We’ve got an unusual market on our hands. Some of the momentum names like SHOP, TDOC, NFLX, TWLO are getting hit pretty hard. On the flip side, financials are up over 4%, which is helping the IWM rocket over 6%.
Heck regional banks (KRE) are up nearly 10%.
Crude oil’s impact is finally playing out, as energy names as the XLE is up almost 8% on the day.
So, is the news of a phase 1 vaccine the reason for this sudden optimism? Perhaps. It’s certainly welcome news to all of us.
However, there’s been a lot of damage done to the economy. It would be a tough slog to get to new all-time highs. But, never say never.
The VIX has fallen comfortably below $30 now for the second time. Once it starts to crack $15 is when you need to be on guard. That means everyone lost their minds and aren’t bothering with protection. Usually, that’s when the markets like to pull the rug out.
Still, bonds are getting beaten down pretty badly today. That usually means equities are moving higher.
Ironically, if they sell off too fast, then rates go up and loan demand grinds to a halt. Imagine how red in the face the Fed would be if borrowing costs skyrocket all of a sudden.
Anyhow, I’m sticking with my plan of short-duration bull, long-duration bear. If that changes, you’ll be the first to know.
