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Economic Calendar - Top 5 Things to Watch This Week

EconomyDec 13, 2020 07:19
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By Noreen Burke -- It’s the last full week for markets before the Christmas holidays and it’s set to be a jam-packed one. The first doses in the U.S. COVID-19 vaccine campaign are due to be administered on Monday as the pandemic rages across the country. In Washington, Congress is still deadlocked about a pandemic stimulus package as the Federal Reserve prepares to hold its final meeting of the year. Tesla is finally set to join the S&P 500 just before the market close on Friday. Meanwhile, Brexit talks are down to the wire and if no deal is reached by Thursday the Bank of England’s final meeting of 2020 will be a must watch event. Here’s what you need to know to start your week.

  1. U.S. COVID vaccine campaign gets underway

The first doses of the vaccine developed by Pfizer (NYSE:PFE) and German partner BioNTech SE (NASDAQ:BNTX) will be delivered to 145 locations around the United States on Monday, marking a turning point in the pandemic that has killed more than 295,000 Americans.

Infections, hospitalizations, and deaths are soaring to record levels in the U.S., which has failed to mount a coordinated effort to slow the spread of the virus.

Healthcare workers and elderly people in long-term care facilities are expected to be the main recipients of a first round of 2.9 million doses.

Millions of Americans could begin getting vaccinated this month, especially if a second vaccine from Moderna (NASDAQ:MRNA) is approved rapidly. Other companies with vaccines in advanced development include AstraZeneca (NASDAQ:AZN) with Oxford University, and Johnson & Johnson (NYSE:JNJ).

  1. Stimulus deadlock

Investors are anxious to hear if more fiscal stimulus is coming as surging virus cases lead to fresh containment measures and business closures in many U.S. states.

But Congress missed another deadline on Friday to deliver a new fiscal aid package to help revive the economy. The Senate instead passed a stop-gap extension of government funding to allow more time for lawmakers to work out a larger spending package, including coronavirus relief.

A deal remains elusive after a months-long standoff between Republicans and Democrats over the size of the potential package. Over 13 million people are due to lose unemployment benefits on Dec. 26 without quick action by Congress.

  1. Fed meeting

The Fed is to hold its final monetary policy meeting of 2020 against the background of a faltering economic recovery.

The U.S. jobs report for November pointed to a loss of momentum in the labor market and the latest jobless claims data hit the highest since September amid fresh containment measures to curb the spread of the virus.

That may prompt policymakers to debate making changes to the bank’s asset purchase program or alter its forward guidance for future purchases, particularly as Congress continues to remain deadlocked over additional fiscal stimulus.

  1. Tesla to join the S&P 500

Tesla joins the S&P 500 on Friday and investors anticipate an epic trade of over $50 billion of the electric carmakers shares in the minutes before the close, as index funds adjust holdings to match the benchmark's rejig.

Adding Tesla to Wall Street's most followed benchmark will force index funds to buy its shares, while simultaneously selling shares of other S&P 500 constituents.

Tesla's stock market value stands at around $600 billion, and its shares are up 600% year-to-date.

Tesla (NASDAQ:TSLA) shares have surged 50% since November, when its index debut was announced. It is the world's most valuable auto company, despite having output that is just a fraction of rivals Toyota, Volkswagen (DE:VOWG_p) and General Motors (NYSE:GM).

Active funds, many of which have avoided Tesla, must now decide how much to own, if any. Portfolio managers have been calling JPMorgan analyst Ryan Brinkman for advice. His view? Tesla is "dramatically" overvalued.

  1. Brexit and the Bank of England

Brexit talks entered overtime on Sunday, with a chaotic no deal exit for Britain from the European Union when the transition period ends on Dec. 31 looking increasingly likely.

Prime Minister Boris Johnson has said there is "a strong possibility" Britain and the EU would fail to secure an agreement on trade.

No agreement by Thursday's meeting would mean the BoE will need to focus on increased risks to the economy and possibly open the doors for more stimulus and sub-zero interest rates.

When BoE policymakers announced a 150 billion pound increase in stimulus last month, they probably didn't anticipate acting again soon.

--Reuters contributed to this report

Economic Calendar - Top 5 Things to Watch This Week

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