Market Briefing For Thursday, Sept. 2

Near parabolic uptrends exist for S&P (SPY) and Nasdaq (QQQ), encouraging bulls, who at the same time should know better, regarding 'finalized phasing' of runs but.. as we've recognized for awhile.. there's no assurance of a repeat phase of slightly similar moves along the way of our bullish trend since March 2020.

Two Brown Bull on Standing on Grass

Pexels

Of course many (I wouldn't mind) hope the S&P can do like the Fed, and sort of 'thread the needle' through this seasonally-challenging time of year. Many Septembers actually advance, though more often than not, it's time for shakes in an extended market. This one is bifurcated with limited leadership, and that is the issue as regards the ability to get any sort of dramatic decline cooking.

Executive summary:

  • Trigger points to break this market are tricky, because internals broke months ago, and have been in a rebuilding trend, again bifurcated.
  • Heavy-lifting momentum stocks remain stretched trying to hold for now, but that's not to say they have investment attraction, aside as hiding places.
  • Virtually everyone knows September / October can be risky and so that contributes to a 'worry wall' holding up, even if not really being climbed.
  • If they rollover it will obviously be called a 'market decline', even when it is more likely to be a shakeout of the 'type' rather than of the entire market, although some statistics and indicators will reflect it as a broader decline.
  • I'd rather not deal with COVID issues (had enough personally) particularly, however supply chains are impacted, and there is some 'stocking up' for goods that are not imported, giving a sense of COVID concern return.
  • So long as we don't have low-dose 'effective' monoclonal antibodies, it makes sense to be concerned about a voluntary withdrawal of activities, as some cities have almost mandated, but generally it's voluntary, just as parents are trying (good luck) to restrain their kids to safe activities.
  • CDC gives some good pronouncements, but some are really miserable or intended to just control people, which diminishes their reputation further.
  • For-instance, telling un-vaccinated not to travel this holiday weekend for sure may prevent some people getting sick, but it won't prevent spread, remember the vaccinated and unvaccinated carry similar viral load levels and that's what diminished the 'get the shot and live your life' pitch we all wish were the case.
  • Also the rapidly diminishing efficacy of existing vaccines is a big deal, as is the failure of funding to expedite new vaccine studies, but it's coming.
  • The other day I mentioned yet-another South African COVID variant that's of 'concern', today still another was identified and named by the WHO as the Mu (as in 'moo') variant of interest, originating in Columbia, so much more likely to be picked-up and brought into the U.S. by travelers (no now we get Moo from WHO to try making slight light of Greek alphabet soup).
  • Aside investments, the main point of COVID, risks increasing even if death rates are slightly lower at the moment, is that it could inhibit U.S. growth right in the midst of an inflationary phase, result can be stagflation.
  • Further result can be a deflationary plunge again, although not just now, and yes one can lead to another, although COVID will be the arbiter of this, not so much Federal Reserve policy, not with the situation underway.
  • Weakness in the Dollar (UDN) reflects probable weakness in stock indexes, and can be a precursor of an S&P decline in the wings, it may also reflect the rising jitters as we move into the oft-vulnerable Sept./Oct. time-frame, so of course you have more analysts nervous or downgrading their numbers.
  • Stability in Oil is assisted by OPEC maintaining their decision to increase production by 400,000 bbl/daily and not more as Washington wanted (OIL).
  • OPEC made an upward revision in 'global Oil demand' for 2022, that's a bit optimistic unless we get 'effective' antiviral treatments to fight COVID, at this point what we have in vaccines is comparatively mediocre if not toxic.
  • And an aside, I'm not at all surprised The White House responded in the affirmative that the U.S. might provide 'aid' to the Taliban / Afghanistan.
  • Late reports say the Justice Dept. is readying antitrust charges related to their ad charges, against Google, this would be similar to what China is doing and seems to be a trend (similar with Apple).
  • Meanwhile stocks are in neutral but teetering ahead of a holiday break.
  • Tornadoes hit Annapolis, and parts of Pennsylvania, New Jersey and Ida remnants are moving to metro New York City.
  • What 'may' cushion downside is news that pills are going into testing for early symptoms of COVID, as I touch on later and already mentioned were forthcoming, but not the formal trials announced today (good news).. and of course Sorrento (SRNE) has their 'pill deal', but this is for Merck's (MRK) first.

