Nuances and ambiguities dominate the market and even geopolitical scene at the moment. The dovish tendencies, primarily real concerns COVID failing to peak as everyone wishes, resulting indirectly in a Fed trying to thread interest rate efforts through the obvious needle, to taper-away from excess stimulus, while not rocking boats too much with regard to economic stabilization.

We are going to have hotter inflation than the Fed would like, but growth does matter, because we concurrently have economic slowing if COVID rages more. And I'm concerned that COVID is never going to reach herd immunity this way, and never could, since even the vaccinated can carry the infection (one of the untruths given by officials previously claiming 'get the vaccine, live your life' as normal). This may be why the Vaccine heads of the FDA resigned today. Lies as both CDC or The White House usurped FDA's role without science-basis.

Now, POTUS day-after reflections on Afghanistan have no market meaning, but do relate to American credibility and fairly obvious miscalculations made. The negotiations by Trump and Biden were both done omitting the government of Afghanistan, which elevated the credibility of Taliban, and that backfired. President Trump was defiant in his remarks, and won't acknowledge what a lot of Americans, of both parties, believe was a poorly planned operation that did not include Bagram air base, although the 82nd Airborne and Marines did a great job within the confines restricting their ability to do more.

Executive summary:

• Earnings, guidance and growth projections remain high, with interest rate expectations low, all of it contributing to analyst euphoria, not the market, as expressed by multi-month distribution masked by strong S&P / NDX (NDX).

• It's indeed a reluctant market, with money managers crowding into momentum (momo) big-caps because of fear, not enthusiasm, even as underlying jitters aren't really there, nor should there be given how low so many stocks are.

• Fed Chair Powell has done a masterful job of 'calming', he even touches on the 'known unknowns' to calm concern of how the Fed may act.

• So there is stress but it's not a mystery to us why the bifurcation and the contrasts of valuations, plus there's a possibility of COVID-related slowing, the latter not because of shutdowns, but basically insufficient vaccines.

• Two Senior Vaccine officials at FDA are stepping down, time for reforms perhaps, although they say it's due to others intruding on their 'space'.

• Latest reports from Israel, where almost everyone is fully vaccinated and COVID is not politicized like here, doctors report about 75% of hospitalized patients were 'fully vaccinated', this reinforces data that also first came to our attention from Israel that vaccine claims of duration were excessive.

• That argues both early efficacy waning, as well as defuses propaganda in the U.S. about 'a crisis of the un-vaccinated', since obviously it's not given the reports of transmissibility whether or not one is vaccinated.

• The Israeli reports also reduce optimism that vaccines will keep people to 'merely' sickness and out of the hospital, but FDA / CDC won't say that as it would deter the un-vaccinated from getting the jab.

• Not saying the vaccine does nothing, just that it's no panacea and doesn't provide protection widely given variants or for very long, and that's why I pushed from the start for more funding of mAb's and antiviral pills, those are coming along, but it all could have been so much faster (blame on Fauci and anyone that was associated with heavily promoting just vax).

• 2nd generation vaccines should do much better (protein based and able to target portions of the virus common to all variants ideally), but that's a story for late this year or 2022.

• Finally the excess vaccine focus instead of antiviral pill or of monoclonal antibody research at an early date, is understood and more is going on.

• Merck, Lilly, Pfizer, Sorrento and others are working on new treatments (MRK,LLY, PFE,SRNE).

• Sorrento issued 'compensation plan' options to executives / employees with strike based on yesterday's closing price, 10 year options I believe, and great price by coincidence (?) presumably.

• Think COVID is overemphasized, hardly, new Univ. of Washington study out today projects 100,000 more Americans will die by December from COVID, and that suggests something less than great vaccine efficacy, we can only hope that in their final weeks the retiring FDA vaccine experts not only leave the Office in good hands, but speed 'trials' of new vax's.

• Meanwhile, South Korea passed a law requiring Google to offer in-App purchases that are paid with outside methods, this may be a template for others to act to curb Google / Apple 'excessive fees' charged for so long (aAPL, GOOGL).

