the prospect of additional fiscal stimulus from the federal government, and the continued support of the Federal Reserve.

The Markets

The broader markets were pulled into the trading frenzy around GameStop and a few other battered stocks.

The Dow Jones Industrial Average finished Friday with an increase of 28 points, or 0.09%. The S&P 500 index rose 18 points, or 0.47%. The Nasdaq increased 70 points, or 0.50%. These are all record highs.

Year to date, the Dow has risen 2.78%, the S&P 500 index is up 4.8%, and the Nasdaq has increased 9.4%.

The yield on the 10-year Treasury Note was at 1.21% on Friday. Spot gold traded at $1,824, down 0.11%. West Texas Intermediate Crude futures for March 2021 delivery traded at $59.73 a barrel, up 2.56%.

COVID-19 – The Numbers

Globally, across 213 countries and territories, there have been over 108 million confirmed cases and nearly 2.4 million deaths. In the United States, over 27 million have been infected and over 481,000 have died.


The number of new cases of COVID-19 per day has dropped to less than half of what it was just weeks ago. This is a dramatic improvement in a very short period.

Johns Hopkins University provides the following graph of infections:

JHU New Cases 2021 02 14

Source: Our World in Data


The number of tests given is still below where it needs to be. But the positivity rate has fallen significantly and continues to trend in the right direction.

JHU Testing Positivity 2021 02 14

Source: JHU Covid Site


The hospitalization rate is also headed in the right direction. Fewer hospitalizations will translate into fewer deaths.

COVID Tracking Hospitalizations 2021 02 14

Source: COVID Tracking Project


We continue to lose far too many Americans to the virus. But, thankfully, this trend, too, is downward. There is a lag of approximately two weeks between hospitalization and fatalities. So, we can be encouraged that deaths will continue to decline in the weeks ahead.

NYT Covid Deaths 2021 02 14

Source: New York Times

The Institute for Health Metrics and Evaluation (IHME) at the University of Washington projects that a total of between 580,000 and 645,000 American will die from the virus by June 2021. The variance is driven by mask usage, vaccinations, and other containment strategies.


If you want to see a summary of this data since March 1 of last year:

COVID Tracking Summary 2021 02 14

Source: COVID Tracking Project


The Biden Administration has been very focused on ramping up the rate of vaccinations in the US. The results, as displayed below, are hopeful.

Bloomberg Daily Vaccinations 2021 02 14

Source: Bloomberg

Here’s a comparison of the U.S. with selected large nations.

WID Daily Vaccinations Comparison 2021 02 14

Source: Our World in Data

Vaccine distribution is vital to getting past the coronavirus. The faster Americans are vaccinated, the sooner we can return to some semblance of normal in this country.

Concerning Vaccine Development

We learned over the weekend that four Oregonians who received both shots of the vaccine tested positive for the virus. This is both puzzling and troubling.

It is too early to draw conclusions about what this means. We know that these vaccines are no more than 95% effective against the virus. Therefore, it is certainly statistically possible for some of those who are vaccinated to test positive. But more research is needed to determine whether there is cause for concern.

The Labor Market

The number of applications for state unemployment benefits fell last week. But the number for the prior week was revised upward. These numbers are still extremely elevated and indicate the labor market continues to suffer.

TE Jobless Claims 2021 02 07

Source: Trading Economics

The number of Americans who filed for continuing unemployment benefits dropped by over 200,000 to 4.77 million in the week ending January 16. Of those who lost their jobs in the spring of last year, 10 million remain out of work. There are 20.4 million Americans relying on unemployment benefits in the week that ended January 23, up significantly from 17.8 million the week before. The jobless rate fell slightly in January to 6.3%. Some found jobs. Others have stopped looking.

National Budget Deficit and Debt

The Congressional Budget Office reported that the federal government will run a $2.3 trillion deficit this year. The deficit, without any additional as proposed by President Biden, will equal 10.3% of gross domestic product. The coronavirus crisis has resulted in the largest budget deficits relative to GDP since 1945.

Budget deficits result in debt and the nation’s borrowing continues to grow as depicted below:

FRED Debt to GDP

Source: FRED

Biden Financial Proposal

Speaking of spending, discussions continue in Washington, DC about the President’s proposed $1.9 trillion pandemic relief package.

Components of the program could include direct payments to Americans, additional unemployment benefits, support for state and local governments, funding for schools and colleges, a new higher federal minimum wage, health insurance, changes to national health insurance, increased funding for nursing homes, relief for the airline industry and transportation systems, and an enhanced child tax credit.

Republicans generally view the proposal as too big, too broad and too partisan. We can expect negotiations to continue into March when elements of the last package (i.e., emergency unemployment benefits), which was passed in December, expire.

The Economy

The federal government’s spending and the Federal Reserve’s unprecedented money support have lifted the economy. A survey of economists by Bloomberg New suggests the economy will grow an annualized rate of 5.6% in the second quarter and 6.2% in the third quarter.

Parting Thought

Last October the International Monetary Fund estimate that COVID-19 had cost the world $20 trillion. A staggering figure that continues to grow.

Fortunately, America does appear to be turning the corner on the coronavirus. If we can get enough people vaccinated, broad social immunity is within reach.

Keep the faith, get vaccinated when you can, be safe, and stay healthy.


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