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  1. Home
  2. / Investing
  3. / Stocks

Biden Bits, Vaccine Vanguard, Unmasking Folly, Minerd Musings, Ives Inklings

Among other things, the president works to align Democratic senators to support his massive Covid relief bill.
By STEPHEN GUILFOYLE
Mar 03, 2021 | 07:36 AM EST
Stocks quotes in this article: XLB, XLK, DOW, RKT, MRK, JNJ, PFE, SNY, NVS, BAX, NVAX, ENDP, MSFT, CRM, ZS, PANW, AAPL, DLTR, WEN, JEF, MRVL, OKTA, SNOW, SPLK

Nobody Knows

I kind of smiled last night before I hit the rack. One eye on my New York Rangers, who would go on to win for the fourth time in six games, which is red hot for them. The other eye, reading and reading all the financial information that will fit inside this melon that I wear between my shoulders. Nothing new. This has been my nightly ritual pretty much since newspapers went digital. Just replace hockey with whatever sport is in season.

Why was I half smiling? Like I am right now? Simple, gang. Nobody knows. Knows what? Knows Jack Spit, that's what.

Pick your favorite financial publication. The lead, or I dare say "superfluous" markets-based story for lack of truly understanding the marketplace, probably mentioned China's head of Banking and Insurance Regulation Commission, a man by the name of Guo Shuqing. Guo was quoted at Reuters, Bloomberg and elsewhere as saying, "Financial markets are trading at high levels in Europe, the U.S. and other developed countries, which runs counter to the real economy."

Sounds good, right? I mean, if you don't know what happened, and you have to write something. Doesn't matter that I read Guo's quote for the first time just after 5 a.m. New York Time Tuesday and pressured U.S. equity markets experienced much of that pressure after 3 p.m. New York Time, turning a lackluster sideways-ish day into a lackluster selloff. I guarantee readers right-stinking now that somebody who is important somewhere to someone says something like that every single day.

Ambiguity

Perhaps Tuesday was just a bit heavy, as Monday had been the strongest day for equities in months and that came itself in response to late February weakness. The whole ball of wax obviously got rolling by volatility in Treasury security markets. Those markets, or the U.S. 10-year note in particular, have (has) traded in a rather tight range since Friday and February simultaneously expired together. As a matter of fact, equity index futures are trading nicely higher early on Wednesday morning even as the U.S. 10-year yield tests the upper end (1.45%-ish) of that range. We'll see what happens should that one yield in particular make another run at the S&P 500's average dividend yield, currently a rough 1.48%.

Sticking to numbers at least for now, the late selloff on Tuesday forced 10 of 11 S&P 500 sectors into the red. Using Sector Select SPDR ETFs as proxies, only the Materials (XLB) sector closed higher for the day, largely due to a Wells Fargo upgrade-inspired rally in Dow Inc. (DOW) and a U.S. dollar that softened a bit over the course of the regular trading session. Technology (XLK) was easily your weakest sector, and its weakest components were the semiconductors as well as renewable energy equipment makers. It was not such a green day for green energy.

Trading volume remained rather light overall, up small at the New York Stock Exchange, down small at the Nasdaq Market Site. Losers did beat winners at both exchanges, but advancing volume ran neck and neck with declining volume at the Big Board, but not quite so closely up in Father Duffy's neck of the woods.

Playing the Rocket Companies (RKT) wheel of destruction game? I see nothing morally wrong with gambling as long as one understands it as such and does not bet the rent.

Busy Man

President Biden was out and about on Tuesday. The president met (virtually, of course) with Senate Democrats over lunch in an attempt to unify the party in regards to the coming vote on the $1.9 trillion Covid relief package that has already passed in the House. There is more than one fiscally conservative Democrat who see parts of the bill as excessive. Keep in mind that Vice President Harris only matters here if neither side loses a vote. There is also a clock to watch here as the federal weekly stipend to unemployment benefits passed during the Trump era will expire on March 14. Friday's jobs numbers will be key and are a very likely reason for the reduced trading volumes of late, but the welfare, or lack thereof, for this bill as debate commences in the U.S. Senate will be a source that keyword-reading algorithms will pick up on.

Far more exciting and optimistic Covid-related news also came from the president on Tuesday. Biden announced that a deal had been struck and cleared by regulators on Saturday that would partner up pharmaceutical giant Merck (MRK) , which terminated its own Covid-19 vaccine candidate program due to a failure to meet goals for efficacy, to devote two domestic facilities toward ramping up the manufacture and availability of Johnson & Johnson's (JNJ) recently authorized (for emergency use) one-shot, easier-to-manage and easier-to-distribute vaccine. Merck will be paid $268.8 million by the Biomed Advanced Research and Development Authority to adapt and update its facilities in order to meet this challenge. One Merck facility will actually manufacture the vaccine, while the other will provide "fill-finish" services such as placing the product in vials and packaging. It is believed that it could take a couple months to get the "fill-finish" facility up to speed.

