— Friday’s Market … A return to the Covid playbook … Sell economically sensitive, buy growth.
— Pardon my untutored use of Latin: E Unum Pluribus … Out of One Many (may suffer).
— Covid’s uptick in Europe maybe an excuse for a slight correction but not the end of a secular bull market …Buy the dip!
A return to the Covid playbook
Last week’s news of the Austrian government ordering a lockdown and requiring mandatory vaccinations of its population should not come as a surprise or a reason to sell stocks. There is no new, more contagious variant in operation in Austria.
That did not make much difference Friday as the market went back to the same playbook it adopted in the spring of 2020, SELL ECONOMICALLY SENSITIVE, BUY GROWTH.
We saw the yield on the 10-year U.S. Treasury Note drop from the previous day’s close of 1.587% to a low of 1.515% (typical of a flight to safety). It closed yielding 1.548%. Meanwhile, the flight to tech took Nasdaq up .40%, while the Dow was down .75% and the Russell 2K was down .86%.
What is happening in Europe should not be surprising. With so many still unvaccinated and colder weather arriving you get people congregating indoors with the obvious consequence of more rapidly spreading disease. The Austrian Government took drastic action and shut things down with a mandatory vaccination order. Despite the fact that we went through a similar spike in the occurrence of Covid 19 in the Southern tier of states, in particular Florida, Mississippi and Texas this summer, we had no lockdowns or federally mandatory vaccination orders. We survived it. The economy and market did just fine. We will survive the next flare up if if it comes our way.
I blame the swiftness of the market response on the computers. They may be programmed to react to news but, as of yet, artificial intelligence has yet to give the computer the ability of the human mind to see nuances in a headline. As such, the computer algorithmic moves create opportunities for thinking investors. Today’s move, especially in energy, down nearly $3 per barrel on West Texas intermediate crude (spurred on by fears of economic shut-downs and their effect on oil demand), may be providing an opportunity in this sector. May I remind you that many of these companies were coining money with the price of oil in the mid $60s.
Pardon my untutored abuse of Latin (and my preaching): ‘E Unum Pluribus … ‘Out of One Many’ (may suffer)
Photo by Aleksei Ieshkin
The obvious point here is that we have forgotten our national motto, E Pluribus Unum, “Out of Many One” … a united people of the United States of America. You know … “One for all and all for one?” Many have set it aside in favor of exercising their own personal freedom of choice versus the common good. That freedom works fine for religion. It does not compute when personal and public safety is in the balance. I shudder to think of what this country would look like today if my generation’s parents balked at immunizing us against rubella, small pox and polio. In my opinion this should not be an issue. Covid is a terrible disease that no one should have to suffer due to another’s adherence to the idea that a vaccination is a violation of his or her personal freedom.
Bottom Line
Covid uptick in Europe may be an excuse for a slight correction but not the end of a secular bull market …Buy the dip!
What’s your take?