one week later, a second vaccine


Earlier this morning, Moderna announced that its anti-covid vaccine was not only as effective as the Pfizer candidate whose trial results were announced a week ago, but it apparently also doesn’t need the special refrigeration that the Pfizer vaccine requires.

In Asian trading overnight, US stock index futures were all up by about 1%, with NASDAQ slightly ahead of the S&P and the R2000. On the Moderna news, the R2000 spiked up to +2.3% and NASDAQ dipped slightly into the red. This echoes, albeit more mildly, what happened when Pfizer made its announcement.

Two possible trading patterns for this week:

–this week is a somewhat paler echo of last week, with return-to-pre-covid life beneficiaries rallying for a couple of days, followed by a rebound of pandemic beneficiaries on the idea that normality is a long ways away

–a normality rally without much of a pro-pandemic rebound. My guess is that this outcome is less likely. But it would be more significant, because it would imply the market thinks the pro-pandemic rally we’ve seen over the past eight months has passed its best-by date. For me, this would be enough to accelerate my slow motion shift away from pandemic beneficiaries

the election and its aftermath for stocks

My man-in-the-street read of the presidential election results is that the overall numbers are pretty much the same as in Trump’s self-described “landslide” victory over Hillary, but contain a sharp repudiation of Trump himself . Trump’s bizarre behavior since seems to me to be some combination of cognitive decline and the antics of an aging rocker who’s trashing his hotel room in a sad attempt to remain relevant.

As an American, I’m embarrassed. More worrying than Trump himself are the administration and Republican party officials who are abetting him in what the rest of the world regards as an attempted coup. Unfortunately, we the people own the hotel.

As an investor, I’m concerned that the economic damage he continues even now to do will cause the eventual domestic rebound to be shallower and farther in the future than expected. This complicates the calculus for portfolio repositioning. We might, for example, have a strong pro-cyclical rally driven by AI extrapolations of past experience, followed by a selloff as earnings are announced.

For the moment, however, the most important thing is to analyze how this week’s trading plays out.

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