Is This Time Different? Goldman Says ‘Early Vaccine’ May Change Market Zeitgeist
Things are going to look a lot different three months from now.
That's the message from Goldman, whose Kamakshya Trivedi and Zach Pandl suggest the "landscape" for markets could change "substantially" on a trio of fronts by the end of November.
I'll resist the temptation to bury the lede. The bank thinks options "are underpricing the upside for equity indices from an early vaccine". And if you posit a scenario where a safe and effective shot comes "early", you're almost compelled to suggest th
Eventually they will be correct. My view is that they are a bit early. Also it would be interesting to know if GS trading desk is writing calls or buying puts (long downside volatility). My bet is that trading is not taking the research bet. The output gap is just too large right now for a rotation into cyclicals for now. The economy is still too unsettled for a sustained direction to the upside. Stocks may anticipate the move- but I believe we are more than 6 months away for a true rebound- and if I am right then cyclicals are probably not the best play for now.
You get a vaccine “announcement” but months before it is widely available, masks and other precautions will immediately become a rarity throughout the south and rural America. Good luck with that.
I just got accepted to the pool from which volunteers will be chosen for upcoming vaccine clinical trials. An outside contractor is managing this effort for five of the big players. According the the pool manager one trial is scheduled for this month — probably Moderna. The rest are not scheduled to start until November, implying that not much will be known for these developers until early 2021.
I think the Pfizer and Astrazeneca trials are being run separately from the pool that includes Moderna. Those two are big pharmas who can run their own trials – unlike the likes of Moderna.
More layoffs coming soon from companies like Caterpillar…
The obvious point is that there is a lot of optimism about a vaccine in the price. Too much optimism considering the history of vaccines for SARS-Covid-2 viruses. The other point is it strikes of odd timing to talk about buying upside risk when put / call ratio is at intergalactic historic lows and the market has been on a tear and the uncertainty of an election still looms. Would love to revisit this call in about 6 weeks.