Today, is Monday. Today is also December 7th, "a date which will live in infamy" or at least that is how President Franklin D. Roosevelt had described the day prior when he addressed Congress on December 8th, 1941. Less than an hour later, the United States would declare war upon the Empire of Japan. The attack came from the skies at 07:48 local time. U.S. Army radar, which was still somewhat experimental at the time, did pick up the incoming aircraft that were to take part in the first of three planned waves (two came off). A junior officer mistook 182 incoming, and certainly not welcome aircraft, for a group of six B-17's that were expected in from the West Coast.
Within hours, four U.S. battleships had been sunk, four others damaged. Two other U.S. warships had been sunk, nine others damaged. In addition, 188 U.S. warplanes had been destroyed, while another 159 had been damaged. The human cost? 2,335 service personnel killed 1,143 wounded. U.S. civilian casualties came to 68 killed, 35 wounded. The attackers only lost five midget submarines that were probably expected to be lost, and 29 aircraft, while suffering only 64 military deaths.
This was tough. Most of the nation read, or heard the news in disbelief, but the U.S. to be truthful, got a little lucky that awful day. For one, the U.S. Pacific Fleet included three aircraft carriers at the time, and all three, though stationed at Pearl Harbor were not present at the time. This allowed the U.S. Navy to proceed operationally in a manner that would be prohibitively costly to the enemy as it tried to extend early victories. The U.S. could rely upon naval aviation (and submarines) as the Pacific Fleet was repaired and rebuilt. Had the carriers been present on the day of the attack, the U.S. would have been very close to defenseless in the Pacific for more than a year.
As it was, even with that stroke of good fortune, a partnership between the federal government and the U.S. industrial base had been awoken. The U.S. would adopt what would appear to be a dangerously lopsided fiscal policy, but such a policy was necessary. The nation was "up against a wall" so to speak. We, as a people, would have to worry about the repercussions of aggressive deficit spending at a later date. That war lasted until August of 1945. Other wars have come, and gone, as have the many lives of those lost defending or protecting a way of life we hold dear. Seventy-nine years. Oil still leaks from the USS Arizona (battleship). There are still American sailors inside. A nation asleep had been woken.
December 6th, 2020
What did you do on Sunday this week. I watched my New York Jets lose again after it appeared that the team had actually pulled off a "W". I also worked a lot. I always work a lot on Sundays. That's my "cram session" day ahead of the market week. While Sundays are workdays in my home, because the markets are closed, there is no actual pressure. It's an easy day.
Do you know what 175K Americans did on Sunday this week? They found out that they had contracted Covid-19. The awful number was actually our best single day measured in terms of new Covid-related infections month (December) to date. 1,114 Americans passed away on Sunday thanks to this horrific virus, which was down from numbers up close to 3K per day to where the daily toll on our nation had been for several days.
Suddenly, after going through the virus and the long-term complications that it had wrought alone on my block for months, two families whose homes I could reach with the toss of a baseball from my front porch are going through the disbelief, and the "dealing with." Fortunately, they know a little more about how to tamp down the immune response in December than they had in the spring. All I can really do, beyond adding names to the prayer list is to make sure they know what to ask and what to tell their doctors in a timely manner.
There is more. The nation is politically divided. We all know this. The outgoing administration was aggressive in the pursuit of lopsided fiscal policy in it's war against the virus. The incoming administration will have to continue on that path. The single greatest program launched by the outgoing administration has in my opinion, easily been "Operation Warp Speed", which married the federal government to the biotech and pharmaceutical firms working on vaccines and therapeutics (Pfizer: (PFE) , Moderna: (MRNA) , Regeneron: (REGN) , and Eli Lilly: (LLY) , are just the beginning), as well as corporations experienced in large scale logistical operations such as drug distribution operations (McKesson: (MCK) ), and delivery services such as United Parcel Service (UPS) , and FedEx (FDX) , not to mention a number of "troubled" airlines that need the work, and will likely participate. Then there's distribution. That's where the national pharmacies will play a key role.
What is more important than how smoothly power is transferred on Inauguration Day, is the seamless transition of leadership over this single program, the largest and most complex effort jointly launched between by the U.S. government in unison with the private sector since that fateful December so long ago. Fiscal policy will be a major topic this week, but even if agreed upon, a $908 billion support bill that also keeps the government open is just the start. There is a long way to go, deficit spending cannot be an issue. This one program may have lopped two to three years off of the length of this pandemic and must operate without a hiccup even if the nation can not. This hand-off is the one that we as a nation, can not afford to screw up.
As intensive care units filled beyond levels that medical professionals are "comfortable with" across the nation, the Bureau of Labor Statistics reported data from their November employment surveys on Friday. The numbers were disappointing. Either shutdowns are curbing demand for labor, or there is now a decreased willingness to work as many workers are likely trying to avoid exposure to this virus. Regardless of cause, more folks (400K) dropped out of the Labor Force than found jobs. Unemployment dropped to 6.7%, and underemployment dropped to 12%, largely because participation dropped to 61.5%. Roughly 10 million folks are on the sidelines. By the way, 12 months ago, unemployment stood at 3.5%, and underemployment at 6.8%. Times were good not so long ago.
Let's not forget that the Fed's Beige Book illustrated a less than optimal picture for at least a third of the nation last week. Markets reacted well to the weak macro, and the pressure this puts on legislators to act. The dollar took a hit, as did debt securities further out on the yield/maturity curve. Equities, and commodities did well, while cryptocurrencies at least held on, at elevated levels.
Headline news will be driven this week, by both the size, and scope (what's inside) any potential support package, at least until Thursday, which happens to be both the first night of Hanukkah in addition to being the day that the Vaccines and Related Biological Advisory Committee (VRBPAC) will meet to openly discuss the EMU (Emergency Use Authorization) applied for by Pfizer and BioNTech (BNTX) for Covid-19 vaccine candidate BNT 162b2. A recommendation could be made to the FDA upon conclusion of that meeting. Moderna steps to the plate in similar style with mRNA-1273 a week later, on December 17th. By the way, the FOMC makes a decision on monetary policy the afternoon (Dec 16th) prior.
In the meantime, it looks like UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen still do not see eye to eye on the exact terms of Brexit, and the UN warned of a coming global famine in 2021. That's why equity index futures are off a bit overnight. That is why the dollar is showing a little strength.
Investors also want to be fully cognizant that Salesforce (CRM) will hold its investor day on Tuesday (Dec 8th) of this week, while Starbucks (SBUX) meets on Wednesday, and the Walt Disney Company (DIS) meets on Thursday. Until then, hang in there folks. Oh, and keep an eye on Qualcomm (QCOM) , and Qorvo (QRVO) this week. This is where the lead on the expansion of 5G technology is becoming most visible.
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