S&P 500 Earnings to Rise by 25%

Jerome Powell, chair of the U.S. Federal Reserve, is still worried about the pandemic and its effects. Meanwhile, analysts project that S&P 500 earnings will rise 25% in the first quarter from a year earlier.

The economy is at an “inflection point” and on the cusp of growing more quickly, Powell said on the 60 Minutes broadcast Sunday evening.  But he warned the pandemic crisis is not yet over.

In the interview, Powell said the American economy “has brightened substantially” as more people are vaccinated and businesses reopen. But he cautioned that “there really are risks out there.” Specifically, that risk is a coronavirus resurgence if Americans return to normal life too quickly.

“The principal risk to our economy right now really is that the disease would spread again more quickly,” he said. “And that’s troubling. It’s going to be smart if people can continue to socially distance and wear masks.”

Powell repeated the Fed’s main message . . .

The Federal Reserve would “consider raising rates when the labor market recovery is essentially complete, and we’re back to maximum employment, and inflation is back to our 2% goal and is on track to move above 2% for some time.”

But Powell said it would “be a while until we get to that place.”

The Big News

Global Birthrates Tumble

Global data on births in December and January was negative. This comes nine months after many countries began feeling the impact of the coronavirus pandemic. It paints a grim picture for population growth. This clouds prospects for sustaining the international economy. Births have fallen between 10% and 20% in many countries, and even more in some areas.

Michigan’s Coronavirus Resurgence

The Covid-19 outbreak in Michigan is bad and getting worse. Hospitalizations have more than tripled in the last month and cases continue to spike. Roughly 7,200 new cases are being reported each day. That is a sevenfold increase since late February. The state is now home to 16 of the 20 U.S. metro areas with the highest per capita new infections.

Pfizer/BioNTech Seek U.S. Vaccine Authorization for Adolescents

Pfizer and BioNTech have become the first vaccine makers to seek U.S. authorization for using their Covid-19 jab on adolescents. The companies on Friday said they had requested emergency use authorization from the FDA for adolescents aged 12 to 15. Two weeks ago, they reported that a phase 3 trial of the jab on 2,260 young teenagers aged 12 to 15 had shown 100% and a strong antibody response.

A Glitch in the Vaccination Race

The race to vaccinate had a hiccup on Thursday. Several patients at a mass vaccination site in North Carolina suffered immediate reactions to the Johnson & Johnson (JNJ) shot. A day earlier, 11 people had adverse reactions in Denver, ranging from dizziness to nausea. Both sites temporarily shut down. The news comes as distribution of the J&J vaccine is expected to fall 85% this week due in part to botched work at a manufacturing plant.

Arthritis Drug Fails in Covid Trials

A rheumatoid arthritis drug from Eli Lilly and Incyte did not meet the main goal of preventing progression to mechanical ventilation in a late-stage study in hospitalized Covid-19 patients. Roughly 8% of participants given baricitinib along with standard of care died by day 28 of the trial versus 13.1% on a placebo, a 38% reduction. In a puzzling result, however, Lilly said its drug substantially reduced the risk of death by any cause in the trial. Baricitinib was authorized for emergency use in combination with remdesivir for Covid-19 patients needing supplemental oxygen.

The Coronavirus Numbers

In the U.S., nearly one in five people have been fully vaccinated. And one in three have received at least one shot. Here are the numbers from Monday at 8 a.m. ET from Johns Hopkins University:

• 136,136,954 Infected Worldwide
• 774,302,096 Vaccines Given Globally
• 2,938,200 Deaths
• 31,198,055 Infected in the U.S.
• 187,047,131 U.S. Vaccine Doses Administered
• 562,066 Deaths in the U.S.

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What’s Next

The stock market rally that sent stocks globally to record highs last week paused on Monday.

On Friday, both the S&P 500 and Europe’s Stoxx 600 hit record highs ahead of U.S.  quarterly earnings reports. U.S.  companies are expected to show the strongest profit growth in two and a half years as the economic recovery from the pandemic accelerates.

Analysts estimate overall earnings for the S&P 500 index will rise 25% in the first quarter compared with the same time last year. The increase for the S&P 500 index would mark the biggest increase in profits since the third quarter of 2018, according to analysis by Credit Suisse.

Despite the S&P 500 outlook, investors seem wary of placing large orders ahead of the U.S.  corporate earnings season. Companies’ outlook statements will be under scrutiny for clues about whether the pandemic, a computer chip shortage and other supply chain logjams will hinder future earnings growth.

Meanwhile, one global crypto exchange is preparing to launch its IPO. Go here for urgent crypto Pre-IPO details.

Yours in Health & Wealth,

Tony Daltorio