(After the contamination story, PR was put out to note Moderna (MRNA) generates more antibodies than does Pfizer's (PFE) vaccine, but Pfizer's is a third the dose.)

COVID meanwhile... seems to be subordinated to discussions of Afghanistan or the Hurricane's wake, both of which are super-spreaders incidentally, but it does 'cover up' the media's lack of depth reporting the 'COVID Origins' Report.

So that came out five days ago and seems forgotten, or merely reported as a indeterminable toss-up of natural (animal) or lab (human-engineered) origin. It is not so simply and we think the lack of proper examination by Congress not only is unforgivable but possibly related to avoiding further tension with China.

According to the Aug. 27 report, “the virus was not developed as a biological weapon.” Additionally, the report claims China officials had no foreknowledge of the virus before the initial outbreak of COVID-19 emerged. Really? We all know the truth there, given the blockage of domestic, not international, flights in China, and the massive evacuation that was ongoing (we heard in Jan. '20, well before official channels acknowledge anything).

The report also ignores the experience of Dr. Qiu, who worked closely with 4 facilities believed to be involved in China’s biological weapons development, including the WIV, where she transferred the cargo of deadly pathogens from Winnipeg, Canada to Wuhan earlier. We wrote about that and the arrest by the Royal Canadian Mounted Police, FBI arrest of Harvard Prof. at Boston Logan, while his Chinese colleague was deported. How was that adjudicated? (not)

The report also ignores published work of Dr. Quay former Stanford Professor who found genetic manipulation of the worse-than-Ebola Nipah virus, showing how gain-of-function research makes viruses 'supercharged'. Nothing at all I'll note about Dr. Fauci being a conduit for funds to 'study' gain-of-function, likely as that's a smoking gun that would unravel the whole sordid tale.

Had intelligence agencies investigated the latest scientific evidence, the death threats to Dr. Redfield (CDC head until this year, stated on 'Meet the Press' it was probably engineered in a lab, and that caused threats on his life, by who? .. seems to me the FBI needed to investigate that if foreign intelligence agents perhaps).. or the resignation of Messonnier, whose sudden resignation from CDC has yet to be investigated.

The dubious 'not thorough to the point of obviousness' report does help China hinder investigation of the pandemic that has killed millions globally and still is ravaging the United States and people around the world. We won't properly at this point evaluate why State Dept. ordered the last planes out of Kabul just to leave screaming Americans at the Airport (as a Colonel desperately texted to get permission, but should have brought them in on his own as some did over the days of evacuation), much less delve into the lab-origins of COVID. This is not part of a promised retaliation against the CCP for attacking me personally (haha), but simply a reminder that in the case of COVID, the jury's not just out, in a sense it has not been fully constituted and convened.

In-sum: 

New record highs for the S&P, Nasdaq and NDX, as jitters grow as they should. We continue to view the concentration into 'heavy lifters' as signs of weakness, not broadening strength. Hence managers hide in those issues, as they're perceived as sufficiently active to enter and exit (they think easily).

What will limit the concerns for the economy, society and markets, will be the arrival of better treatments for COVID and variants. We've talked of Merck as well as others like Sorrento working on differing 'pills', and today Pfizer has joined the race for pills. Merck, is going to start trials by October for patients that have early symptoms, but are not yet seriously sick.

The prospect of a broader decline in the market, although still not catastrophic, would be a huge surge in COVID, which the majority think isn't possible with so many vaccinated but actually is.

This is an excerpt from Gene Inger's Daily Briefing, which typically includes one or two videos as well as more charts and analyses. You can subscribe for  more

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William K. 1 year ago Member's comment

At last it is admitted that performance of the giants does not tell us how the rest are doing. Certainly they can have trends of their own.

And finally the reality that this plague is going to be around for a while, and continue to bring death and damage to humanity.  The fact is that it looks like a military weapon system run amuk, and adapting to be a more effective weapon. That  is the inherrent flaw in the concept of smart weapons, which is that they can become more effctive on their own.

Could this be the run-up to the prophesied Judgement Day? If so, a lot of folks have a serious problem ahead.