Chart of the Week
Weekly U.S. box office has come back a fair bit over the past few months; however, it remains well below 2019 levels:
The top 10 movies in the U.S. grossed about 38% of what the top 10 movies grossed over the same week in 2019; however, this does not account for the quality of movies with this year’s top 3 – Fast & Furious part 216 (this time they go really fast), The Boss Baby: Family Business (this is not a joke), and The Forever Purge (I think this is the 11th Purge movie) – perhaps not a great sample of the best that Hollywood has to offer.
COVID-19 Update
A mixed bag of news on the COVID front as the delta variant and a lack of vaccinations in many regions has led to a renewed surge in cases. Let’s start with a chart and then add some color:
The Bad News
Delta has now become the dominant strain in most regions and has even led to renewed upticks in the U.K. and Israel where more than 50% of the population have been fully vaccinated. The problem is that if even a small percentage of the population has not been vaccinated, the transmissibility of delta is significantly greater than earlier strains and thus cases among the unvaccinated have surged. Further, young people, many of whom are still not eligible for vaccines, have proven more vulnerable to delta.
The Good News
The vaccines work – at least in terms of reducing severe or fatal cases to almost zero. The U.K. provides, perhaps, the best illustration of this as case counts are once again on the rise; however, the fatality rate has dropped to below 0.1%, which is essentially on par with the common flu:
Mixed News
Pfizer announced this week that it will seek an Emergency Use Authorization (EUA) for a third dose of its vaccine to be administered 6-months after the first two doses in order to boost immunity to COVID-19 and its numerous variants. Pfizer indicated that after 6-months, the two dose regime provides waning immunity; however, a third dose (booster) increases immunity by 5x to 10x with limited adverse side effects. It is likely that we will see similar applications from Moderna and possibly AZN and JNJ.
Economic Update
With the gradual reopening of the Canadian economy, we have seen a nice recovery in the jobs data. Canada added 231k jobs in June, while the unemployment rate fell to 7.8%. The gain in jobs mostly offset the lockdown induced loss in jobs during April and May (-275k combined); however, the gains were skewed toward part-time work (there was actually a net loss of ~33k full-time jobs) and it is clear that the Canadian economy is still far from firing on all cylinders.
Meanwhile, the U.S. reported non-farm payrolls last week, which showed a gain of 850k jobs and an unemployment rate of 5.9% with ~9.5mn unemployed. To put the U.S. employment picture in perspective, prior to COVID, the unemployment rate was 3.5% with 5.7mn unemployed, but at the peak of the COVID-induced recession, the unemployment rate was 14.7% with more than 23mn unemployed. Thus, while the U.S. economy still remains far from where it was prior to COVID, it has come a long way in the past 14-months.
Market Update
It was a mixed week for stocks. Monday through Wednesday were fairly quiet (the U.S. market was closed on Monday for the July 4th holiday); however, Thursday saw one of the sharper down moves we have seen in some time with most major indices off between 1% and 2%. The reason for the down move was concerns about global growth, especially with the delta variant outbreaks in various regions. Rising bond yields, which had become a big bugaboo for investors a few months back, have quickly given way to falling yields and concerns that the bond market is now signaling problems with growth rather than problems with inflation (bond yields tend to rise when inflation is a concern and fall when growth is a concern).
However, as we have seen time and again over the past year, Thursday’s fears proved somewhat short-lived with Friday (at least at the time of publication) seeing a broad-based recovery.