EU resumes use of AstraZeneca vaccine

19 March 2021

The noise

  • The US Federal Reserve sharply upgraded their growth expectations for the US economy in 2021 from 4.2% to 6.5% despite cautioning that a full recovery from the impact of the pandemic was distant and would require ultra-easy monetary policy. Fed Chairman Jerome Powell highlighted that interest rates are likely to remain close to zero until 2024.
  • The EU will resume using the AstraZeneca vaccine after the European Medicines Agency found the “benefits to outweigh the risks”. As several European countries encounter a third wave of new infections, the fact that the entire European bloc remains well behind much of the developed world in terms of vaccines delivered is stark.
  • A study has found that 4.4 million new businesses were started in America in 2020, a 24% increase from the year before. It is by far the biggest increase on record. The 2020 boom is a likely result of the trillions of dollars of US government support, cheap access to finance and a steep rise in unemployment forcing workers to find alternative income streams.

The numbers


The nuance

In financial markets, Federal Reserve Chairman Jerome Powell is currently an A-list celebrity. Every time the man opens his mouth, investors hang on his every word, trying to determine what he’s thinking so that they can deduce how the Fed will react to of the phenomena occurring in markets. It didn’t take Sherlock Holmes to decipher the message he was trying to convey in his speech on Thursday.

Powell was very clear that he is happy to let the economy run hot, going as far as saying that he even expects inflation to rise later this year but has no intention to act if it does. His decisions will instead be guided by employment numbers and “average inflation” being above target. Effectively this sets the Fed up to ignore inflation prints above 2% for some time using the argument that these are cancelling out the sub-2% numbers experienced during the pandemic. Not a single member of the Federal Open Market Committee thinks that the Fed’s target base rate will increase this year – Powell has clearly made his intentions entirely unambiguous.

For now this means that as economies reopen, stimulus cheques are distributed and central banks continue to pump money into the system, there will be no force keeping inflation in check. Inflation expectations and therefore bond yields have been on the rise this week as investors sold off government bonds in another spate of volatility. In equity markets, the growth vs value tug-of-war continues to play out as the tech heavy NASDAQ-100 index fell 2% this week.

Over prior weeks, we have repositioned portfolios to be protected against a volatile environment of emerging macroeconomic trends and weekly shifts in sentiment. Our holdings are great businesses with proven track records and runways for growth whose success is not dependent on central bankers making particular decisions or the market keeping faith in a business model which has not yet proved its value.

Quote of the week

Roughly translated, their new name means: "Explosive Good Looking Salmon.” Daily Mirror Article.

No one really knows why a salmon takes a fly; it’s not hunger. In the case of a Taiwanese student who took the bait and changed his name to “Bao Cheng Gui Yu”, the motivation certainly was hunger. The name translates to Explosive Good Looking Salmon. This was all part of an elaborate promotion by a chain of sushi restaurants offering an all-you-can-eat sushi meal for the person who changed their name, along with five friends. Officials in Taiwan are begging people to stop changing their name to incorporate “salmon” after more than 130 fish-lovers changed their name to bag free sushi. In these divided times, it’s reassuring to know that students the world over are connected across borders in their willingness to always go the extra mile for a discount.

Phil Smeaton
Chief Investment Officer

All investment views are presented for information only and are not a personal recommendation to buy or sell. Past performance is not a reliable indicator of future returns, investing involves risk and the value of investments, and the income from them, may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.


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