Coronavirus is making an ugly comeback. The stock market refuses to notice.
New confirmed Covid-19 cases hit a record 130,989 Tuesday. What’s more, 10.6% of coronavirus tests came back positive, double the average positive rate since the U.S. first started conducting at least 1 million tests a day.
More than 61,000 Americans are in the hospital—another record, while reported deaths tragically hit 1,347 Tuesday.
The virus is “about to explode,” Scott Gottlieb, former FDA chief, told Shepard Smith on CNBC Tuesday, adding the country is in for the “most difficult phase of the pandemic.”
Gottlieb’s warning comes days after Pfizer announced encouraging efficacy data for its Covid vaccine, news which has sent the Dow Jones Industrial Average up more than 1,000 points over the past two days.
U.S. stock futures are up again Wednesday, despite Gottlieb’s concern. The stock market, of course, is forward looking and Dr. Gottlieb said that life can potentially get back to normal in the latter part of 2021. Having a target date for normalcy is a powerful positive for investors and far better than “hope.”
America, and the world, just need to keep battling the virus until then.
*** GM’s Mary Barra on the future of electric vehicles, Spotify’s Harley Finkelstein on the transition in retail and Box’s Aaron Levie on the move to the cloud. Register here for Investing in Tech, this Thursday at 1 p.m.
Biden Moving Forward With Transition Plan Despite Challenges
President Donald Trump has yet to concede the 2020 election. The former vice president is moving forward with a transition plan, regardless.
- The Wall Street Journal reported that the Trump administration has not provided President-elect Joe Biden a designation that would have allowed him to view certain classified information. The Journal noted a delay may also slow down Biden’s selection of cabinet officials due to background investigation delays for security clearances.
- Some Republican leaders, including Senate Majority Leader Mitch McConnell, have pointed to the Trump campaign’s claims of election fraud and plans for legal challenges. It’s unclear what path Trump’s lawyers could take to flip the election in his favor.
- Secretary of State Mike Pompeo, when asked if the State Department planned to engage with the Biden campaign, said while smiling, “There will be a smooth transition to a second Trump administration.” He added that the world should be confident a transition will occur for whoever is president on Inauguration Day.
- At a news conference on Tuesday, Biden called Trump’s holding out, “an embarrassment.” He added, “I think it will not help the president’s legacy.”
What’s Next: Biden expects everything to “come to fruition on January 20th,” adding that his hope and expectation until then is “that the American people do know and do understand that there has been a transition.”
Supreme Court Hears Arguments Against Affordable Care Act
The Supreme Court heard arguments Tuesday in a case some fear could end the Affordable Care Act. At least two justices seemed open to keeping the majority of the bill.
- The case centers on the Affordable Care Act’s individual mandate. Originally deemed constitutional because the penalty was ruled a tax by a majority of the Supreme Court, Republican attorneys general from 18 states argue the 2017 removal of the penalty makes it no longer a tax.
- If the Supreme Court agrees, the bigger question would be whether or not the individual mandate could be severable from the rest of the bill. Republicans argue it can’t, while Democrats disagree and warn millions of Americans would lose health care and pre-existing condition protections amid a pandemic.
- Justice Brett Kavanaugh signaled support for separating the toothless mandate from the rest of the bill. Chief Justice John Roberts suggested some in Congress wanted the Supreme Court to strike down the bill, “but that’s not our job.”
- “It’s hard for you to argue that Congress intended the entire act to fall if the mandate were struck down when the same Congress that lowered the penalty to zero did not even try to repeal the rest of the act,” Chief Justice Roberts said.
What’s Next: President-elect Joe Biden said Tuesday that his administration will fight to ease the burden of health care on American families. Biden ran on improving the Affordable Care Act, rather than replacing it with a single-payer system like those supported by the progressive wing of the Democratic Party.
Britain Erects Barricades Against “Hostile” Takeovers
The U.K. government is seeking new powers to “investigate and intervene in potentially hostile foreign direct investment” and block takeovers it would deem contrary to the country’s national interests, according to a new “national security and investment bill” published Wednesday.
- Under the bill, investors will have to notify the governments about transactions “in designated sensitive sectors, such as (the) defense, energy and transport sectors.”
- That would allow the government to “investigate and take action to address any national security risks” as well as screen and “interrogate the acquisition of sensitive assets and intellectual property, as well as the acquisition of companies.”
- “Hostile actors should be in no doubt—there is no back door into the U.K.,” Business Secretary Alok Sharma said.
- The U.K. government’s release says that “the vast majority of transactions will require no intervention and will be able to proceed quickly and with certainty,” and Sharma insisted that the country “remains one of the most attractive investment destinations in the world” and wants to “keep it that way.”
- Sanctions for noncompliance with the new regime would include fines of up to 5% of annual company revenue or imprisonment of up to 5 years for guilty executives.
- The government has identified 17 sectors where notification will be mandatory, notably defense, communication, and sensitive industries such as nuclear, artificial intelligence, data infrastructure, or quantum technologies.
What’s Next: The bill does not go much beyond what others, like other European countries or even the U.S., have in their legal arsenal to counter unwanted investments. The EU itself is currently looking for ways to strengthen its defenses against takeovers raising geopolitical problems, such as those initiated by Chinese state-linked groups.
Apple Unveils First Macs Powered by New M1 Chip
Apple on Tuesday unveiled new versions of the 13-inch MacBook Air, the 13-inch MacBook Pro, and the Mac Mini, the company’s first computers powered by the M1, a new Apple-designed system-on-a-chip, as Apple’s long relationship with chip giant Intel fades away.
