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Chief economist update: A vaccine and a better vaccine

"Voices singing, let's be jolly
Deck the halls with boughs of holly
Rockin' around the Christmas tree
Have a happy holiday
Everyone dancin' merrily..."

- Brenda Lee

It's not even December yet but Wall Street's already "Rockin' Around the Christmas Tree" as news of a better COVID-19 vaccine sent both the S&P 500 index and the Dow Jones Industrials Average soaring to new record highs overnight.

Here's the news Factset prepared earlier: "Moderna (MRNA-US ) said on Monday that its coronavirus vaccine candidate is 94.5% effective based on an interim analysis of Phase three data. It added that the majority of adverse events were mild or moderate in severity. It noted that it plans to ask the FDA for emergency use authorisation (EUA) in the coming weeks. In a separate release, Moderna said its vaccine candidate is now expected to remain stable at standard refrigerator temperatures of 2 to 8C (36 to 46F) for 30 days, up from previous estimate of 7 days.

This comes in the wake of some of the logistics/distribution concerns (WSJ) surrounding the vaccine candidate from Pfizer (PFE-US ) and BioNTech (BNTX-US ). While the recently announced efficacy rate was also over 90%, helping to unleash a bullish pro-cyclical rotation in the market, it needs to be stored at roughly -70 C (-94 F)."

Who would have thought that after dropping to a four-year low of 18,213.65 points back in March (as economic activity froze in most nations around the globe), the Dow is now just a whisker away from 30K points - it closed at 29,950.44 points last night for a whopping 64.4% surge from the March low. Similarly, the S&P 500 index has soared by 65.5% from March.

Just last week, US Fed chair Jerome Powell told fellow central bankers at the annual ECB Forum on Central Banking that: "The vaccine is certainly good and welcome news for the medium term, although significant challenges and uncertainties remain about timing, production, distribution and the efficacy for different groups."

Powell was referring to the Pfizer and BioNTech vaccine candidate - and its shortcomings - back then. Moderna's discovery should partly assuage some of Powell's concerns.

Still, it'll be a race against time. Will the vaccine be produced and distributed in time to slow/halt the exponentially growing cases of infections and deaths in America? To date, the the US tops the COVID-19 list in terms of total cases of infections, new cases, total deaths, new deaths and total active cases.

This is not lost on Powell, stating: "We've got new new cases at a record level, we've seen a number of states begin to reimpose limited activity restrictions, and people may begin to lose confidence that it's safe to go out."

...and they have. According to the Wall Street Journal: "States are slapping new restrictions on daily life amid a resurgence of the coronavirus that some officials say is the most widespread and intense since the pandemic struck in March."

"Governors in New York, Maryland, Minnesota, Iowa, Utah and other states have imposed measures..."

Since then, Reuters reports that: "Michigan and Washington state ... imposed sweeping new restrictions on gatherings, including halting indoor restaurant service ... North Dakota joining 35 other states over the weekend in mandating masks and Iowa this week requiring them in certain circumstances."

While recent reports note that US president-elect Joe Biden favour targeted measures vis-a-vis a nationwide lockdown, infections and deaths could overwhelm America's hospitals and healthcare workers, leaving Biden with no other choice but to freeze social and business activity to contain the outbreak.

That, or hope and wish and pray that vaccinations become operative in time for Christmas.

Read our full COVID-19 news coverage and analysis here.

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