E Market Briefing For Tuesday, Aug. 3

Investors are nervous - and yields are low. If you get higher interest rates as well as a peak and reversal in Covid cases, ironically that's a market risk, much as it would be a welcomed scenario for both people and business.

At the same time of course a washout in 'yields' and a spike in the S&P upon realization of 'peak Covid', would be terrific. Just expect a) that's unlikely yet to be the case; and b) it might not be so terrific for the S&P beyond initially. I think we're seeing 'hints' of 'peak Covid' in the U.K.; not really yet in the U.S.

At the moment the S&P might like to celebrate the concept of Covid-cresting; but we're not there yet. One can hope regardless of the shuffle in stocks. We do see Tuesday turnaround as a rebound from Monday's just modest fade.

Again our wildcard continues to be Covid; and the 'presumed' dovish Fed as relates to 'tapering'. And Jackson Hole is forthcoming. The Fed shouldn't be in the market's face 'formally' until October or November; but the comments that will be made might help lean analysts to view them with a slightly hawkish tilt; but again only if we see a peak and downward curve from Covid / Delta.

This would be the idea like traveling North... go far enough and without doing anything you're actually going South. If Covid (terrible way to herd immunity) sweeps most everyone who has been reluctant to get vaccinated, then we get more tragic suffering in the interim.

Now alternatively there's the real idea of even higher proportion of vaccinated citizens (70% in partial form now) which (combined with the percent that had Covid, hence antibodies) being probably closer to 80%; and that might be enough to close the corral on Covid, and achieve herd immunity that way. Epidemiologists seem in a frantic mood about all this; and that means they hope so but don't know.

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

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