One thing's for certain: The stock market doesn't believe in the vaccine. It either thinks it won't work, or that the rollout will be too rocky -- too incoherent to matter.
Sure, the video of the hospital worker getting vaccinated stirred hope that this long international nightmare might soon be ended.
But the stock market says there is no end in sight. In fact, worse, it is saying that the good news on the illness front is now baked in, so let's take stock that 300,000 people have died from this scourge. At this pace, an additional 100,000 deaths is certainly reasonable to expect, a number that could come close to eclipsing the military deaths in World War II.
Is it possible that the good news for now is over, and the bad news about the illness is now front-and-center?
I think so.
What makes me so sure?
Let's go over what's going up and what's going down.
First, this rally was based in large part on a turn in the world's economy, led by China. The Chinese economy is red hot, something that seems almost impossible until you realize that a command economy can command its people to wear masks and give every piece of data of where they are so contact tracing is effective. It can also command you to be sequestered, where you can't get anyone else sick.
We can judge the strength of the economy by looking at the oil and other commodity stocks. They are almost all headed down after moving up early in the day, one of the worst patterns imaginable. The travails of Occidental (OXY) , which has been hot as a pistol, is a good pictorial of the moment. This stock has been a rocket since the end of October, traveling from $8 to $21. To me, that's enough. It can't make enough money with oil at $46 to make it in its current condition.
I think you dump Exxon (XOM) , which didn't exactly guarantee the dividend last time it spoke. Preserving a dividend and preserving an institution are two different things.
Next sell-off? The marginal retailers like Kohl's (KSS) and Nordstrom (JWN) and Macy's (M) . I think that all three companies have made terrific strides, but I also think that the possibility of a shutdown of non-essentials could be in the cards to cut the endless caseloads. Vaccines vs. virus? Sadly, take the virus.
These stores have had a huge run. Time to ring the register on some of your wins, even as I think that they are in better shape than when they were at much lower levels. I don't expect those levels to be revisited. But I don't expect much of an advance judging by the commodities and the uncertain unemployment picture.
I like Darden (DRI) and Cheesecake Factory (CAKE) . Brinker's (EAT) going to make it. In fact, it's going to come out on the other side much stronger. But there has been too much evidence that restaurants are the places of the most radical spread. The work of Dr. Kim Prather, a professor of Chemistry and Biochemistry at U.C. San Diego who is Distinguished Chair in Atmospheric Chemistry, has become the benchmark of what can and can't be done to cut Covid and the indoor spread, which is more aerosol droplets than we thought when the pandemic started. Her work has influenced the scientists in Washington that restaurants are a danger. New York City closes its restaurants Monday. Given the surge of disease, I believe others will soon follow. Without stimulus, the layoffs will be accentuated. They come at a bad time; eviction gets legalized in January.
Every day, literally every day, the buyers of the cruise lines come in, usually at about 4:15 a.m. ET. They just move up the stocks for no reason whatsoever. It's certainly not because of earnings. Monday they reversed. A trade that had been money every day, whether it be Royal Caribbean (RCL) or Norwegian (NCLH) or Carnival (CCL) , is not suspect. We have the vaccine, but we do not have the arms for the vaccine. They are in different places for now.
But let's get down to basics. What tells you that we are going back to the old days now that the vaccine euphoria has peaked?
First, Disney (DIS) vs. Netflix (NFLX) . Disney put on a fabulous show last week and the stock gained almost 20 points, but it is very difficult to see the parks opening soon given the rollout may be uneven. Meanwhile, Netflix has languished. The apotheosis of Disney may have came, for now, at the end of the meeting, because Monday the indoor version of Disney, Netflix, surged. I like Disney a great deal and don't recommend selling it, given that I think we will actually have a glut of vaccines by April. But, for now, the home entertainment is topping the Magic Kingdom.
If you fear that you will get sick if you go out to a retailer, then you buy at Amazon (AMZN) . That's why you knew that the move in Amazon would be vicious and unrelenting. It's been biding its time, as it has been wont to do while people pronounce it dead. Then we realize that a pandemic is Amazon's best friend.
Lennar's (LEN) flying ahead of its quarter on Wednesday, because Lennar's a bellwether for those who are still fleeing from the inner city. What does a city offer? Work, dining out, entertainment.
But if you take work and dining out and entertainment but you keep rates low what do you do?
You move. Hence the Lennar run.
It's the internet's time again. The Federal Trade Commission has struck and it can't strike again. Social media can move up.
Finally, so many have written off the semis of late that it seems as if there's been a universal belief that you have to sell an Advanced Micro Devices (AMD) or an Nvidia (NVDA) and buy a BP (BP) or Conoco (COP) . Monday, though, the market reveals its true colors and all of the semis rally.
Now, I know that Tuesday could bring a reversal, but this market has been waiting for the vaccine so long that you can play it as a surprise in the media, but without a cresting of cases and deaths -- and a uniform position on things that can be done to slow the pandemic -- we have none. It's more of a photo op than it is a decisive blow against Covid.
The good news, though? We have seen the FANGs and the semis and the digitals like Twilio (TWLO) and Shopify (SHOP) and Adobe (ADBE) to run. The keepers of the economic growth story are handing the baton back to the lockdown winners, because they market's expecting a lockdown, because the deaths are so overwhelming that even the virus-doubters, of which there are legion, are starting to un-deny their denials.