I'm always searching for a mantra for a given market and I think I have found it: no news is good news especially when it comes to the pandemic.
Case in point: Novavax (NVAX) . This small Gaithersburg, Maryland clinical stage biotech has become the acknowledged leader in the fight against covid even as its stock, which traded at $4 for months before the pandemic, now trades at $174 up another $8. It means nothing that the company has been a money loser, accumulating about $400 million in losses in the last three years.
Why does this all matter? Because Novavax has never brought a vaccine to market yet got $1.6 billion from the federal government for a vaccine. It must produce 100 million doses of the vaccine by the beginning of the year.
But that's old news. I can't tell if the old news is still in play or if we are back in physics class learning, specifically Isaac Newton's first lesson: an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force. Clearly there's been no unbalanced force.
I feel the same way about Sorrento (SRNE) . Here's a company that a week ago inked a deal with Columbia University for a saliva test that could be used for instant results with a very high probability of accuracy. Nothing has happened yet the stock keeps going higher. It's another object in motion. And it's another company that's not very good at making money, having only one profitable year in 12. I can't call it a penny stock but it was a two dollar denizen before this romp to $17 began.
It's not just pharma. How about Federal Express (FDX) with a stock up $11 points. I have studied the research and while there is speculation that ground rates are going up, I think this one's flying because United Parcel (UPS) has been soaring off the last quarter and there's a belief that it can't be going up in a vacuum. As it rallies we are going to get target price boosts that will keep the speed and the direction going higher with great velocity. I figure we get some real positive analyst coverage tomorrow now that it has broken out. That's their style.
It's the same deal with the banks. No one has said word one about why they are suddenly moving. I mistakenly sold some JP Morgan (JPM) stock for the charitable trust a few points ago because I thought that the next thing you would hear is that there is no deal between the Republicans and the Democrats, and that would cause a level of defaults that could really be a body blow to the group. With that would come suggestion that their dividends are too high and drain too much capital.
Now I think under a Democratic regime that would have already happened. But under this regime where President Trump almost has dictatorial powers over everything federal, there hasn't been such a call. No matter, Newton's in play here for certain. I picked JP Morgan and not Goldman Sachs (GS) to sell because Goldman has fewer real estate loans that could go bad. It didn't' matter. The group trades as if it were one, even American Express which epitomizes the travel and the going out that's almost been brought to a screeching halt from the pandemic.
Finally there are the ragged retailers that keep inexorably climbing based on what? Who knows? Is no news about Home Depot (HD) good news? Are the crickets that emanate from Bed Bath & Beyond (BBBY) indicative of a higher price? No, not a one. But that's what happens in a bull market. Stocks move up on nothing. It's like that old Seinfeld episode where Jerry explains to Russell Dalrymple, the fictional president of NBC, played with sheer genius by the sheer genius that is Bob Balaban: it's a show about nothing.
This is a move about nothing. And it's having the same success as that great show. All I can say is, as a bull, long may she run.