Markets stocks

Nomura’s McElligott On Vaccine News: ‘The Reflation, Reopening, Relief’ Trade Will Be ‘Insane’

News that Pfizer's COVID-19 vaccine has an efficacy rate above 90% rippled across asset classes on Monday. Now, markets will prepare for what could be a dramatic reversal of the under-the-hood price action in equities that characterized the post-election rally. Recall that expectations for divided government under a Joe Biden presidency ushered in a return of tech outperformance and catalyzed a powerful bout of bull flattening in the curve. The idea, in brief, was that a Republican Senate would serve as a firewall against tax hikes and re-regulation, while also capping the size of the next stimulus bill. On balance, it was bullish for equities, as is the prospect of a more predictable White House, but it disappointed those who had positioned for a "blue wave" trade through steepeners and cyclical value in stocks. But, by Friday, analysts were talking up a possible revival for pro-cyclical trades as a pair of Georgia runoffs set for January means there's still an outside chance for Democrats to flip the Senate while expected positive news on the vaccine front had the potential to change the macro game. "We expect an end in sight for the COVID-19 pandemic,” JPMorgan's Marko Ko
Subscribe or log in to read the rest of this content.

3 comments on “Nomura’s McElligott On Vaccine News: ‘The Reflation, Reopening, Relief’ Trade Will Be ‘Insane’

  1. Vlad is Mad says:

    feels like a market top moment, not just for Growth stocks, but the market as a whole. While this is said with a degree of timidity and humbleness, it may be interesting to see where we are in a months time

    • runamok says:

      Yeah, in few months time for myself. Deaths from all causes peak around the holidays each year. COVID deaths might not peak until late January (who knows). Vaccine for all of us maybe June (who knows)?

      Head fake on this one. The “blue wave” had a high probability. This is spectacular to watch but I’m guessing there’s another narrative later this week.

      When COVID is mostly in the rear-view mirror, the reflation, reopening, relief rally will be spectacular. Employment will improve. With or without the Red Senate, Biden could end up being a lucky president.

  2. I would look for anything that benefited from stimulus to give some ground once the exuberance is over.

Speak your mind

This site uses Akismet to reduce spam. Learn how your comment data is processed.