Money manager behavior for a number of months as FANG love affairs for sure dominated the 'tape'. They accounted for perhaps 80-90% of both price-weighted and volume gains/activity), and more recently (and necessary as we oft pointed-out) we got some rotation into Oils and Industrial stocks that tend, in the post-pandemic world, to benefit from relative values vs. insane excess.

The concern we've had (and it's somewhat alleviated by rotating corrections it seems in at least some 'grand dames') however is generally not dramatic to a degree normally seen in meaningful S&P corrections. That reflects reluctance to abandon the expensive (mostly tech) stocks that benefited during heaviest COVID restrictions, and even Server maker demand due to crypto 'mining', not merely chip issues in the automotive sector (SPX).

Because of an essentially constant liquidity influx and lack of return elsewhere you had several managers abandon age-old (fiduciary?) balancing guidelines and just blindly mimic the behavior of their peers. That means many remain in those stocks, given mild adjustments, and a lot of things have to go right for a truly optimistic 'fundamental' argument, given out-of-the-world valuation levels otherwise, even after minor pullbacks.

This whole bifurcated situation, as relates to the very expensive stocks, tends to remind me of a 'contrast' I used to explain this behavioral psychology. Our investing behaviors should be, and generally are for the majority, presumed to be vastly different from our consumer behaviors. As consumers of goods, we seek discounts on products we want and avoid products seen as too pricey.

On the other hand, as investors, many seem to even prefer paying top dollar for stocks (led on by cheerleaders at high levels), and then they crater and the same enthusiasts avoid them like the plague when at a deep discount. If a top of the line Samsung TV is on-sale (and I need one), I'll go shopping. I won't buy it at full-price. With stocks, people like them at full price and not when low (but I get part of that, the TV will never go about 'list', a stock can, but that's of course who one gets swept-up in the 'greater fool theory' of stock chasing).  

I endeavor (look at the 2020 peak and valley approaches or appropriate S&P bifurcation and under-cover distribution this year) to employ the logic of your inner consumer, not your average investor. It tends to have one heavily in cash or dividend stocks (like our AT&T), or even energy stocks (like Chevron) looking to fetch bargains when the ongoing corrections in big-tech sorts itself out (T, CVX). Of course 'greater fools' may win out, with some at the end of the line, as I have noted before. For some of those stocks, the line -for now- is indeed behind.

Executive Summary:

• Moaning among pundits waiting for a drop continue, while cheerleading of pricey FANG types also continues and remains misplaced near-term.

• Given this session was perfectly normal (dip-up-dip-up erratically soft in some not all areas), we'll hone in on a few developments.

• The 'least' important was the time taken by media to discuss Facebook (FB) continuing to block former President Trump, at least for six months more.

• The 'most' important least reported story was California's effort to punish intelligence by 'dumbing down' math teaching in schools to be 'socially appropriate' for all (in other words coddling those who are slow), this just screams about reasons people oppose what the far Left tried to obtain.

• Alright, back to other events: The White House eviscerated Intellectual Properly protection for vaccines, in-favor of noble efforts to help pharmas globally make vaccines, this is morally admirable, bad for US initiatives.

• Big pharma US stocks like Moderna (MRNA) and Pfizer (PFE) plunged, as both count on multiyear revenue streams (after all there will be an annual shot), but there is more: the IP involves MrDNA technology which holds the keys to solving many pathogens and viruses, and the U.S. needs to not yield any of that, hence there was insufficient homework before a political decision.

• Let me note a preliminary trial report you won't hear much about as yet: it seems that after one has COVID (recovered) you have about 8 months of high antibody protection (maybe more), but after a few months there was NO benefit of getting the 2nd short of Moderna or Pfizer.

• COVID immunity was as high as it's going to get on the first shot (this may correlate as well to people that had antibodies, didn't even know it, got a bad reaction, with of course no idea that they had put their immune systems into 'overdrive', a theory of mine anyway), on this YMMV.

• Through merger, Sorrento (SRNE) now owns over 8 million ImmunityBio shares, IBRX, selling for around 16, notable as they are launching a Phase 2 trial run by the Walter Reed Army Hospital (but in Thailand cooperating with of course their agencies), which essentially aims to cure HIV (keep it simple as I can... it's a variation of IL-15 with antiretrovirals).

• Sorrento reported earnings and actually made a slight profit (surprising at this point in their cycle, but welcomes), the shares bounce and get hit on by the bears repeatedly, but if their finally get an EUA approval from FDA, or a huge arbitration settlement (you can research details, it's complicated of course), the shorts would be squeezed and shares jump notably, all the cautionary 10-Q language is the same as previously, displeased with the speed of FDA or lack of timely updates, it's a play on 'drug approvals'.

• By the way I suspect they're moving some 'test kit' manufacturing to the US from China, based on (now pulled) employee job openings in San Diego purely related to setting-up manufacturing and distribution, this also presumes they expect CoviStix to be ultimately approved by the FDA.

• Finally, the rebound in Bitcoin (BITCOMP) is no surprise, but it's the craziness around Dog-e-Coin (as I'll term it) (DOGE-X), which began as a joke, that has many players fanatical now, probably they expect Elon Musk to 'push' it on SNL later in the week, and who knows .. he may ... and then it spikes and plunges?