• OPEC meeting now (Wednesday), and the expectation is increased Oil production of 400k bbls/daily, not a wide open flow nor is that desirable, nor is the demand there global.

• Hence let's hope they did not listen to a 'plea' for more Oil from POTUS, uninformed about energy and oil independence, the U.S. spent many years efforts to regain, yes alternative energy is evolving and EV's are expanding, but the point is Oil will be needed for a very long time, and the funds should stay here in the United States, not Saudi Arabia (OIL).

• Years ago calling for a 'crash', I used an expression 'time for la guillotine', this is not such a time because a 'wall of worry' is being climbed by the generals, not the troops, who remain back in the trenches.

• I loved hearing one reporter ponder if this is a Marie Antoinette market, it's not barring some geopolitical shock, but there are uncertainties that mostly relate to being cautious ahead of a Fed draw-down of expansion, and defensiveness about 'talk of tapering' even if initiated thereafter.

• Just to recall, Marie Antoinette threw lavish parties, indulged in frivolous spending, at a time of wide late 18th Century France poverty, compelled later to suffering and degradation, eventually meeting 'la guillotine', Marie had a little-known nickname current big-spenders might do well to recall: Madame Deficit, although today's disruptors don't use 'la guillotine'.

• So the market may suffer a 'sprained neck', require massaging later on, but probably avoid Marie's fate, with the S&P (SPX) not entirely beheaded, but with so many other stocks already beheaded or fearing the executioner.

(To be accurate for our readers in Paris or Bordeaux, the Paris Conciergerie was both palace and prison, located just west of the Île de la Cité, presently it is used mostly for law courts. The poverty of the people prompting revolution, to a degree related to Marie's husband, King Louis XVI, spending fortunes to help the Americans, for which the King & Queen eventually gave their lives. So citizens should know we have more than the Statue of Liberty to unite us.)

In essence: 

We're likely entering a defensive period for consumer cyclicals in particular, with hedge managers essentially hiding-out in the momentum big caps (most techs) that do the heavy lifting and give an illusion of strength that is far broader than they actually report.

People are pulling-in their horns a bit, less dining, less clubbing, less travel, along with more discretion and reluctantly accepting that the vaccines are not the best, do not protect entirely, if they do provide some resistance to COVID at least for awhile (even that duration keeps eroding).

The economy may well grow next year, but the sectors and characteristics at this point seem to hinge more on progress against COVID, than worrying about tapering from the Fed. They will of course start that, but it won't matter, and it won't matter big time 'unless' we're actually seeing new economic contraction.

Countries are experiencing COVID rebounding, including Israel and some are in Europe, even though 'all' have lower per-capital infection rates than U.S. is experiencing, and probably because of disciplined behavior maybe more than vaccines. Mostly it's the same vaccines, and even in China (which started all this inadvertently presumably) they are now advising a second shot.

In-sum: 

COVID means more than the Fed for now, though tapering's initiation will have some effect, even if universally expected. Tepid tapering talk tends to target some diminishing of mortgage-backed securities buying and so on.

The President's speech today made some valid points, but was too political in some ways, with inaccuracies as well. At least that's the take from ex-military guys that served and know the leaders who ran the Kabul operation too. We'll 'hope' President Biden is right that this ushers in a time of peace, while reality suggests the next insurgency or civil war 'in' Afghanistan is just getting started between Taliban and a majority of the people. Remember we armed a terrorist forces, by not destroying the equipment delivered to the collapse Afghan army and that point was omitted as media and White House talking points tended to reference the smaller numbers of helicopters etc. that were at Kabul airport.

It's gear elsewhere that had been supplied that is the true embarrassment. It's also clear that we continued to hand-over gear while pulling air support from Afghan troops, but few point that out. I emphasize it because it gives Taliban an automatic advantage over any counter-insurgency that will develop. We've inadvertently made it lots harder to drive the barbarians out. I realize the U.S. it 'out' and won't go back (as long as we don't get threatened), but stupidity in this situation results in supporting terror, or an Islamic state, which isn't in the interests of civilized mankind. It's likely planting the seeds of new conflicts.