November 19, 2021
Good morning,
Concerns around the fourth wave of Covid dragged down overnight markets as European lockdown headlines cast a pall over Friday’s trading on exchanges overseas. U.S. Futures are only off -0.15% but it’s a Covid day in terms of the market’s focus.
Markets are right to be worried about Covid’s spread in Europe. The spike in Covid cases in Austria far outpaces anything that country has witnessed since the pandemic began — and has moved surprisingly fast for a country with a relatively high vaccination rate. Germany too is experiencing its highest case count so far. Belgium and Ireland have very high cases counts and cases are also rising in Denmark, France, Spain and Portugal. The U.K. is an interesting counterexample. Cases there have been high for months, but deaths and hospitalizations have remained relatively low, so authorities seem content to let it run for the time being. In eastern Europe, where vaccination rates tend to be much lower than Austria (65% fully dosed), Germany (68%) or Belgium (75%), deaths are running extremely high. Austria’s high vaccination rate may be contributing to keeping the rate of mortality relatively low, but deaths from Covid-19 still rose 66% in the past seven days compared to the previous seven.
In the U.S., cases had stabilized and are now showing signs of rising again. They’re concentrated in the eastern Rockies and Great Lakes states, but New Hampshire, Vermont and New Mexico have seen increases in recent days. As for U.S. equities, it feels like to a large extent the Covid trade had already returned in recent sessions. Price action in small-caps has been poor since the Russell 2000 hit its high on November 8th, but not as bad as that in the “Covid industries” of airlines, hotels, and cruises, which closed yesterday at their lowest level in more than two months.
Very hard to accurately discount, this next wave of Covid may be more cause for pause – we shall see.
Have a nice weekend.
Be well,
Mike
Source today – Bloomberg