Much of the vaccine focus is currently on existing, stage three trials (Moderna, Oxford University etc). But adenovirus-based vaccines have been shown to elicit strong immune responses. This is promising. Stock markets in the US have continued their long, extended rally.
Europe faces a number of challenges: the dominance of US technology is one. Travel restrictions, triggered by the UK’s response to rising Covid-19 infections, are another. The divergence in the PMIs on Friday – up in the US and UK, but down in the Eurozone – underlines the point.
The US and UK are both benefitting from housing markets that are very responsive to central bank largesse. Lumber prices rose sharply on Friday. The median price for existing home sales was up 8.45% y/y in July.
The US also dominates the list of Covid-19 winners: the big six ‘technology’ companies – saw big gains in their share prices last week – again. Critics worry that the US will simply be left with endemic structural unemployment, helped in no small measure by intense cost-cutting enabled by ‘tech’. But as the rise of Tesla shows, the US tech giants are at the forefront of important changes in the world economy. With China in retreat, the rise in the S&P 500 reflects the global dominance of US tech.
Summary
• Europe stumbles, but UK, US up
• Not just Apple driving IT shares in the US
• Tesla’s rise, California fires
