Womack Investment Advisers

Vaccine can be a powerful word. It’s worth 14 points in Scrabble (42 on a triple word square) and, last week, it was worth a whole lot more than that to financial markets. On Monday, a pharmaceutical company and a biotech company announced preliminary trials of their vaccine show it may be 90 percent effective, reported Financial Times . The revelation conjured tantalizing visions of a future in which virus precautions are unnecessary and life returns to normal. Around the world, pandemic-fatigued populations cheered and markets rallied. CNBC reported: “The Dow was up nearly 3 percent, while Nasdaq fell 1.5 as laggard sectors like energy and financials outperformed tech. Stay-at-home plays…were sharply lower, but airlines rallied 16 percent. The S&P energy sector, still down 45 percent this year, was up more than 14 percent, and financials were up 8 percent.” As demand for risk assets, like stocks, increased so did bond yields. In the United States, the yield on

  We all know that the flu comes and goes with the seasons. We even call the flu “seasonal” and expect it to rear its ugly head about this time annually. What if the COVID-19 virus is similar? What if it, too, rises and falls with the seasons?     Goldman Sachs Global Investment Research group took temperature data from NOAA and NASA, and COVID-19 data from Johns Hopkins University, and found a very distinct correlation between the current rise in COVID-19 cases in some parts of the country, and the change in temperature since July (when Covid-19 cases had reached a low).     The chart below shows that those areas whose average temperatures have fallen by 10 degrees or more since July have experienced a rise in COVID-19 cases, while those areas with lesser temperature changes have not.   The relationship is fairly linear (R 2 value of 0.65) with a greater drop in temperature (e.g., Wisconsin, Montana, the Dakotas) being associated strongly with a greater increase in COVID‑19 cases,