I was all set to focus my post-Thanksgiving column on the incredible fecklessness of the Biden Administration's energy policy, and the extraordinary ignorance of Energy Secretary Jennifer Granholm, who, somehow, when queried earlier this week, did not know the daily U.S consumption of oil. Well, in the midst of digesting my turkey, the administration is getting its wish, sort of, as oil prices are cratering this morning. But today's incipient market rout - I am writing this column pre-market - has nothing to do with a meaningless release of Strategic Petroleum Reserves or any kind of DC nonsense.
The markets are crashing, led by the DJIA, based on news of the discovery of a new COVID-19 variant, Nu, technically B.1.1.529. This new variant, first spotted in Botswana apparently, has reportedly already spawned several sub-mutations, and, most chillingly, reportedly spawns a high number of mutations - I have seen a figure of 32 quoted often this morning - in the spike protein itself. Vaccines based on messenger RNA technology (mRNA) work by creating spike proteins, which sort of pop the virus cells like balloons, so if Nu is what is being described today, the world is in for a world of hurt.
But, as a numbers geek, I look at COVID stats every day (I use worldometers.info) and, I have to say, they have been looking awful the past two weeks. Why? Because, as I have so often quoted in my RM column, 88% of the world's population lives in the Northern Hemisphere, and it is getting cold. When I caught my COVID case in March, a journey I detailed in several RM columns, it was after an unseasonably night out with my running club in Central Park (I have no way of knowing when the virus started attacking my cells) and there is a STRONG correlation between cold weather and COVID spread.
As we suffer through a nasty, cold and wet Black Friday here in NYC, I also see that the U.S. will likely hit 800,000 fatalities from COVID this weekend, just as we approach the threshold of 50 million cases. As a stock analyst, I can say, with great sadness, nothing has changed fundamentally. This pandemic is an endemic. We are going to have to live with it. And treat it. I am traveling to Europe tomorrow and will likely get a COVID booster shot this afternoon. Such is life in 2021.
But that's NOT the narrative that CNBC and the other mainstream media outlets have been pushing. Ofr the past 8 weeks. It is very, very, very difficult for me not to see political bias in the recently rosy proclamations emanating from CNBC. Did Scott Gottlieb, a Pfizer Board member, really say recently on CNBC that the pandemic phase of COVID is ending? Sorry, Scott, you are as clueless as ever, or, perhaps, as clueless as Jennifer Granholm.
That's the lesson here. You have to protect your own wealth, just as you have to protect your own health. Government is not going to do it for you. But how to do that in an environment where bond yields are crashing again today, as the 10-year ProShares Ultra 7-10 Year Treasury (UST) yield plunges this morning to 1.53%? Without moving to Brazil - I'll be there again in two weeks and will look to enjoy the summer weather along with high government bond yields and low, seasonal COVID case numbers, aided by a successful, if slow, vaccination program, there is only one alternative for U.S investors: High-yielding U.S stocks.
Yes, that is going to give you a lot of energy exposure, but, again, remember that the problem with energy pricing in 2021 is NOT rising demand (although natural gas prices are spiking today even in the midst of oil's plunge) but a chronic underinvestment in the industry since oil's crash in 2014. I go where the yield is. And if I have to get those damn swabs jammed up my nose every two weeks to do so, the pain is worth it. Screening for yields among S&P 500 members becomes a royal pain, owing to some legal machinations regarding data generated by Standard & Poor's, but remember that, according to multpl.com, the current yield of the S&P 500 (as of yesterday's close) is an extraordinarily low 1.26%. The bar is low.
Just make sure you are using up-to-date information and are not, by mistake, reading an article on high-yielding stocks that was written in October. Here is the Yahoo Finance stock screener.
Use it wisely. But do use it. Things are changing in the world. Make sure your portfolio is protected with REAL returns.