Despite a year filled with terrible news, the past few weeks have given us some rays of sunshine and incredibly good news. So good, that the headline generated the morning of Nov. 9 will be branded in my psyche for life. “Pfizer and BioNTech release phase III trial results for their COVID-19 Vaccine. More than 90% Effective.”
Reflecting on the news a few days later, it got me thinking about the news that sticks with us. The news that we will remember for the rest of our days on this planet. Think about some of the things you will never forget, and then think about exactly where you were, what you were doing, and how it made you feel.
If you ask someone born in the ’40s or ’50s, they can tell you exactly where they were when they heard the news of President John F. Kennedy’s assassination. My mother-in-law often recalls the day Elvis died in 1977. She remembers exactly where she was, and what she was doing. Most of us remember with crystal clarity the morning of 9/11.
Hearing bad news is like getting struck by a lightning bolt; it’s specific, quick and deep. Thankfully, hearing good news can have a similar impact. I remember when I got the call that I was accepted into the University of North Carolina — I was waiting and waiting for the telephone to ring and then, wham! And I vividly remember the day I got engaged to Lynne. After that came the birth of our sons, all unforgettable. Though with four of them, I admit, the details from each are a little jumbled.
I will forever remember that exact moment on Monday, Nov. 9, 2020, at 7:15 a.m. I was going through my morning routine, drinking coffee in my kitchen, and watching CNBC on my phone when the Pfizer/BioNTech announcement happened.
A 90% effective vaccine from Pfizer! Am I still asleep? Can this be real?
I was so excited; I rushed into the office and sent a note to our entire firm touting “news of what could be the greatest medical advancement in more than 100 years” and looking ahead to again attending a Kenny Chesney concert.
OK, you’re probably wondering what Kenny Chesney has to do with anything. At that moment, a raucous concert was my best visual for a crowd of singing, drinking, sweating people — the opposite of what we can do now.
A return to a retro economy
Let’s talk about what these announcements, followed by Moderna’s 94.5% effective vaccine results, mean for the economy and the stock market.
Pfizer/BioNTech plans to produce 50 million doses (enough for 25 million people) by the end of this year and 1.3 billion doses (enough for 650 million people) by the end of 2021. The U.S. Department of Health and Human Services and the Defense Department agreed to buy the first 100 million doses for front-line workers and the most vulnerable populations. With the Pfizer/BioNTech and Moderna COVID-19 vaccines coming soon, that means most of the general population will likely receive access to the vaccines around spring 2021.
For most of this year, investors have been chasing stocks that benefit in a COVID-19 world, with no regard to valuations or long-term prospects. They’ve been focused on anything and everything digital, including online shopping, video call meetings and food delivery. During what I will always remember as vaccine week, we got a preview of how investors may shift their views as the virus goes away:
- Office REITs in New York were up more than 30%.
- Some cruise lines were up almost 40%.
- Some energy stocks were up 30%.
- Banks — yes, boring banks — were up 11%.
I’m not saying the switch has already flipped, but it’s what could come. I believe we will see a swing back to what I’m calling a new and improved retro economy. That’s a return to an environment where companies in more traditional sectors of the economy (banking, energy, industrials, utilities, telecom, health care and travel) may begin to finally see a tailwind, as opposed to the headwinds of 2020. Stocks in these sectors are often categorized as value companies, rather than growth companies.
A recent survey by Baird asked participants, “What is the one thing you look most forward to doing post-COVID-19?” The top four responses give us a glimpse of where we’re heading:
- Traveling
- Hugging everyone
- Concerts/public events
- Being with co-workers
A retro economy means we go back to human interaction, as well as travel and leisure activities. Remember when people used to go to movie theaters and Disney World?
Is value on the rebound?
Value-oriented stocks, many of which are focused on paying steady quarterly dividends, have been showing signs of life over the past few “good news” weeks. As the modern miracles of medicine start to flow, there should be an enormous economic impact, and I believe the stock market should continue to reflect that.
But, from an economic standpoint, we aren’t there yet, and we likely have some rough months ahead. If this was an Ironman competition, I’d say we’re about one-third into the last leg of the race. The excruciating swim, check. The 112-mile brutal bike ride, check. And now we’re facing the long and monotonous marathon run. It’s the final leg of the race. We’re exhausted, but we got a boost from these announcements that will take us across the finish line.
Bottom line: Remember the miracle of this time. News of new vaccines and therapies is a real shot in the arm for our morale and the economy. That means there’s real light at the end of the tunnel. I’m optimistic that we are witnessing the beginning of the end of COVID-19 and a return to normalcy in our lives.
A retro economy doesn’t mean we’ll simply revert back to 2019. It will be a new and improved version, with a more fluid work environment, more flexible work travel and a more dynamic workforce, as the Army of American Productivity continues to march forward.
Fingers crossed.
Wes Moss has been the host of “Money Matters” on News 95.5 and AM 750 WSB in Atlanta for more than 10 years now, and he does a live show from 9-11 a.m. Sundays. He is the chief investment strategist for Atlanta-based Capital Investment Advisors. For more information, go to wesmoss.com.
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