On the pandemic front, some very encouraging news came over the weekend with the Israeli health ministry announcing that chances to catch the virus have dropped 95.8% for individuals who received both doses of the Pfizer vaccine. Moreover, the health ministry added that the vaccine was 98% effective in preventing breathing issues as well as fever. Other positive news from Israel showed that the Pfizer vaccine significantly helped to reduce the spread of the virus as well as illness. On the matter, latest clinical data showed that the Pfizer vaccine was as much as 89.4% effective at preventing transmission. As a reminder, Israel has now administered roughly 7.4m doses accounting for 82.4% of the Israeli population. United Arab Emirates are the runner-up with 56.15% of the population vaccinated as of today followed by the UK which stands at 17.25m people vaccinated, ~26.73% of total population. UK Prime Minister Boris Johnson is expected to deliver an update speech today to unveil his roadmap out of the lockdown. Expectations are that schools are set to reopen from March 8th with outdoor activities allowed for small groups.
Secretary of the Treasury Yellen called for a large stimulus package to help speed up the economic recovery. Yellen mentioned that the surge of federal spending could prompt a sustained rise in inflation but added that inflation has been very low for many years and the Fed could always rise rates. Yellen also said the White House will likely propose a second economic recovery package later this year that would include spending on longer-term investments like infrastructure, renewable energy, education, job training and research and development. The proposal would also include tax increases on corporations and wealthy Americans that would "phase in slowly over time." During his campaign, President Biden proposed raising the corporate rate to 28% from the current 21% (prior to President Trump's tax cuts in 2017, the rate was 35%).
In the US, the IHS Markit services PMI rose to 58.9 in February, its highest level in almost six years. The indicator for US manufacturing slowed slightly but remained in expansionary territory. Separately, industrial production in January was 0.9% higher than in December, while consumer spending rose by 5.3% m-o-m. In Europe, the flash IHS Markit purchasing managers’ index (PMI) for manufacturing reached a three year high of 60.6 in Germany in February and rose in France (to 55.0) indicating that activity is expanding. But PMI figures showed services activity continues to contract in both the euro area’s largest economies. The composite PMI for the euro area overall was 48.1 in February.
As people were advised by the government not to make cross-province trips during the Chinese New Year holidays, travel activities in China dropped sharply by over 50% from the same period last year and by over 70% from 2019. However, this has led to strong local consumption. During the holiday week, retail sales (including restaurant services) rose by 28% y-o-y and movie box office revenues came in at Rmb7.8bn, the highest in history.