Market Briefing For Tuesday, Nov.17

Frenetic debates about the logic (or lack of) regarding the S&P upside are just a bit numerous. First of all we've only cutback a bit, argued defensive mentally but 'not' short-selling, and on the prowl for another shakeout but not just yet.

The amusing part is you have classic bears, at odds with calamity types, and a few technicians who (actually properly) don't see a lot of value and say S&P is a lateral 'band' unless it moves higher, and then it would be more appealing to them (geez Louise, actually then it would be finally truly overbought).

But I do get it between the skeptics (color me lightly skeptical, and to be clear that's not an ethnic remark) or the perennial bears, it's tough to acknowledge this is simply what we've described, an alternating ying-yang market between the 'value vs. growth' contests, with some days (like today) where both kick-in sufficiently to levitate everything to a degree.

Let me add one more thing. So-called 'millennial' young people driving this is less true now than it was back in the late Spring and early Summer, when as you know I was lockstep with them (and strange bedfellows that were rallying, like the post-COVID plays prematurely, such as cruise-lines, hotels or airlines). We see that again right now, or small-cap techs that are also priming to run.

The excuse from curmudgeon pundits 'blaming the rally on the youngsters' is again really not what this is (though they are represented). And it's the perfect time to add Tesla (TSLA) to the S&P, which is coming. This is November and a scramble is underway by portfolio managers and institutional traders, who I sometimes point out, are compensated with performance-tracked bonuses (or lack of bonus) related to how they do competitively with each other or Indexes for that matter. That's part of why it's a run in or a rush out.

So what could go wrong? Well China could invade Taiwan or Trump might be contemplating bombing Iran's nuclear facilities. (Yes there was supposedly a White House meeting on Thursday and Trump asked about the feasibility, so that may be anti-Trump propaganda..about him wanting to go out in a blaze of glory... or it could actually be something if there's any 'there there'.)

So.. any Iran strike -whether by missile or cyber again- certainly focus purely on Natanz, where the International Atomic Energy Agency reported less than a week ago that Iran’s uranium stockpile was 12 times larger than permitted under the nuclear accord the US abandoned 2 years ago. IADA noted that Iran had not allowed it access to another site where there was evidence of past nuclear activity. Mr. Trump asked national security aides about available options, and supposedly dissuaded after a 'wider war' scenario came up.

Meanwhile . . the vaccine 'gold rush' is getting cute, and both parties are very clearly 'buying into it', which may be fine, but not the 'holy grail' of fighting this COVID devil. Frankly that's going to be vaccines 'and' antibody therapeutics. I hasten to note that Trump got Regeneron's (REGN) version, and Chris Christie of NJ got the Lilly (LLY) MAB (monoclonal antibody).

So, as to 'initial' vaccines: the day after a still-testy election, Pfizer (PFE) announces that they have a COVID vaccine that is "90 percent effective". Two days later, Russia says its vaccine is "92 percent effective". And a week later, Moderna (MRNA) says it has a vaccine that is "94.5 percent effective".

So is anyone buying this one-upmanship? And the even more hilarious (if you think back) is Sorrento (SRNE), with no approved MAB yet (and not really focused on vaccines) claimed their MAB was/is 97% effective. Which is accurate? Maybe all of them, but the only one that isn't merely gauging the sample of candidate patients who did or didn't catch the virus, happens to be Sorrento's, because the measure of accuracy would be getting a negative test from a person who tested positive just a few days before.

And while I can't substantiate this, I have heard that Sorrento quietly replaced the STI-1499 test with STI-2020 for the Temple Univ. study (clinical trials has both listed I believe) and that might be why there's been no active testing yet, or even recruiting. But we don't know, and they do show up on Medstar now (in DC). Although the Medstar may be the other drug for ARDS. Regardless if one, just one, or a test which many have given up on every appearing, stuns us all by actually being approved or simply interim data results, stock runs up.

Sorrento needs to get fast-tracked ASAP as Washington needs to focus on this, and much less on political wrangling. My suspicion is that institutions just lately have been buyers of Sorrento (lots filed their higher holdings mentioned last week) not so much for the drug or test approvals (as crucial as that is for sure), but 'perhaps' if they believe another takeover or partnership deal is now being shaped-up and 'might' be why CEO Ji has been unusually quiet (some say that's a good thing, especially if he stays away from media).

Not always is the answer to that, depends on what he has to say, and if reality not aspirational. One San Diego 'person' a bit familiar, contends (and I cannot affirm in any way) that Gilead (GILD) had a deal cooking with Sorrento at the time of Dr. Ji's 'warning to shorts', and then the deal fell apart when Gilead went with a different company (I think Immunomedics). So there might be another deal in the wings. While there supposedly is no thing as inside information (I sure have none) there is such thing as a 'syndicate'. If there is something cooking, and 'if' there are investment bankers involved in any way, while they sign and are supposed to not let anything slip, do you believe that degree of integrity?

I have no idea, but shares act like they want to go back up and speculative as everyone (including me) says it is, there has to be some reason that Schwab, Morgan Stanley (MS), State Street (STT), Fidelity and others were increasing stakes. I suppose we shall see whatever it is, in the fullness of time.

There are some expectations that some will be pressured by 'events' due to COVID over the weeks ahead.

Bottom-line: the mass S&P indecision pattern resolved to the upside, but this seems more like pre-weekend short-covering than a particular celebration. So I suspect a) not shorting and b) reasonably defensive was indeed appropriate as we approach a week likely filled with election politics and vaccine news. I'm of course eager to see resolution for new 'tests' and treatments too.