A Vaccine for Children

As the vaccine rollout continues in the U.S., pharmaceutical developers are beginning trials with younger patients. Up until this point, vaccine testing has largely excluded those under the age of 16, as well as pregnant or nursing mothers.

According to reports, Pfizer has now fully enrolled its COVID-19 vaccine trial in kids ages 12 to 15, which will focus on 2,259 participants. Moderna, meanwhile, is also undergoing safety and efficacy testing for younger recipients of the vaccine and expects data for kids 12 and up may be available before September. Data on kids ages 11 and younger, however, which would involve a lower dose, is still not expected until next year, 2022.

According to the American Academy of Pediatrics and the Children's Hospital Association, children are less affected by COVID-19 than adults are, but they do still catch the virus and can spread it. More than 2.5M cases of coronavirus were reported in children as of January 14, or roughly 13% of all cases.

Meanwhile, the broader vaccine rollout has been â€œpatchy,” as Bloomberg News describes it. According to the Centers for Disease Control and Prevention (CDC), nearly 38M vaccine doses were distributed to U.S. states as of Thursday of last week, but only about 17.5M had actually been administered. In other words, over half of the shipped vaccines are reportedly sitting on shelves across the country. Furthermore, of the shots given, 15M have been for a first dose, while only 2.5M Americans have been given a second round.

According to Dr. Rochelle Walensky, the new director of the CDC, the federal government is working with the manufacturers and directly with states to understand exactly where the supply is and the hold up on distribution. At least 12 states have reported vaccine shortages, with warnings from San Francisco and New York that they could be completely out of doses this week.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said he's worried about governments delaying the second vaccine dose. Speaking today on a virtual World Economic Forum panel moderated by Bloomberg’s editor in chief, John Micklethwait, Fauci warned that larger-than-advised gaps between the two dozes could â€œdent efficacy.” Additionally, Fauci suggested that existing vaccines may not fight future variants and upgraded versions will be needed. Moderna, for example, has already begun human studies of a shot against the South Africa variant, after lab tests reportedly showed its current vaccine may be less potent against that particular strain.

Meanwhile, President Biden has affirmed his commitment to vaccinating 100M people in 100 days, or roughly 1M people per day for the next three months. The seven-day rolling average for coronavirus vaccine doses administered to Americans currently sits at 912,000 according to the Bloomberg vaccine tracker[1]. Of course, while any improvement is welcome, the President’s target is arguably only minimally above the current run rate, and furthermore, falls short of some expectations for the administration to â€œset the bar higher,” as one reporter suggested following the target announcement.

Regardless of the specific pace of vaccinations, with the broader process underway, some states are adjusting virus restrictions. California, for example, is scheduled to remove its stay-at-home order today, according to NBC News. Meanwhile, in Chicago, children hoping to return to in-person learning will have to wait longer after teachers voted to strike. 

Investors, meanwhile, are beginning to brace for possible snags in the vaccine rollout and a slower pace of a return to â€œnormal.” As we noted in our 2021 Outlook, while the vaccination process is well underway, a lot has to go just right to meet the market’s expectations of distribution and widespread vaccination, and realistically, a lot could go wrong during the process from logistical hurdles to refrigeration problems to administering delays with all 50 states individually responsible to develop, organize and execute a vaccine distribution plan. In fact, the vaccine distribution timetable proposed by Washington officials is under the most optimistic scenario assuming zero hiccups with approval, manufacturing and production, supply chains, shipping and distribution.

Last week, equities ended up an average 2.2%.

Overnight, equities were up 0.1%. This morning, however, equities are down with the Dow down 0.8%, currently trading at 30,741.78 as of 11:00am ET.

In political news, according to reports, Biden’s stimulus plan â€œisn't running entirely smoothly” as a bipartisan group of lawmakers reportedly pushed back on the White House yesterday to justify the $1.9 trillion price tag.

Recall, on January 14, Biden announced details of his proposed sixth-round COVID relief bill totaling $1.9 trillion. Entitled the American Rescue Plan, Biden’s stimulus plan includes another round of direct payments at $1,400 per qualifying person, enhanced federal unemployment benefits of $400 per-week through the end of September, and an increase in the federal minimum wage to $15 per hour. The proposal also extends the eviction and foreclosure moratorium until the end of September, as well as provides $350 billion in state and local government aid, $170 billion for education, and $70 billion for COVID testing and vaccination. The proposal is furthermore said to be the first phase of a two-part strategy, with a broader program focused on infrastructure and climate change to be unveiled in the coming weeks.

While discussions are ongoing over potential stimulus, the President is expected to continue with a flurry of executive orders. An order today is expected to boost federal agencies' purchases of U.S. products, fulfilling a campaign pledge to â€œBuy American.”

Last week, on his first full day in office, President Biden announced a dozen executive orders to combat the coronavirus pandemic and invoke the Defense Production Act to make supplies.

Other executive orders included increasing federal reimbursement to states and tribes from 75% to 100% of the cost for National Guard personnel and emergency supplies, creating a Pandemic Testing Board, which will aim to increase testing capacity, expand the public health workforce, support COVID-19 screening in schools and collect data on reopenings, and requiring masks on public transportation and negative COVID-19 tests for anyone entering the country from overseas.

Following the inauguration, Biden also signed a series of executive orders moving to preserve and fortify the Deferred Action for Childhood Arrivals (DACA) program, halting construction on the U.S.-Mexico border wall, and revoking a key permit for the proposed Keystone XL pipeline.

This morning, the Chicago Fed National Activity Index unexpectedly rose from 0.31, revised up from 0.27, to 0.52 in December, a two-month high. According to Bloomberg, the index was expected to decline to 0.10 at the end of 2020. The Chicago Fed National Index draws on 85 economic indicators; a reading below zero indicates below-trend growth in the national economy and a sign of easing pressures on future inflation. In December, 53 of the 85 monthly individual indicators made positive contributions, while 32 made negative contributions.

Also this morning, the Dallas Fed Manufacturing Index unexpectedly declined from 9.7 to a reading of 7.0 in January, a six-month low. According to Bloomberg, the index was expected to rise to 12.0 at the start of 2021.

Tomorrow, the FHFA House Price Index is expected to rise 0.8% in November following a 1.5% gain the month prior, the Conference Board’s Consumer Confidence Index is expected to rise from 88.6 to a reading of 89.0 in January, and the S&P CoreLogic 20-City Home Price Index is expected to rise 1.0% in November, down from the 1.61% gain in October.

Later this week, on Wednesday, durable goods orders are expected to rise 1.0% in December following a similar gain in November. Also, on Wednesday, the Federal Reserve will release its latest policy decision.

On Thursday, GDP is expected to rise 4.2% in the fourth quarter following a record 33.4% gain in the third quarter, and initial jobless claims are expected to decline from 900k to 878k in the week ending January 23.

Finally on Friday, the PCE is expected to rise 0.3% in December and 1.2% over the past 12 months, and the core PCE is expected to increase 0.1% in December and 1.3% year-over-year.

-Lindsey Piegza, Ph.D., Chief Economist

[1]We incorrectly noted an 800,000 pace in our Friday note.