Fear and hysteria are not engineered by Washington about COVID, however it is a 'mood' to factor into everything from media to stock market projections. It has been our view all Summer that prospects hinge on how COVID-fighting will go, and of course the implications for growth.

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Even though one can extrapolate higher growth coming from infrastructure bill spending, it's not the Industrial Revolution (although more far-reaching from a global communications perspective). And it should evoke snugging-up policy at the U.S. Fed, and eventually other central banks. However it likely won't.

I should say it won't 'yet'. Just like certain stocks need a 'catalyst' to get some interest going to light their path to higher levels, that ultimately occurs despite interim frustration. For a Fed official that's just how you get an awareness that 'snugging-up' will be needed, and more than just 'talking about talking about a tapering'. But there is so vagueness about COVID that the Fed won't dare, yet.

Kaplan and Ester at the Fed chatted about 'tapering' starting with the October meeting, and they may. That would be ideal for the stock market incidentally. I think given the historic vulnerabilities in the August-October time-frame, it's of course in Wall Street's interest to see any 'shocker' delivered to washout most sellers 'before' we get into seasonal reinvestment season and so on in 2022.

Now, while nobody will be surprised by 'tapering' (or even a Fed hike), stocks won't recoil much. Nor should they. First of all slight rate increases aren't very relevant at all for business, and all they do is relieve the asset bubble inflation slightly. Best kept secret in monetary history. We really have no need for such stimulus as we've had, which was supposed to be 'emergency' stimulus.

The 'emergency' in health persists, in terms of helping jobs and dislocations in most aspects, that's behind. At this point most businesses can cope, so if not due to COVID, artificially low interest rates won't help them. Neither will bailouts that were often misappropriated by businesses that didn't need them. I know of at least 2 restaurant chains (one is 'National') that filed bankruptcy last year and continue operating, and apparently have plenty of funds. Free money was a thing last year, many people needed it, others abused the opportunity.

Speaking of hysteria ... the action in Sorrento (SRNE) has been pretty choppy. Today they announced they've been working (clearly unnoticed) on a vaccine for six months or so with a Boca Raton based (tiny staff) biotech. One has to dig just a big to recognize that the Boca-boys cashed-out of most of their business for 75 million dollars, selling to DuPont International (DD).

They also have relationships with South African pharmaceuticals and a huge manufacturing relationship (from the past I guess) in India. That potential for international vaccine manufacture/preparation may be on Sorrento's mind with this deal, although it could be purely due to the vaccine. Dr. Ji, CEO of SRNE, said this is part of their effort to develop affordable mass vaccine for the world, and without the super-cold transit/storage requirements of current vaccines.

They kept their C-1 platform for drug and vaccine development, and that's the deal with Sorrento. It also is a pretty decent speculative 'bet' by Dr. Ji, as he gets the worldwide distribution it appears, except for Africa. (Does DuPont at some point show up in this mix, don't know.) Sorrento is paying 5 million cash and another 5 million face value in stock, so 'probably' Dr. Ji has a good idea if this will pay off, since he's been working with them 4-6 months.

Combine yesterday's U.S. Patent awarded Sorrento (a form of epidural drug delivery as best I can describe the modified micro-needles) and you have just another piece of the puzzle that is Sorrento. I believe I see the picture and it's just advanced over Dr. Ji's original vision, just that he promoted it too early on. The idea as far as COVID (and some cancers too, later) of providing 'diagnosis, testing, treatment and even residual care', finds vaccines fit into the mosaic of his puzzle. I suspect the market will appreciate this again increasingly ahead.

Incidentally Pfizer (PFE) today said they could 'tailor' a vaccine specific to the delta variant and test it in 100 days if given the funding. Funding? They need more money? I think the taxpayers have contributed a lot, can be pressed for more, but doubt they couldn't simply redesign their vaccine internally.

I believe they were responding to a news report today about Pfizer having no better than 46% or so protection in Florida, to be specific, which mirrors Israeli reports we've noted previously, related to comparative waning efficacy. So the story also said Moderna (MRNA) was only slightly more protective, but lasted longer, a result of it being a bigger (quantity) shot, perhaps. Both are woefully lacking in the longer-run. Hence I guess that's an opportunity for Sorrento, if they can deliver 'better', hence being the best not the first, both in efficacy and cost. Do I know more? Nope. That's enough for now, and I'll keep following this having alerted all who would listen to the pandemic risk in January of last year, plus the market low in March that year, then unfortunately contracting it myself.

In-sum: 

There's no basic change in the S&P or most other markets, other than noting that big-cap momentum (FANG+ types) haven't come back much, few at all, and most all are expensive. It's been Oil and Banks again doing well as preferred, so you'd still need to see the others snap-back to get more traction. Otherwise it's the same grind we've assessed for seemingly a long time.