Tuesday, May 19, 2020

Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET.

Subscribe

You don’t have to be an epidemiologist to be bullish on stocks

The stock market surged on Monday, with the Dow (^DJI) jumping 911 points or 3.9%. And at least some of the rally was attributed to improved hopes that a coronavirus vaccine was on the horizon.

Biotech firm Moderna (MRNA) announced encouraging interim Phase 1 data on its vaccine candidate.

“The Moderna team continues to focus on moving as fast as safely possible to start our pivotal Phase 3 study in July and, if successful, file a [Biologics Lisence Application],” CEO Stéphane Bancel said. “We are investing to scale up manufacturing so we can maximize the number of doses we can produce to help protect as many people as we can.”

Moderna shares jumped 20%.

While it’s historically taken at least five years to get a vaccine, extraordinary efforts are being made to achieve a vaccine in a fraction of that time.

And according to a recent survey conducted by Deutsche Bank, financial market professionals are betting we’ll get that vaccine sooner than later.

“In terms of the virus, people are generally optimistic (74%) on a vaccine being available within 18 months even if only 5% think within six months,” Deutsche Bank’s Jim Reid reported on Monday.

This is incrementally encouraging as many agree that a vaccine is a prerequisite for getting things back to where they were before the coronavirus pandemic.

“For the economy to fully recover, people will have to be fully confident,” Fed Chair Jerome Powell said on CBS’s “60 Minutes.” “And that may have to await the arrival of a vaccine.”

But while Monday’s developments are hopeful, there’s still a long way to go. And everyone may need to better manage their expectations.

Even assuming a vaccine soon becomes available, it’ll take a considerable ramp up before we have the capacity to get the billions of doses that are needed. No one company can do this.

“To address the potential demand, companies are scaling-up manufacturing at-risk without clear evidence that the vaccine is safe and efficacious,” Morgan Stanley analysts wrote on Sunday. “Ensuring quality is one of the main challenges, along with establishing a reliable distribution system and meeting cold chain requirements.”

In other words, there’s much more to it than manufacturing the vaccines themselves.

“Every day, it’s, OK, are we going to run out of glass vials?” Bill Gates said in an interview with the Wall Street Journal. “You may think that’s a simple part of it, but nobody’s ever made 7 billion vaccines.”