E Market Briefing For Thursday, Dec. 31

  • The Fed will never be able (in our lifetimes) to reverse this, so it tends to drive up prices, as nominally stocks may actually rise beyond this crisis, at the same time trying to play how this impacts S&P risk is still premature and I'm glad we were able to urge 'not' fighting the Fed this year.
  • The Fed is basically underpinning this market in 'surviving' sectors, that is the underpinning of our bullishness from March 23rd forward, but also it is stretched in 'some' sectors that benefited, so open to eventual shake-out.
  • Again many smaller caps already shook out and bigger caps generally not so much, hence a different bifurcated prospect 'may' loom in 2021.
  • Last night I noted the new UK virus variant, now at least in Colorado too, it was 2 National Guardsmen at a nursing home that caught it, so more it seems are infected by the mutant virus at that home, and elsewhere too.
  • Faster spread has not 'yet' triggered panic in the U.S.A. (aside incredible lines where the elderly wait hours for the vaccine here in Florida, while it's a gamble, but even if getting it, some of us will wait to have it in pharmacy or doctor environments, which is a question of weeks, not months.
  • People often act 'as if' a single vaccine shot will give them back their lives immediately, and I wish it were so, rather it's a couple weeks for immunity to even begin, and even when protected, one can still catch the virus.
  • Not just because 'antibody therapeutics' mostly work right away, they both protect individuals 'from' getting infected, as well as not spreading virus to others, if they're given as preventative rather than after symptoms start).
  • That means (unlike vaccines) the immune system isn't being tasked to mount a response only after cells have been penetrated by virus, my bias is to kill the virus, stop it in its tracks before or during earliest symptoms.
  • That's for the future: for now the speed of vaccine roll-outs cannot keep pace, but if this causes more 'activity inhibition', that ties to the stock market if it compels delayed 2021 growth prospects, as contemplated.
  • 'Growth matters' and to get that the US especially must emerge from this pandemic, and lead the world in distribution of 'useful' reliable tests plus treatments (antibody therapeutics more key than just vaccines, a problem that has been politicized by the funding priorities seen so far).
  • We are extended only in some areas (but be cautious as institutions focus there due to volume that supports entry and exit in-size).
  • So, while conditions for some sort of pullback exist, with greater odds for overworked big-caps than small-caps or specialized stocks suppressed and ripe for rebounds soon, the January Effect may hold this a bit longer.
  • The biggest prospective destabilizing action remains COVID-19 itself, as a lot of value and growth projections 'presume' a modicum of true revival as well as likely pinning too much hope on vaccines alone.

In-sum: the market is mixed, with some post-settlement tax-related deadlines behind. The failure of getting a larger stimulus Bill through the Senate is clear at this point at least, with McConnell refusing to 'unbundle' new provisions.

Friday, ideally will be higher, especially if tensions with Iran don't ratchet-up in a rapid way. News reports the President is so worried about the attempt to try reversing the vote January 6th (the attempt may occur, its success odds are zero), are supposed 'why' he's flying back to Washington and not staying with his family in Palm Beach for a New Year's Eve party for invited guests. Just a thought crossed my mind: if there's some military move contemplated should a rocket attack (again) be launched at our Embassy in Baghdad or something, he might want to be in DC, not PB. I hope Tehran is smarter than trying that at this point, but just tossing it out, as otherwise I don't know why the return (?).

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