Will Democrats Really Win Georgia?

The World Bank warned that the global economic recovery is on shaky ground.

That’s because the economic rebound from Covid-19 will rely heavily on the successful rollout of vaccines. The World Bank said that any delay risks more than halving this year’s growth rate.

At best, the world faces “a slow and challenging recovery,” the bank said.

It forecast on Tuesday that world GDP would grow by 4% in 2021. That would still leave economic activity 4.4% below its pre-pandemic growth path by 2022.

This assumes rapid progress with vaccination campaigns in advanced economies . . .  and in major emerging developing countries. The World Bank forecast is based on widespread vaccine coverage by the second half of 2021.

If infections continue to rise and vaccine rollouts in major economies are slow, global GDP could grow by as little as 1.6% this year, it estimated.

The Bank also gave its worst-case scenario. If financial stress leads to widespread debt defaults, the global economy could contract for a second consecutive year.

The one item that really caught my eye in the World Bank forecast was this:

The outlook was bleak for advanced economies. In the World Bank’s central scenario, growth in the developed world is set to average 3.3% this year. And that’s if all goes well.

Meanwhile, the bank raised its outlook for China. It expects China’s output to rebound to nearly an 8% rate.

That tells me countries like the U.S. need to expand their fiscal stimulus.

The Big News

FDA Rejects Vaccine Dose Delay

The FDA has rejected the idea of delaying the second dose of COVID vaccines. Some states had considered following the approach taken by the U.K. It is delaying the second dose of both the BioNTech–Pfizer and AstraZeneca–Oxford vaccines to give more people the protection of at least one dose. Here’s why: One in 50 people in England has now been infected with the virus.

LA Hospitals Are Running Out of Oxygen

Los Angeles hospitals are, incredibly, running out of oxygen. The L.A. County Emergency Medical Services Agency issued a directive Monday. It stated that ambulance crews should conserve oxygen by administering it only to patients who have oxygen saturation levels below 90%. And to reduce demand on hospitals, the agency directed ambulance staff not to transfer to hospitals most patients who have virtually no chance of survival.

Cutting in the Vaccine Line

Human nature never changes. Look at what is happening as people try to wedge into the front of the vaccine line. A high-end nursing home in Florida offered vaccines to major donors, The Washington Post reports. And experts point out that others are turning to unscrupulous doctors or even getting themselves classified as “essential” workers to get vaccinated sooner.

China’s Pandemic Freedom

Visitors returning from China agree about one thing. Chinese citizens do not have freedom of speech, freedom of worship or freedom from fear. But they do have freedom from the pandemic at the moment. Restaurants are packed, as are hotels. And instead of Zoom calls, people meet face to face to talk business or celebrate the new year.

EU Gives Moderna Vaccine Approval

EU regulators recommended approval of Moderna’s Covid-19 vaccine. This paves the way for its rollout on a continent in urgent need of more supply. That leaves only a formal sign-off by the European Commission. The EU has ordered 80 million doses of the vaccine, with an option to double the amount.

The Coronavirus Numbers

Here are the numbers from Wednesday at 8 a.m. ET from Johns Hopkins University:

• 86,532,134 Infected Worldwide
• 1,871,100 Deaths
• 21,051,525 Infected in the U.S.
• 357,385 Deaths in the U.S.

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What’s Next

The Georgia runoff election has certainly gotten the markets’ attention.

Futures on U.S. tech stocks dropped while futures on small stocks – the Russell 2000 – jumped this morning.

The market consensus at the moment is this: Democrat control of both houses of Congress means stimulus and infrastructure spending. That means more economic growth, helping domestic-focused small stocks.

What I noticed the most, though, was that the yield on the 10-year U.S. Treasury rose above 1%. That is the highest level in over nine months. That was pre-pandemic.

However, the Fed is lurking. The presence of the Fed in the Treasury market will keep a lid on rates going too much higher.

The dollar is sinking again this morning. More stimulus is negative for the dollar, which favors rotation into emerging market currencies and equities as well as Europe and the UK. Commodities, like metals, are also favored.

The U.S. dollar index fell to new lows not seen since April 2018 on the apparent Democrat win.

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Yours in Health & Wealth,

Tony Daltorio