“TRUTH IS OFTEN THE FIRST VIRTUE LOST IN WAR AND POLITICS”

COVID is a major electoral issue.  There is a long-lived axiom of “truth is the first virtue lost in war and politics.”  Today it appears that this axiom is on major league steroids, the result of the blogosphere and the election.

I do not think it is political to write that COVID has dramatically altered the landscape.  Some are very fearful believing all are on the verge of being infected with an incredibly deadly pathogen.  Others think it is nothing other than a great conspiracy being used to destroy Western society as currently known.

Some believe a vaccine will be the panacea to end society of this scourge but are quick to dismiss any progress on a vaccine.

Over the weekend there were considerable headlines quoting Dr. Fauci stating the vaccine will only be “partially effective” stating that he is hoping a vaccine may be effective in 50% to 60% of people hoping for 75% effective rate.  To be totally effective the vaccine must work in 98% of people.

The numerous press accounts I read concerning Fauci’s remarks had a not so subtle negative bias, not so subtly stating an effective vaccine is years away.

As noted many times context and perspective is always lacking.  Fauci also commented the effectiveness of a typical flu and pneumonia vaccine is about 50%, further stating 2018—19 data suggested that year’s vaccine was only 45% effective.  To place the 98% effectiveness into perspective, the measles vaccination is 93% effective.

And then there is the question as whether or not one will be vaccinated.  According to Gallup Poll released Saturday 35% of people will refuse to be vaccinated.  Breaking it down politically, 81% of Democrats would get vaccinated, 47% of Republicans and 59% of independents.

Regarding ages, 76% aged 20-29 would elect to be vaccinated but only 70% of those age 70% would elect the vaccine.

What I found interesting was the racial breakdown.  Gallup reports that 67% of whites and 59% of “nonwhites” would get vaccinated.

In my view the above has everything to do with the markets.  There are calls to again shut down the economy, depending upon the source the odds of such is anywhere between 10% and 60%.  To write the obvious another shutdown will have disastrous socio economic and geopolitical effects.  The perception as to whether there is an effective vaccine may impact the election, an election where the two candidates’ economic policies are polar opposites.

Speaking of which, I do not think it takes a political scientist to conclude the dissention over the next stimulus package is entirely political and how the outcome of this stalemate can influence immediate term opinions.

In one regard it is a realty TV star vs. seasoned political veterans.  And yes, politics is a blood sport, a chess game, always attempting to calculate how society will respond to one’s actions.

Radically changing topics, JP Morgan stated yesterday that “it has never been this easy to make money in small caps as one in every five small and mid-cap company is down over 30% since the beginning of COVID.”

JP Morgan further wrote “for every dollar that today is managed actively in the world, there is 80 cents managed passively with no regards for fundamentals and valuations are wide.”

Raymond James comments Apple is today worth more than the entire capitalization of the Russell 2000.

Indexing is longer a market strategy it is the only market strategy.  A transition will occur but the operative question is when.

Commenting on yesterday’s market activity, mega sized tech declined while value shares advanced. Oli gained.

Last night the foreign markets were up.  London was up 2.51%, Paris 2.66% and Frankfurt up 2.56%.  China was down 1.15%, Japan up 1.88% and Hang Sang up 2.11%.

The Dow should open moderately higher as Russia claims it has a vaccine, strong Chinese economic data and falling hospitalizations in the US.  Moreover, equities are inspired by President Trump’ s statement he is considering a tax cut on capital gains.  Wow!  That is the inverse of the Democratic Presidential candidate.   The 10-year is off 7/32 to yield 0.60.

 

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