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Pfizer shares fall. OPEC+ agrees on output cuts. And Wall Street is increasing its presence in China. 

Pfizer Falls

Pfizer shares declined as much as 3.1% on Thursday following a report saying that supply-chain problems mean the drugmaker expects to ship only half the Covid-19 vaccine doses this year it had initially planned — down to 50 million from 100 million. In further downbeat news, Anthony Fauci slammed the U.K.'s drug regulator, saying that it rushed to clear the Covid-19 vaccine that the company is developing with Germany-based BioNTech. The U.K. watchdog said Wednesday it had approved the Pfizer vaccine, which means the shot will likely be used in Britain before the U.S. and the EU. Meanwhile, the co-founder of BioNTech joined the world's 500 richest people after the approval. And here's where Pfizer stands in Asia.

Markets Fall

Asian stocks looked set to slip Friday after news broke late in the U.S. session that a Covid-19 vaccine roll-out is facing near-term supply-chain hurdles. The dollar retreated. Futures slipped in Japan and Australia, while the S&P 500 turned lower after the Pfizer reports. Sentiment was also hit by news that California will lock down its economy if its critical-care capacity reaches its limit. The Nasdaq Composite eked out a gain to close at an all-time high. Treasuries ticked higher.

Slowly Does It

OPEC+ agreed to ease oil-output cuts next year more gradually than previously planned, giving a fragile market more time to absorb the extra supply. A gradual tapering falls short of what had been widely expected before this week: a full three-month delay to the scheduled January output increase. Yet the compromise deal also avoids a breakdown of OPEC+ unity, which had become a growing risk after days of tense talks exposed exposed a new rift between core cartel members, the United Arab Emirates and Saudi Arabia. Oil rose on the news.

China Trove

Wall Street's increased its presence in China this year, and a record $212 billion of foreign funds have poured into Chinese bonds and stocks. That's despite measures from Washington aimed at decoupling the U.S. from China. But the opportunity to capture a share of profits that are estimated to swell to $47 billion in investment banking alone by 2026 is too great to ignore: Goldman Sachs and JPMorgan are now pushing to take full control of their China ventures, while fund giants such as BlackRock have been given the greenlight to set up shop. Meanwhile, President Donald Trump isn't letting his election loss stop him from beating up on China.

Stay-At-Home Winner

The biggest gainer on New Zealand's benchmark index follows familiar themes for successful stocks on the gauge: a strong focus on the U.S. and an ability to tap the stay-at-home thematic. Diagnostics company Pacific Edge has soared 542% to become the top stock on the S&P/NZX 50 this year, buoyed by its bladder cancer tests that can be taken at home. U.S. health practitioners have adopted the lockdown-friendly cancer screening kit in lieu of appointments that would otherwise need to be done in medical centers overwhelmed by coronavirus.

What We've Been Reading

This is what's caught our eye over the past 24 hours:

And finally, here's what Tracy's interested in today

Back in September Federal Reserve Governor Lael Brainard talked about the central bank shifting from "stabilization" to "accommodation" in a comment that seemed to suggest the Fed would try to avoid withdrawing support for the economy too early. It would be a major change in the central bank's reaction function, and one that has the potential to create self-reinforcing feedback loops that can move markets. That's the suggestion made by Naufal Sanaullah, macro strategist at EIA All Weather Alpha Partners, and Jon Turek, the author of the Cheap Convexity blog, in an upcoming episode of the Odd Lots podcast.

The idea here is that when the Fed dropped interest rates to 0% back in March, unemployment was about to surge to 14%. Now, unemployment is at 7% and the Fed is still keeping rates at 0%, which further stimulates the economy and lowers unemployment and thereby amplifies the easing effect so long as the central bank doesn't raise rates. In other words, there's an ongoing easing even if the Fed isn't explicitly lowering rates or introducing other new forms of monetary support. The "Fed feedback loops" idea is perhaps most evident in the U.S. dollar, which dropped to its lowest level since 2018 overnight and has contributed to a loosening of U.S. financial conditions that's generally seen as good for the global economy. In that sense, as Turek describes it, a "weaker dollar can beget a weaker dollar."

You can follow Tracy Alloway on Twitter at @tracyalloway.


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