Searching For A Narrative

Searching For A Narrative

US equities catapulted higher Tuesday, capping a mammoth two-day rally and putting the S&P on track for its second best week of 2021, no small feat considering how many stellar weeks this year boasted. Big-cap tech surged 3%, the best single-session gain since March. Small-caps rose 2%. There was no respite from dizzying thematic swings. Profitless tech shares, the locus of pain amid Fed tightening concerns, jumped 6%, the most in some 20 months. After falling into a technical correction,
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6 thoughts on “Searching For A Narrative

  1. Oh, well, I was feeling pretty good about things until you mentioned Larry S.’s comment at the end there. Now I have to go sit in the corner and worry for the rest of the evening. Thanks a lot, Walt…

  2. Handling the debt ceiling without an 11th hour impasse would be good, as it will open a larger window for Santa to climb through.

    Russia invading Ukraine will be bad if it happens, not that markets care about Ukraine that much but retailatory cuts in NG to EU can’t be good except possibly for the energy complex.

    Otherwise, I struggle to see a fundamental narrative for today and would chalk it down to oversold stocks and options dynamics.

    The latest news on Omicron does not strike me as obviously bullish. It increasingly looks like 2x vaccine efficacy is significantly affected, and 3x (booster) may be affected as well. Lower severity is not clear, and if Omicron is 3x more transmissible than Delta, then 1/3x the severity implies no reduction in hospitalizations plus 3x the opportunity for more mutations. If convalescence from Delta provides little protection from Omicron, why should convalesence from Omicron be assumed to protect from whatever is next in the Greek alphabet?

    Still, the rally is good. It creates renewed opportunities to derisk.

    1. From the front page of Tuesday’s Portland (Maine) Press Herald: “The number of COVID-19 patients hospitalized in Maine jumped to a new high Monday, an apparent result of a post-Thanksgiving spike on top of the ongoing surged fueled by the more contagious delta variant of the disease.”

      Note they said DELTA variant, not Omicron.

      This in a state where 68.9% of the population is fully vaccinated.

      But, as a Wall Street trading legend once told us that before taking action, we should “Look at how the market reacts to news, not the news itself.” The futures reaction reaction to the headline that a lab study indicated that a triple dose of the Pfizer vaccine may neutralize the Omicron variant is a fine example of that.

      “We’re Happy as Clams, by a Sewer Pipe!”

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