‘It’s Difficult To Fade’: As Markets React To Vaccine News, ‘Quant Quake’ Risk Comes Calling
"It's difficult to fade this move as global risk markets should rally more on what is truly a remarkable breakthrough on the vaccine front," AxiCorp's Stephen Innes said Monday, following Pfizer's announcement that the company's jointly-developed COVID-19 shot has an efficacy rate above 90%.
"A lot of today's price action makes sense. The tech-heavy Nasdaq has underperformed, while industrial names are making the most of it," Innes added, noting that Russell 2000 futures came into the cash sess
This is clearly good news. However, at best this puts things back to where they were in February. The slow-flation environment was exacerbated by the pandemic, it was not created by the pandemic. ‘Fixing’ the pandemic doesn’t alter the decade long narrative that underlies ‘slow-flation’. I expect a week or so of narrowing between growth and value and the like, and then the realization that we still have central bank liquidity as the only engine behind the economy. The only possibility of a change to the narrative would be an unlikely outcome in Georgia.
Yep, we will likely still be far behind where we were in February given the structural damage that has and will continue to accumulate until the vaccine is fully distributed (assuming this is indeed the silver bullet). This will give Republican senators one more reason to slow play virus relief even as the virus rampages across the country. My prediction? Pain.
Indeed, though as many have noted, those who feel the pain may well not be stock holders. Add enough QE and low interest money and we’ll keep that bubble up even if 4 million die and 20 million are newly homeless.
Exactly.
Yeah, not like rates are going to up, the Fed balance sheet is going to shrink, or that COVID is suddenly in the rear-view mirror.
Yet, the statements in the post from the pros are emphatic. This could be the catalyst for the year-end rally.
Isn’t there a saying, “Buy low, sell (um, something)”?
Another day like this and XLE might touch it’s 200 DMA.
60% vaccination rate for herd immunity with a 90% effective vaccine. Now the question is how do we get 60% to take the vaccine? Prior to the election less than 50% of Americans said they would get it if available. Does anyone believe Trump will encourage his supporters to get the vaccine so we can rebuild the economy under a President Biden?
Those who don’t get the vaccine still have a chance at being part of herd immunity by just getting covid and not dying.
Imagine America in mid 2021. Everyone who is willing to be vaccinated will have been. But these are not “blocking vaccines” – they don’t prevent the virus from replicating in the upper respiratory tract for a while, they just prevent the virus from spreading to the lower respiratory tract and causing serious disease. Meaning, a vaccinated person is still able to get infected, its just that his or her Covid will be very mild if not asymptomatic.
(Caveat: above is what I believe based on the monkey data, it hasn’t been demonstrated in humans, and the phase 3 trials aren’t to confirm or disprove it; with monkeys, you can vaccinate then deliberately infect them, take daily swabs of the upper tract, then euthanize and autopsy them to investigate the lower tract, while we can’t do that with humans, unless maybe you’re a Yighur in China).
So, getting back to America in mid 2021. A couple hundred million people are walking around, knowing they are vaccinated thus pretty much safe from symptomatic Covid, and probably not so motivated to social distance because, what’s in it for me? Bars, restaurants, venues, etc will all be open for business and packing ’em in because, they have to if they’re going to survive. Hardly anyone wearing masks because, we’re ‘Muricans. And the virus is quietly ripping through this vaccinated population, its just that no-one notices or much cares. Remember that without social distancing, the R-naught is like 4-5.
Now imagine you’re the anti-vaxer in this crowd of exhaling, infected, maskless people. And you are not protected by the vaccine you refused to take. You’re probably not wearing a mask or taking any precautions, because you think it’s all a hoax anyway. What’s your chances of getting through the year without becoming infected?
It won’t be a Darwin situation overall, because the infection fatality rate is low and getting lower as treatment improves. But for the older or medically vulnerable vaccine refuser . . . I think the number of 60+ yo hardcore Trumpers might actually dip next year.
Thanks, jyl. You’ve been making very good comments.