E Market Briefing For Thursday, Dec. 31

Herd Immunity? Some start to question if this is a myth pushed by Fauci and others to calm an anxious world (or to market vaccine compliance?). Having the flu or common cold never conferred future immunity to people. Thus why should anyone out there think you are immune to a future case of COVID-19 if you get a vaccine?

Especially as 'governments' aren't going to want to pay, to do this herculean immunization task year-after-year after year, it must evolve. Vaccines will in the form of annual flu shots (remember the Spanish Flu is today's Influenza A) but many people will simply not conform, even if they're barred from travel etc.

Even 'this' winter, many people who had COVID once will get it a second time. It may be less severe or hopefully not more severe. A body of knowledge will grow from this winter's experience, and blinders will be removed for those with a propensity to deny anything other than the 'promoted' leading vaccines. The emerging variants (or mutations) may contribute to more-open medical minds.

The inescapable conclusion: herd immunity is wishful thinking for now at least and perhaps for years. Rapid test diagnostics plus easily administered lower dose (than the President got) effective therapeutics are likely solutions plus of course vaccines for those who get them, but it won't near universal adoption.

Once realistic (low dose or nasal drops/spray) therapeutics become available and vaccine shortcomings are grasped (especially lack of durable protection), the scientific community and the public will demand the efficient prophylactic or early-symptom responses we're talking about, and Sorrento claims (among others) to be working-on (hence that dreaded term: pending). Wait a couple of months when or if thousands of vaccine recipients catch COVID 'anyway', and it may be that it triggers a stampede to mAB therapeutics (like STI-2020 etc.).

Will these low-dose outpatient monoclonal antibodies be available in quantity then? Hopefully. Perhaps officials 'know this' or that's why they grudingly offer the Regeneron IV (REGn) treatment and know what is needed but isn't here yet, and that's the Sorrento IM shot (or they want one from Merck (MRK) or Pfizer (PFE) or others, they are all scrambling). Sorrento either has had 'inertia', or something else is going on. All we know is that 'if' they have it, this needs to be known, and it's a long time since they proclaimed recruiting for trials, with no logical explanation of the delay having been forthcoming, even though DARPA funding for Phase 2 tests suggests that more is going on than we know of yet. Surprise ahead?

Now, as to buying power, it's typically thin, with net liquidity continues to slide until 'seasonal' reinvestment funds show up in the 1st Quarter of a new year. It is not at the precarious state some contend, but it is a bit shaky for now.

It's an ebullient period causing bubble talk partially because of long-call levels that some have pointed out. True, but depends where they are concentrating. If it's to avoid tying-up serious cash in speculative stocks, that's something I'd contended makes sense, so one has a 'vegas bet' at risk, not betting a ranch.

If it's in mainstream stocks, that's another story. Those being held typically are better used to 'write' (sell) calls to those who want to speculate at high levels, with no argument about valuations being stretched in many of the super-caps, as well as some stocks that seem particularly benefiting 'from' the pandemic.

So, the last two overly enthusiastic periods ending in the dot.com 2000 bubble I warned of at the time or the 'Epic Debacle' I called for ahead of Bear Sterns and Lehman in early 2007, were followed by the heaviest S&P bear markets in decades, with both basically halved from their peaks. While a replay surely is reasonable to occur one day, this is not that day.

While there has to be lots of rotation to hold the S&P up in 2021, the values in stocks already historically at highs are often very limited (not all). Growth will have to occur in post-COVID stocks, but many are also not exactly bargains. So the prospect of extension, or a sharp break (but not catastrophe) is out there, 'in-theory', while it really depends to a great degree on results not propaganda about the success (and embrace) of vaccines, or later therapeutic drugs, that will really take serious COVID concerns off the table as I've noted quite often.

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