global vaccine shot in the arm

America, and the world, received a huge shot of hope this week.

The $210 billion drugmaker Pfizer announced on Monday that its coronavirus vaccine is 90% effective at preventing COVID-19.

As expected, travel and hospitality stocks were the trading session’s big winners. The best performing S&P 500 stock was Carnival, up nearly 40%. Hawaiian Airlines cruised the highest among airline stocks, up an incredible 50%. Only three airline stocks —Singapore Airlines, Air Transport Services and Cargojet—were down for the day. Airline stocks’ daily volatility has historically been ±4%, but on Monday they had a move of 4 standard deviations.

Top 10 Best Performing Global Airline Stock on Monday November 9, 2020
click to enlarge

Following the positive news, Goldman Sachs was quick to adjust its market forecast for the next 12 months. The investment bank sees the S&P hitting 4300 by the end of 2021, which is an increase of more than 20% from Thursday’s close.

Goldman sachs forecasts SP at 4300 by end of next year on vaccine hope
click to enlarge

Investors’ enthusiasm was tempered slightly by the realization that Pfizer’s vaccine, although effective, has a couple of serious drawbacks that may prevent it from having a wide reach globally. One, the vaccine requires two doses a month apart, and it’s reasonable to expect that a large percentage of people who showed up for the first shot will not return for the second shot, for various reasons.

And two, the vaccine must be stored at an incredibly frigid -94° Fahrenheit. That’s colder than the average temperature observed at higher elevations in Antarctica’s icy interior. Most countries on earth, including some developed countries, simply do not have the appropriate cold storage, not to mention the supply chain infrastructure, to transport and deploy the vaccine to everyone who needs it.

According to CLSA’s estimate, as much as 50% to 60% of the population needs to be inoculated to stop the pandemic, though some estimates are even higher at between 70% to 75%. “Reaching this level of immunization will not be easy,” the investment group says.

That doesn’t mean it’s impossible, of course. Plus, other promising vaccines are currently in development. Russia claims its own Sputnik V vaccine is 92% effective against the coronavirus, and it’s already begun selling it to other countries, including Brazil, India, Mexico and Egypt.