- The new MacBook Pro will be priced starting at $1,299. The M1-based Air will be priced starting at $999. The new Mini, which as usual ships without a screen or keyboard, will be priced at $699. Orders on all three models started Tuesday and will begin shipping next week.
- Apple has long designed chips for the iPhone, iPad, and Apple Watch. But Apple had been relying on Intel processors to run Macs for well over a decade. The M1 chip includes an 8-core microprocessor, an 8-core graphic processor, and security and DRAM functions. It is produced on 5-nanometer process technology.
- This was the fourth major virtual product event for Apple in the Covid-19 era. Apple first revealed plans to build Macs using its own chips at its Worldwide Developers Conference in June. The company launched an updated Apple Watch in September and last month unveiled the iPhone 12 lineup.
What’s Next: Tuesday’s Mac announcement follows the company’s best-ever quarter for Mac sales. In the fiscal fourth quarter, ended Sept. 30, Mac sales were $9 billion, up 29%.
What’s in Store for Stocks, Stimulus, Trade, and Other Issues During a Biden Presidency
Following last Tuesday’s presidential election, which stretched into the weekend, and Pfizer’s early but positive Covid-19 vaccine data, Barron’s caught up with Moody’s Chief Economist Mark Zandi and UBS Global Wealth Management Americas Chief Investment Officer Solita Marcelli on Tuesday to learn how recent events could impact investors.
- The policies of President-elect Joe Biden will likely have less of an impact on sectors than they would have if the Democrats held the majority in both chambers of Congress, Marcelli said, adding that it would be more difficult to pass substantial legislation with a divided government.
- Democrats retained control of the House, AP projected Tuesday night, and could still secure control of the Senate if the party can win both of Georgia’s runoff races in January. A divided Congress would be positive for sectors like health care, industrials, consumer discretionary, and financials, Marcelli told Barron’s subscribers.
- Marcelli does not expect Biden to roll back all tariffs on China. “We do believe that he will tone down the hawkish rhetoric, and also relax trade tensions with allies around the world,” she said. Moody’s Zandi expects tariffs on China will remain.
- Zandi said he expects a deficit-financed fiscal rescue package between $1 trillion and $1.5 trillion on the other side of the inauguration. The package could include more unemployment insurance, another round of stimulus checks, more Paycheck Protection Program money for small businesses, and other aid.
What’s Next: Read more on this as well as a Barron’s Roundtable discussion of the political and policy implications of the election. And register here for this Thursday’s Barron’s Live call with Carolyn McClanahan, a physician and financial advisor, who will discuss what’s next for health care next year, under President-elect Biden.
I am 31 years old and my wife is 30. We both live in New York. We have been married for four years. She makes a little more than me, but doesn’t really save.
Three years ago, she started her online entrepreneurship master’s degree, which cost $50,000. I was against it because I think it is a waste of money. It was her dream to get a master’s degree even if it is unrelated to her job in banking.
We have one joint checking account into which I deposit my entire paycheck. She, however, only put in the same amount as me and her extra pay into her own secret account. Her tuition and student-loan debt comes out of our joint account.
During the two years of her studies, our joint account never had more than $3,000. I was stressed constantly as we have no emergency money. It was a struggle trying to pay her student debt.
She traveled twice to Europe during her school vacations. I was against that too, as we can’t afford it based on the joint account balance. She went anyway with her girlfriends, and every year she buys luxury bags. I had to ask my parents to chip in to pay for her credit-card bills.
She told me she had no money in her secret account because she used that money to pay her other credit card. We argued about this a lot. In the end, she graduated and her leftover student-loan balance was $12,000 at the beginning of 2020.
During the Covid-19 shutdown, her spending and travel was put on hiatus, so our joint account grew. For the first time, it broke the $7,000 mark. She paid off her student loan in one go with her secret account money, about $10,000. That shocked me, because I always thought she had no money in that account.
I suggested that we start to save money for a down payment on a house and to put the brakes on any travel for two years. She got angry, mostly due to the stay-at-home order. She was bored. I told her that, given that she achieved her dream of getting a master’s degree, now it is my turn to fulfill my dream of owning a home.
She insisted on putting money aside for travel, and said if I won’t go, she will travel alone with the money. I finally blew a fuse and texted her parents that I want a divorce. She has been staying with her parents since then. After cooling down, I went over and apologized to her parents.
Her parents were so angry with me. Her mom said, “What is so wrong with traveling and buying a few bags?” I said, “We don’t have money for that right now.” My mother-in-law said, “You don’t understand. It is not about the money.”
Her mom said she regretted giving her daughter permission to marry me. She said my wife’s secret account money came from her bonus and it’s her right to spend however she wants with it. Her dad told me to be a man and treat my wife better, and so I went home alone.
I am frustrated. I saved my paychecks just so she could afford her tuition. We didn’t have a Health Savings Account/Roth IRA, or any investment account in order for her to fulfill her dream. I have no other accounts, and after four years of working I am left with a four-digit balance in our joint account.
I just wished she would have shared more of the financial burden given that she is such a big spender. We are both Chinese, so there are a lot of “cultural” expectations for the husband to take care of his wife.
However, I felt that no matter what I do, I receive no appreciation for my hard work. I just hope she can come back and change, be more transparent, and have no more secret bank accounts. But in my heart, I know the ship has sailed.
Read The Moneyist’s response.
—Newsletter edited by Stacy Ozol, Matt Bemer, Ben Levisohn