Vaccines, Lockdowns, Energy and What Warren Thinks – Try the Chicken Capriciossa

By now you know – it was all about Moderna +9.5% and the vaccine! Markets surged yesterday across the board… after the biotech announced a 94.5% efficacy rate for its mRNA vaccine to battle the virus. It was clear from the moment the news hit the tape… recall that last Monday  – PFE/BioNTech – reported a 90% efficacy rate and that also lit the fuse sending market surging as investors welcomed the news… and yesterday’s 94.5% was even more exciting… now while the vaccine is not here yet – it is on its way and that was enough for investors to overlook the surge and the lockdowns happening in the US and around the world.

Then Joey took to the podium and held a ‘presser’ – raised concerns that he is operating blindly, that the Trump administration is not playing nice in the sand box, but that he and Kamala are ‘powering through’… and he also made it clear that he is not intent on ‘locking down the country’ as some had suggested last week. (Which also helped the market surge). Ok – let’s be honest – this is how the game is played – when they are considering an action and need to take the temperature in the country – they send someone out to ‘float the balloon’. to suggest that some action might be the appropriate action – and then they wait for the ‘feedback’! And that is what happened last week with Dr. Michael Osterholm – the newest member of the Biden ‘Virus Team’.  If you recall – Dr. Osterholm revealed that he ‘thought’ it would be necessary to lock the country down for 4 – 6 weeks… This link takes you to the story featured on CNBC that revealed the ‘balloon’…

In this story he also suggested that the US has all the money it needs to survive this lockdown and pay everyone for their time off… When the news hit the tape – the market started to stumble – people started to talk about it and then there were questions – What was Biden planning? At this point – If you recall – when it appeared that this idea would not be well received – Osterholm suddenly took to the media and took complete responsibility for the idea and said that it was NEVER REALLY discussed with Biden, but that it was his own opinion (something that was not completely clear in the article – it was left vague for a reason) – keeping Joey and Kamala out of the fray… but what it did do was give the Biden team a read on what the country thinks… Now – a complete lockdown is different than regional or city specific lockdown – those are happening, they are happening around the country – Washington, Oregon, Chicago, NY, NJ, Michigan, etc. all being in some state of ‘sheltering in place’. But a complete national lockdown – I suspect it will be met with a fair amount of opposition… and that is what they learned with that balloon.

Recall – the FED would do that exact thing during the height of the financial crisis… they would float ideas about rates and stimulus and watch how the markets reacted – and that would help drive policy decisions as it would give then insight into ‘expectations.’ (This isn’t rocket science…)

As the markets teased higher in the morning – it took a breather mid-day when Joey was speaking – and then rallied into the end of the day to close at the highs across the board… Investors cheering as the Dow inched ever closer to 30,000 – a level that will surely ignite a whole new set of algo’s that react to ‘technicals’ signals when we pierce it… but that did not happen yesterday, so sit tight. By the end of the day – the Dow added 470 pts or 1.6% to close at 29,950.44, the S&P gained 42 pts or 1.16%, the Nasdaq added 95 pts or 0.8% and the Russell outperformed again… adding 42 pts or 2.3%!

Gains made across the board – Value continues to outperform Growth SPYV + 1.8%, SPYG +0.8%, Energy remains the star performer – the XLE rising 6.5% as investors are now making a bet that the vaccine will help to heal the world and that demand for energy (oil) will surge. Industrials (XLI) +2.4%, Financials (XLF) +2.2%, Real Estate (XRT) + 2.6%, Basic Materials (XLB) +1.9%, all following in kind on the same thesis. Tech – while it did advance did not perform as well…XLK +0.97% and Communication stocks – XLC +0.64% – as investors recognize that the surge into some of the big tech names is A. – a bit overdone and B. a bit overdone.

Airlines and cruise stocks also benefitting as it appears that when life gets back to normal, then people will be travelling again…  not sure about you – planes yes, but cruise ships? 5000 people on a floating tub, nowhere to go, nowhere to hide… not for me, not so fast… but again, I am one person in a sea of many.

Today’s drivers… AMZN, TSLA, Buffet, AirBNB and yes Trump…

This morning there is a bunch of news items that are sure to create a range of discussion points. Amazon announcing the launch of its ‘online pharmacy’ – and this is having an immediate impact on the pharma stocks – as it is sure to shake up the industry. CVS -7%, WBA -10% and RAD -11% in the pre-market on the back of this news.

This new business will allow consumers to order refills on their phones and have them delivered to their homes… OK – so what? CVS and WBA – already do that as well. They will accept ‘most’ insurances and if you are a Prime member who doesn’t have insurance you will still be able to buy generic meds at a discount. All this means is that you have to fill out a ‘profile’ on Amazon – give them your history, you list of meds, your name, address, SS#, DOB, gender (both at birth and current),  Ethnicity, legal status, preferences etc. and then Amazon will be happy to send you whatever meds you like – along with plenty of targeted ads now that they know even more about what you do and what ailments you suffer from etc. I for one – like my CVS – so not sure that this whole Amazon thing works for me, but I’m just one person in a sea of many.