The even better news is this: With the two big pharma firms teaming up, the president was able to announce that (even though it remains humanly impossible to land an appointment anywhere near me right now) the U.S. should have enough supply of Covid-19 vaccines to cover all American adults by the end of May, moving that target date up by two months. Just an FYI: Teamwork is the way to make the dream work. Pfizer (PFE) is currently teamed up with Sanofi (SNY) and Novartis (NVS) for the purpose of speeding along production, while Novavax (NVAX) is currently working with both Baxter International (BAX) and Endo Pharmaceutical (ENDP) even prior to any authorization.

Not That People....

... listen to their governors anyway, but one day after the Centers for Disease Control (CDC) cautioned against rolling back public health measures too quickly, Texas Gov. Greg Abbott and Mississippi Gov. Tate Reeves both announced the end of their state-wide mask mandates. The Mississippi rollback goes into effect today (Wednesday), while Texans will need to wait until March 10 to freely endanger others.

Call me crazy, and perhaps I am indeed biased by my own experience with this disease, but most folks probably would not label me liberal and I do not see the reason to rush this. Most people will do what they want anyway, but there are people who do what they're told because they've been told. I think we have an obligation to try to protect those people and their perhaps vulnerable loved ones, but that's just me. Just checked the Johns Hopkins website. Both states are (along with many states) on the downslope of their recent curves, and while there are indeed very few new cases of Covid in Mississippi, Texas is actually ticking slightly higher over the past few days. Might have waited on pulling that trigger.

Just saying, as someone who in his life has had to (as part of a team) haul an 81-mm mortar (with ammo and rations) up a mountain side on a hot day while wearing the full NBC (Nuclear, Biological, Chemical) warfare suit. If wearing a mask is your biggest problem, God bless you, you have surely led a charmed existence.

How 'Bout Dat?

Guggenheim's Scott Minerd, who happens to be one of the few guests on financial TV that I will un-mute for, was quite blunt on Tuesday. Minerd sees the possibility that the expected large expansion in money supply (deficit spending) that is likely to accelerate this year will force cash into and end up supporting (not smashing) bond markets.

Minerd sees the probability that safe and liquid markets will draw enough cash to not only after a given time reverse the recent selloff for Treasury securities, but actually return that market to trend, which is a multi-decade bull market. Minerd expects the Fed to take on real yields should those yields threaten economic recovery. Minerd's models even show potential for a negatively yielding U.S. 10-year note as early as sometime in 2022. Hmm...

On that note -- and this is more related than I think anyone in financial media has picked up on just yet -- Wedbush five-star (TipRanks) analyst Dan Ives, who needs no introduction, not only sees more upside for big tech, he actually says that the "tech party is just getting started." Know what? Makes me feel a whole lot better about telling Alexis Christoforous that I was not too sure that I trusted the recent allocation rotation during my Yahoo Finance television appearance Tuesday afternoon.

Check this out. Ives sees 25%+ upward movement for tech the coming year, led by "FAANG, cloud and cybersecurity. While Ives sees some moderating growth post-pandemic, he sounds quite optimistic concerning strength across a number of these tech-related industries and he names names. Among others, Ives names Microsoft (MSFT) , Salesforce (CRM) , Zscaler (ZS) , Palo Alto Networks (PANW) and Apple (AAPL) . All those, with the exception of PANW, are current Sarge longs. Rock on.

Economics (All Times Eastern)

08:15 - ADP Employment Report (Jan): Expecting 169K, Last 174K.

09:45 - Markit Services PMI (Feb-F): Flashed 58.9.

10:00 - ISM Non-Manufacturing Index (Feb): Expecting 58.7, Last 58.7.

10:30 - Oil Inventories (Weekly): Last +1.285M.

10:30 - Gasoline Stocks (Weekly): Last +12K.

The Fed (All Times Eastern)

13:00 - Speaker: Chicago Fed Pres. Charles Evans.

14:00 - Beige Book.

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: (DLTR) (2.12), (WEN) (.18)

After the Close: (JEF) (.91), (MRVL) (.29), (OKTA) (-.01), (SNOW) (-.17), (SPLK) (.03)

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At the time of publication, Guilfoyle was long JNJ, PFE, MSFT, CRM. ZS and AAPL equity.

TAGS: Bonds | ETFs | Indexes | Investing | Stocks | Treasury Bonds | Technology | Real Money | Coronavirus

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