Picks and critiques are not really the core of this market thinking right now, although we certainly do continue to hear both during what remains bifurcated market activity. That's a fact: S&P and DJIA moved up early Tuesday, small-caps got hit, and then recovered somewhat later in the day.

Photo: CES 2022

Two things are ignored (if even grasped by the market overall): a) tech stocks that run-up into the start of CES, often are hit during CES, especially if they've had good news that brought-in buyers at the very start, b) the overarching as well as frustrating element to the market and 'life' right now remains COVID, as a new variant in France has been identified (even if not yet indicated as being a 'variant of concern' by the WHO), so, c) much still hinges on the pandemic.

Executive summary:

• The 'Marseilles' variant of Sars-COV-2 (COVID) hasn't been called to the attention of nations or the pubic yet, after French experts identified it.

• Dr. Michael Mina of Harvard pretty much set the stage Tuesday, with his morning warning on CBS that there was 'no science' behind the 5-day isolation following a positive COVID test (as I suspected pressure from the airlines pushed CDC to that, specifically listening to Ed Bastian of Delta, who I think a lot of, but in this case have had to disagree with the logic).

• Dr. Mina actually states patients are often at their 'most infectious' at the 5-days mark, and that's a horrible prescription for how this is now handled (continuing a political/economic rather than medical approach to guideline creation, and then even Dr. Fauci of NIH embraced that on Sunday news.

• Dr. Wollensky (CDC Director) jumped aboard the 'junk science' idea of 5-days being adequate quarantine), as I heard her rationalize on Colbert on CBS last night (not good when chief medical directors are trying to calm the nation on late night 'comedy' shows.

• Acquaintances were aboard an NCL cruise and 1 day out on an 11 day intended cruise they were turning back to Florida, this followed others I know also on an NCL cruise that was turned-away from Columbia last week, in both cases there were COVID outbreaks aboard the ship.

• Presuming Dr. Mina is correct (I suspect he is) then this 'hot mess' will be continuing for awhile, even if Omicron fades in a couple weeks, that's for sure 'to be determined', as is a French / Cameroon variant in Marseilles.

• The impact of Paxlomid (the Pfizer (PFE) pill) will not be adequate at all, due to supply not truly significant until June, which is unacceptable, a confusing set of guidelines this evening (that you can exit isolation after 5 days 'if' a negative antigen test) is also a spin or pushback against criticism.

• Rising interest rates have yet to spark 'overt' action by the Fed nor yet to cool-off the hot real estate market.

• This may be the time most of the nation is entirely unsustainable for new buyers (this is where they get investors into building rental homes or units that probably have the investors holding the bag a year or two later).

• Incidentally that type of competition for homes and even condos has the effect of artificially contributing to price non-affordability for actual people.

• Intelligent thought suggests buyers should step-back from buying, as this is clearly a seller's market again, especially here in Florida, although we sense sort of 'everyone' moving here, so migration remains strong (also it's the middle of the Winter Season, so another excuse to 'shop' here).

• Oil prices remain firm and indirectly that's contributing to a firm Dollar (BNO, UUP).

• Nasdaq was hit hard, presumably as the 10-year rallied, but recovered somewhat late in the day, so far this is acceptable early-year chop.

• A broader tech sell-off is likely a mixed story, depending on over-inflated mega-cap techs versus smaller-techs just coming off yearly lows.

• Closing the world's 3rd largest port (and Nike's (NKE) primary shipping origin) by China due to another COVID outbreak is an additional concern.

• A third Chinese researcher has pleaded guilty to stealing research secrets from GlaxoSmithKline (GSK) in Pennsylvania for their CCP-funded pharma in China, these related for monoclonal antibodies intended to fight cancer.

• By the way Glaxo's antibody against COVID is the one remaining now that works, while Regeneron (REGN) is close to announcing a reformulated version.

• News like further shipping delays affects inflation of discretionary goods of course, but also makes it tougher for economists to assess the 'durability' of higher prices, history suggests prices eventually retreat, but not lots.

• We do 'not' expect a housing or market debacle like we forecast in 2007 or 2008, but we do expect higher rates and a step back in various sectors of financial assets, and we've outlined this 2022 prospect regularly.

Takeaway message: if the market actually crashes here it won't be the Fed or interest rates (they actually might peak short-term just above here), but COVID.

The way things are being handled is sadly reminiscent of early 2020 days as I was still calling this 'WuFlu'. However much of the population is vaccinated in the USA, with a majority of stocks (not all mega-caps) already severely lower in a process going on for several months at least. And there is realization that the FDA is not in any hurry to approve new 'treatments or affordable tests' for COVID, or combining monoclonal antibodies to create more effective cocktails.

I think there are researchers exploring that now, but the clock is ticking and of course the acknowledged delay in getting the Pfizer pills 'made' reveals what I have unfortunately talked about for well over a year, the funding and focus on vaccines, as good as they might be, as contrasted to concurrent work on pills or other treatments that create multiple fallback layers to protect our people. I have been critical of old Dr. Fauci not generally, but specifically, because of all this, as he repeated the pattern of the HIV epidemic decades ago, emphasis on vaccines (which never arrived effectively) and delay in cocktails of pills (as did arrive but after too many perished or were very ill because of the delay).

