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Good morning, Bull Sheeters. The Dow goes for eight straight, and the S&P 500 is within 1%—a mere 33 points—of its February all-time high. The latest rally comes as the global coronavirus toll tops 20 million. It took six months to hit the first 10 million and just six weeks to double that tally. (A reminder: six weeks is not a long time.)
Let’s see where investors are putting their money on this risk-on day.
Markets update
Asia
- The major Asia indexes are mostly higher with Hong Kong’s Hang Seng up 2.1% in afternoon trade.
- There’s a silver lining—for now—in the fate of Next Digital, the media outlet started by Hong Kong Media tycoon and pro-democracy advocate Jimmy Lai who was arrested Monday under Beijing’s contentious new national security law. Next Digital shares soared as much as 210% after support of Lai’s plight reverberated across social media.
- The Trump Administration’s campaign against Hauwei is taking its toll, particularly on its chips business. Production of Huawei’s high-end Kirin processors will cease on Sept. 15 as its supplier, Taiwan Semiconductor Manufacturing Company (TSMC), is under intense pressure by Washington to cut ties with the Chinese telecoms powerhouse.
Europe
- The European bourses flew out of the gates this morning. Germany’s Dax was up 2% an hour into the trading session.
- Britain’s labor market saw its worst hit since 2009, the height of the global financial crisis. Q2 employment levels fell by 220,000. Tomorrow GDP numbers come out, and it appears the U.K. economy shrunk by more than all other G7 nations.
- Lebanon’s prime minister Hassan Diab resigned yesterday along with the rest of the government following last week’s deadly blast and waves of street-level protests.
U.S.
- The U.S. futures are trading higher. Propelled by Boeing and Caterpillar, the Dow rose for a seventh straight day on Monday. That’s despite sell-offs in most Big Tech stocks.
- Apple shares gained more than 1% yesterday, enough to push CEO Tim Cook into the billionaire’s club. On his watch, the company’s market cap has grown more than five-fold.
- A fiscal stimulus plan remains elusive and there are growing doubts Trump’s promised 400-buck unemployment benefit supplement will become a reality as states balk at the amount they have to kick in. As Jefferies analysts said in an investor note this morning: “We don’t see the President’s executive order as a game changer. Only Congress can reverse the cliff, which we still expect to be the case by September.”
Elsewhere
- Gold has tumbled, down around $2,000/ounce.
- The dollar is flat.
- Crude is climbing again, with Brent up 1%.
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“V” for vaccine
Don’t be surprised if you start hearing about a different kind of V-led recovery.
Goldman Sachs this weekend released its revised U.S. GDP forecast, and it’s a bit rosier than before. That’s because Goldman sees a vaccine on the horizon, one that will be “widely distributed” by the middle of 2021. That’s it’s new baseline, which would fit more or less Anthony Fauci’s best-case scenario.
Here’s Goldman’s new take on the road ahead for the U.S. economy:
The baseline case is for US GDP to rise to 6.2% in 2021 (up from 5.6%) and for unemployment to top out at 6.5% by the end of next year (down from 7%).
As Fortune‘s Jeremy Kahn writes in his fascinating feature on drugmaker AstraZeneca, there’s a lot at stake in the race to find an antidote. “A vaccine is the key to ending the long, global nightmare of the coronavirus pandemic. It can unlock economies and save countless lives. Without it, millions more could die, and business and government will remain hostage to the virus.”
There’s plenty of reason to be optimistic about a vaccine breakthrough. There are over 160 vaccines in development. And, according to UBS, “six vaccines are now in large-scale trials globally, typically the last stage before applying for regulatory approval.”
Now, here’s the fly in the ointment. Vaccine skepticism is sky-high. According to Gallup, more than one in three Americans want nothing to do with a COVID vaccine, and that could be just enough of a margin to throw off any herd immunity effect. (The U.K. survey data isn’t much better).
Here’s the Gallup breakdown on vaccine willingness by age range, region and, yes, political affiliation:
Republicans, rural Americans and those in the 50-64 age bracket are least likely to get a vaccine jab, according to Gallup.
Even still, Wall Street right now is focusing on a vaccine hitting the market as a primary catalyst to get the global economy back to pre-pandemic levels. Judging by this morning’s rally, investors are pricing this in, too.
But, as we see here, vaccine take-up is an entirely different story.
Will the public heed the advice of public health officials and get a COVID jab? We’re struggling to get people to agree on making a painless gesture, like donning a face mask.
Wall Street would be wise to update its models to take this into account as we may in fact be facing a dreaded U-led future— one defined by an unwillingness to vaccinate.
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Postscript
Just a note to say Postscript will return on Friday. It’s very likely a shaggy dog will make an appearance.
In the meantime, thank you all for your emails the past few days. I really appreciate the feedback.
***
Have a nice day, everyone. I’ll see you here tomorrow… But first, more news below:
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's read
Teslanomics. Fortune asked the noted Tesla bull, Joe Osha of JMP Securities analyst, to show us the math that justifies why Elon Musk's creation should be crowned the world's most valuable automaker with a market cap north of $260 billion. His calculations, including how many cars they need to sell by 2025, are definitely worth your scrutiny.
The most "popular" trades. Day-trading app Robinhood confirmed to Fortune it's shut off a much-watched feature—the "popularity data" measure—that showed which stocks were trending. That's probably bad news for those of you still long Hertz and Kodak.
MPW. Fortune is collecting nominations for our annual Most Powerful Women lists, which publish in our November issue. The lists—one focused on U.S.-based executives and one focused on execs based outside the U.S.—have long relied on four criteria: the size and importance of the woman’s business in the global economy, the health and direction of the business, the arc of the woman’s career, and her social and cultural influence. This year we add: how the executive wields her power to shape her company and the wider world for the better. We’re accepting submissions through this online form. The deadline for applications is Aug. 24
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Market candy
Quote of the day
“When companies increase the number of job postings on their websites, we anticipate an increase in sales and earnings in the future. When they cut them, it means some not-so-good times are likely ahead."
That's Alex Nekrasov, an assistant professor of accounting at the University of Illinois at Chicago, who co-authored a study on why it makes sense to check this once obscure metric to find stocks on the rise: job postings.
