Good Morning,

There will be no vaccine until winter 2021, according to Chris Witty. The Chief Medical Officer has said that it’s unlikely there will be an effective vaccine this winter and he’d be very surprised if one were to be available before Christmas. Despite professor Witty’s words, Donald Trump is considering bypassing the normal FDA approval processes and fast tracking the Oxford developed vaccine in the hope that he can get it out before the election in November! The FDA could grant the drug “emergency use authorisation”, which would mean it doesn’t have to have undergone a 30,000 person clinical trial. It’s a double edge sword though; get it out there and claim you’ve saved the day, or get it out there through cutting a load of corners and the already fragile public trust gets shattered. The FT has the story.

Boris has said that ‘failure to re-open schools is not an option’. His plans to get children back in the classroom from next week has been endorsed by all four chief medical officers, who say the balance of risk is much more in favour of children being in school and facing a small risk of covid, rather than continuing to be kept at home and suffer all of the development problems that can bring. Boris will be touring schools this week for some photo opportunities to try and convince people that schools are safe – we’re sure they are, but Boris has got the antibodies, so his endorsement seems a little hollow!

The return to school is happening at the same time that Europe is seeing a sharp rise in cases and this has got people concerned that we could see an explosion in cases. Germany reported its highest daily case rate since April and France saw 4,000 daily cases on Thursday and Friday of last week, up considerably from the 2,500 daily cases the week before. Spain is the runaway leader of recorded cases at the moment with 153 per 100,000 people, compared to 22 in the UK.

Staying in Europe: Protestors in Belarusian capital Minsk may have numbered 200,000 at the weekend, as they gathered despite warnings from the incumbent leader not to and police and security forces on standby to dispers crowds.  Opposition leader Sviatlana Tsikhanouskaya is set to meet the US deputy secretary of state today, to see if there is a peaceful resolution to the situation that would avoid a direct intervention from Russia.

Across the Pond: Stocks have continued to grind higher despite all of the headwinds. Additionally bets against the market have fallen to a 15 year low. Short positions have averaged 2.4% over those years, but now sit at just 1.8%, as investors struggle to justify betting against the central bank’s endless supply of money and the home it needs to find once its’s printed. The dizzying prices are now reminiscent of the 1920s and the 1990s, but those periods had booming underlying economic growth, whereas the US has the polar opposite, leading some to think there is only one way they can go. The Wall Street Journal has the story.

Looking at the week ahead: The data sheet is reasonably light, but there are some central bankers speaking and what they say could be interesting. ECB member Isabel Schnabel speaks on Wednesday and her neutral stance over policy means that any inclination we see from her leaning one way or the other will be noteworthy. Andy Haldane, the Bank of England’s Chief Optimism Officer is also speaking on Wednesday and we’ll be looking to see if his glass remains more than half full.
The big one is on Thursday with Fed Chairman Jerome Powell delivering a speech at the Jackson Hole Symposium. Mr Powell could well hint at monetary policy actions that he’ll be looking to take in September and if it does look like the Fed are going to take an even more active role in the market, we could see the dollar slide continue. The problem he faces is that he’s damned if he does and damned if he doesn’t: If he wants to keep the markets stable, he needs to show willing that the Fed is there to orchestrate proceedings, but this in turn builds upon ever more experimental monetary policy and stretches the credibility of the system. If he doesn’t add anything or play the calming, supportive role that he needs to then markets start to become twitchy, the junk end of the market starts to behave badly and that risks spreading into all corners, which in turn would take another massive hit of liquidity to ‘fix’. His job is as much about tactful oration as it is policy decision.

Have a great week.

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