9:59 a.m. The Dow Jones Industrial Average is soaring after Russia announced that it had approved a Covid-19 vaccine.
Of course, Russia’s announcement shouldn’t be taken at face value. In fact, it’s not even an approval, at least not as the term would be used in the U.S. ”In a televised meeting, Russian President, Vladimir Putin, stated that Moscow’s Gamaleya Institute successfully developed a ‘safe and effective’ coronavirus vaccine ready to move to a Phase 3 trial, sparking risk-on money flows,” writes The Sevens Reports Tom Essaye.
Of course, by that standard, a number of U.S. vaccines would have already been approved as well. If the Russia vaccine is the catalyst for the stock market’s move this morning, it’s likely because it further catalyzed a narrative that is already in place: New coronavirus cases are declining in the U.S., earnings have been better than expected, and investors, with plenty of Fed liquidity at their backs, want to own something other than big tech. A proposal by U.S. President Donald Trump to lower capital-gains taxes by linking returns to inflation is probably also helping at the margins.
“I’m not entirely sure that’s what the economy needs right now, or the public purse for that matter, but with Trump going into the election on the back foot as a result of the pandemic, rising record stock markets are one thing he has going for him,” writes Oanda’s Craig Erlam.
Remember, the trend is your friend.
Write to Ben Levisohn at Ben.Levisohn@barrons.com