Next up is the latest portfolio adjustments by the ‘Oracle of Omaha’ – the one and only Warren Buffet. Learn what he likes, what he doesn’t, what he bought and what he sold. Where he thinks the world is going and where we have been. You will see that he sold some 40 mil shares of Apple in the last quarter – not because he doesn’t like Apple – he still owns 965 mil shares – but because he took those proceeds and re-invested them in the new names he has identified for the future… It’s called investing, it is not a statement that he thinks Apple is in any kind of trouble – it just risk management proper investing. So don’t go and read anything negative into it.

And then we learned overnight that Lonnie Musk’s Space Ex’s rocket ship – connected with the Int’l Space Station last night – all very exciting, but the real news is that S&P announced that TSLA is going to be part of the S&P 500 Index starting on Monday December 21st… so this morning TSLA stock is SURGING – up 12% on this news… Think about this – EVERY mutual fund that mimics the S&P has to now own TSLA, every ETF that mimics the S&P has to now own TSLA – Capisce?

AirBnb is getting ready to go public on the Nasdaq… not today, but getting ready…

And Trump TV?  Rumors that Newsmax is being pursued by Trump are all over the place, but CEO Chris Ruddy – tells Variety Magazine that NewsMax will not become Trump TV – anyone willing to take the other side of that bet? Remember – Everything is for sale at a price… just sayin…

Eco data today includes Advance Retail Sales of +0.5%, Ex autos and gas of +0.7%, Industrial Production of 1%, Capacity Util of 72.3% (again not at a level that suggests inflationary pressures at all. It would need to be > 85 to be really concerned, but anything over 80 will start to raise some eyebrows).

This morning US futures are a bit lower… and again – that should not be surprising to anyone… Yes, nothing has changed between yesterday and today, virus still surging and the vaccines are still being developed. Therapeutics are improving and while hospitalizations are up, deaths are in decline, Trump is still throwing a temper tantrum and Biden is trying hard to make the transition smooth. Value Stocks are outperforming Growth and the sun will rise over the Atlantic. After the surge yesterday, investors are just digesting the moves – nothing more… but remember – this isn’t over yet… so sit tight.

European markets are also lower… after their surge yesterday… In EU-specific news Hungary and Poland blocked the adoption of the 2021-2027 budget and recovery fund presented by the EU – word is that they did this because ‘the budget law includes a clause that makes access to the money conditional on respecting the rule of law.’ What? Respect the rule of law? Who would have thought?  At 7:30 – the FTSE -1.15%, CAC 40 -0.33%, DAX -0.31%, EUROSTOXX -0.42%, SPAIN -1.27% and ITALY+0.32%.

The S&P closed at 3626 up 42 pts… after testing as high as 3628… below last week’s high of 3645… Today’s action should see some pullback and consolidation in the markets as it prepares for the next event… which in this case will be the finality of the election and the realization that Trump may pull some fast ones before he exits the WH. It is also what happens on January 5th in Georgia – which will define the executive branch for at least the next 2 yrs. Sit tight and stick to the plan. And Chris Ruddy joins CNBC at 7:30 to discuss the rumors of Trump and NewsMax. Stay tuned.

Take good care.

Kp

Chicken Cutlets Capricciossa  

This is a “simple dish,” easy to make and takes no time at all… you can also use with veal or pork cutlets – as you prefer. Here is the pic from my Saturday evening dinner.

For this you need: Chicken cutlets – pounded thin, homemade Italian breadcrumbs, Arugula, Red Onion and Shaved Grana Padano Cheese, Eggs, flour.

You begin with pounded chicken cutlets. Rinse under cold water and pat dry with paper towel. Dredge the cutlet in flour, then dip in egg wash (scrambled eggs before you cook them)… then cover in the homemade Italian style breadcrumbs* and set aside.

When completed – heat up olive oil in a baking dish under the broiler… (being careful to watch as the oil will ignite if it gets too hot before you begin cooking.) Dip one side of the breaded cutlet in the hot oil and flip to the other side and broil – 3 to 4 mins. While broiling, prepare the Arugula for the finishing touch.

Mix the arugula with the chopped tomatoes and red onion – season with s&p and dress with fresh lemon juice and toss.

Flip the cutlet and broil the other side. When done remove from oven and place on center of warmed plate. Now using salad tongs place the Arugula salad on top of the cutlet top with the shaved Grana Padano and drizzle with olive oil.

Buon Appetito.

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Kenny Polcari

Kenny is the editor of Morning Thoughts and has been with Seven Figure Publishing since 2019.

Kenny is a CNBC exclusive contributor appearing on shows like The Halftime Report, Power Lunch, and Closing Bell. His market commentary has reached audiences across the nation on media outlets such as Bloomberg, Fox, ABC, and more.

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