It is inexplicable to me that nobody in the former or current Administration has been willing to take the lead and point-out these shortcomings all this time. Or if so they were sideline, marginalized or ignored in deference to those with the 'seniority' or in some cases questionable ties to major pharmaceuticals. They proclaim that doesn't influence them, but then where were the multi-pronged massive (Warp Speed in size if you like) programs on both prevention and treatment. And not minor spending on treatment research as was the case. It is all disheartening and shouldn't involve politics, but bureaucratic agencies..

And then there's the Olympics... a reporter posted about the COVID concerns: 'let people speak, the sky will not fall'. Both the comments (and possibly the author) were 'deleted'.

It seems too many are hewing to Washington's line on COVID here, and not questioning enough about how we got to this point. Answer the questions and approve affordable tests, the sky won't fall (cushy retirements might). Recall Mr. Bright, who was demoted at NIH for being candid? Put him in-charge.

CES was uninspiring in recent years, outside of some of the prototype autos shown, and this year is no exception, although even more discombobulated, as there has been an attempt to hold the tech show 'live', but it has floundered after a majority of major exhibitors either bailed-out or limited their presence. I note that most CEO keynotes were cancelled, nobody wanted to risk 'Vegas'.

While EV's are the heart of interest now, to us it remains components and the power management aspects that give suppliers some common interest from a variety of automakers, whether they're successful or not. We do however hold positions (one solid the other speculative) in EV automakers or wannabe's, so that includes Ford (F) from 12, Canoo (GOEV) from just over current price, or of course AEHR Test Systems (AEHR) for Silicon Carbide burn-in testing.

There are other players that indirectly benefit from growth in EV, and Advanced Micro Devices (AMD) is a player there as well as Qualcomm (QCOM). So is LightPath (LPTH) and of course Luminar (LAZR) as a leading LiDar (VLDR) autonomous / assisted driving system provider.

Humorous return of the Chrysler (FCAU) Airflow name, no it won't resemble 1934's version, ahead of it's time and unsuccessful (as I don't personally recall hah). If Stellantis (STLA) manages to progress quickly enough (they have lagged), and if the shares happen to get hit a good bit, we may develop an interest. So far we're very pleased with our Ford selection at 12 and don't need another.

If Ford can indeed double estimated production of the EV F-150 they'll outdo the primary competitor for pickup EV's, and that will be an controversial Tesla (TSLA) truck. Generally pickup's have a higher gross profit margin that any SUV's.

Ford will likely have 'first mover advantage' with the F-150 Lightning, as Ford has about 200,000 advance reservations already. While Chevy's Silverado is going to be out there (and we like GM too since 30's), our preference is Ford because of positioning. They are all growth stories with varying 'bets'. And as a wild card speculation we added Canoo, which 'if' they execute has an interesting potential of multiple times gains (just a bet). What 'if' Canno just happens to get a Walmart contract (or more), or even the UPS contract that a rival company can't readily fulfill? Canoo outlined various-sized 'van' set-up's. That's an advantage for the modular structure that uses the same platform.

It may seem sketchy, but lots of insider buying by the CEO at Canoo.. so we'll presume he's interesting in success, not failure. But so far no progress report.

GM's Cadillac will do well, more announcements coming, but price points are all over the map and generally 50k and up. IF Canoo can ramp-production at a 35k-40k range (and unique style), they may make an intrusion. What they'll need is a marketing partner, hence the speculation about Walmart (WMT) and so on resulting from their otherwise-inexplicable HQ move to Bentonville Arkansas.

In-sum:

The market went after the growth sector (and mega-caps) Tuesday, mostly as rallies in Treasuries seemed to be a primary reason, though I have in-mind the COVID French variant nobody has seemed to notice (or reports yet to the public). Hopefully it's not an issue, or doesn't become one, but I want us to be aware it exists. Higher rates and a new variant are definitely not pluses.

A lot of pension-fund buying has paused (and probably awaits new seasonal reinvestment funds that appear further into Q1), so the dynamics are there. If you also want to move the Treasury supply you have to offer higher yields, as you have the biggest buyer (China) already having a trend of 'stepping away'.

And of course the Fed stepping away, but China remains the biggest holder I have alluded too, so that's a potential issue. But our Fed alone matters. While all that is true, corporate earnings are sort of inflated in some sectors, related to clearing the books during troubles and then looking good when results are favorable, not to mention that on-the-surface inflation helped earnings for the majority. The most vulnerable are the stocks that were 'pandemic fashionable' and they have rebounded but are not entitled generally to renewed advances.

In other words, you don't have the market tailwinds that many got spoiled with so a more discerning buyer will focus on stocks that make money (like Oils) at the same time 'bets' are made in 'lottery ticket' speculations to a degree.