Monday Musings: December 28, 2020

Dec 28, 2020


Public Trust Credit Team
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The U.K. officially strikes a deal with the European Union (EU), bringing the saga of a potential no-deal Brexit to an end

After four and a half years of painstaking negotiations, EU ambassadors are now beginning the process of ratifying the terms of the monumental trade deal, effective on January 1, 2021. The British Parliament will hold an emergency session on December 30 to pass the needed legislation to formally sign the deal into U.K. law. The new agreement, covering roughly £660 billion worth of trade between the U.K. and the 27 EU member states, will be the largest bilateral trade deal ever signed by both parties. The most important aspects of the deal are that both sides agreed to no tariffs or quotas on goods that cross borders from the U.K. to EU member states and vice versa. There are some concerns emerging around U.K. businesses that will have just a short grace period to transition to the new customs processes and border procedures that take effect next week. Additionally, adequacy standards for data protection and the exchange of private data flows between both parties still need to be flushed out over the coming months. While both citizens and businesses in the U.K. have little time to prepare for the transition, at least a no-deal Brexit has been avoided.

President Trump signs the pandemic aid bill after passing both Houses of Congress

Over the weekend, President Trump signed a $900 billion bill for pandemic aid, providing economic relief for millions of Americans impacted by the COVID-19 pandemic. The relief aid was part of a larger $2.3 trillion omnibus appropriations package that will provide specific pandemic relief in addition to a $1.4 trillion bill to fund government spending through September 2021. The COVID-19 relief aid includes direct payments of up to $600 per adult and per child for individuals with incomes under $75,000. The approved aid will allow Americans to claim unemployment benefits for up to 50 weeks and a supplemental $300 a week in benefits, a smaller amount than the initial $600 per week approved by the CARES Act in the spring that ended in the summer. The President has reiterated his plea to Congress to raise the direct payment sent to individuals from $600 to $2,000 per person. The House is anticipated to vote today on a standalone bill to increase the stimulus checks to match the President’s request of $2,000, but it remains unclear how the Senate will respond to this proposed standalone legislation.

As 2020 ends, there is reason to anticipate brighter days ahead

As 2020 comes to a close, 2021 begins with substantially more optimism. While the end of the divisive election season and a lull in social unrest have both provided reasons for hope, the market’s strong performance in December seems to be related to the COVID-19 vaccines and fiscal stimulus. Approximately 10 million doses of vaccine have been distributed in the United States, with roughly 2 million administered to front line health care workers. Current projections point to 20 million Americans vaccinated by the end of January. After more than 300,000 lives have been lost in the United States, it seems that the eventual rate of domestic infections and deaths should slow. 
Outside of the United States, there is similar reason for hope. In Europe, 200 million doses of the Pfizer and BioNTech are scheduled to be administered before October of 2021 with another 100 million requested. In addition, the European Commission has also contracted with AstraZeneca for 400 million doses; Sanofi-GSK (300 million doses); Johnson & Johnson (400 million doses); CureVac (405 million doses); and Moderna (160 million doses). In Asia, Singapore became the first in its geography to approve the Pfizer-BioNTech vaccine, and it expects to begin vaccinations by year-end. In China, Sinovac and state-owned Sinopharm are both at work developing their own vaccines. According to reports, Sinovac’s offering will not require the extreme refrigeration of the western vaccines, making it a viable solution for the developing world. Recognizing that the trials of 2020 and COVID-19 are far from over, it is both reasonable and, in our view, necessary to believe that the coming year will be better!
All comments and discussion presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information presented should not be used in making any investment decisions. This material is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses.

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