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Obviously great news for humanity. What do we think are going to be the market implications?

 

Initial market reaction has been euphoric. Obviously a very effective vaccine that can be rolled out pretty quickly wasn't priced in and should accelerate a return to normal and amazing news for travel related stocks and energy stocks and financials. But on the other hand markets are trading well above where they were a year ago before anyone had even heard of COVID-19. And perhaps markets can no longer count on much fiscal and monetary support now.

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Let's play the most likely to be benefited game, I think NYC office will see a huge pop today.  ThePupil will be dancing on the street today.

 

Six Flags

Disney (Theme Park)

Comcast (Theme Park)

Travel - Airlines

Expedia, Trandigm, Heico etc

What else could benefit? 

Williams Company for the pipelines, anything O&G related likely benefits today

 

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Did I miss something?  That article didn't say when the first jab will be delivered.  I understand that Pfizer needs to collect data for another 3 weeks or a month before it can provide incontrovertible evidence that the vaccine works.  So, the first jab might be around December 1st?  And the first people with vaccine-induced immunity might be around January 1st?

 

 

SJ

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Did I miss something?  That article didn't say when the first jab will be delivered.  I understand that Pfizer needs to collect data for another 3 weeks or a month before it can provide incontrovertible evidence that the vaccine works.  So, the first jab might be around December 1st?  And the first people with vaccine-induced immunity might be around January 1st?

 

 

SJ

 

If you know anything about the equity market, it is very forward looking.  This provides hope and that's what you need sometimes.  It takes away the risk that a 50% effective vaccine is the only way forward. 

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Did I miss something?  That article didn't say when the first jab will be delivered.  I understand that Pfizer needs to collect data for another 3 weeks or a month before it can provide incontrovertible evidence that the vaccine works.  So, the first jab might be around December 1st?  And the first people with vaccine-induced immunity might be around January 1st?

 

 

SJ

 

If you know anything about the equity market, it is very forward looking.  This provides hope and that's what you need sometimes.  It takes away the risk that a 50% effective vaccine is the only way forward.

Not only is the market forward looking, but:

90% is potentially very good news,

Pfizer's vaccine in some ways is among the best vaccines to prove highly efficacious because distribution preparations are well along the way, and it might be taken as a sign that other vaccines with a high probability of success are likely to be effective also.

 

One piece of bad news in all of this is that the mutant mink coronavirus may be crossing to the USA as we speak and current vaccines are untested against the new mutation. Too bad the Trump administration is yet again failing to block all travel in time for what may turn out to be a new pandemic viral mutation. Other countries have already banned all travel and freight from Denmark as a precaution.

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I guess this kind of pisses all over Joe's big Covid Task Force agenda......was supposed to be a very big deal for him today.

 

Let's focus on making money here Greg.  There are still lots of undervalued names.  Just look at the whole Office REIT and Multi-Fam REIT thread

 

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I guess this kind of pisses all over Joe's big Covid Task Force agenda......was supposed to be a very big deal for him today.

 

Let's focus on making money here Greg.  There are still lots of undervalued names.  Just look at the whole Office REIT and Multi-Fam REIT thread

 

Personally, I'd like to have a lot of those and some of the MSG E/S's right now...shucks. Too much time in politics and covid thread...maybe we get another shot when the mink virus gets here...one can hope.

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Initial reaction has been a pop of around 10% in energy, 10% in financials and 20-30% in travel related names and real estate. Obviously quite big moves but then again these sectors are still well below pre-COVID levels and had already sold off significantly from the summer when the initial re-opening/V shaped recovery fervour was taking steam and the market is so driven by momentum that there might be a much longer rally before the good news is fully priced in. Of course still some uncertainties re approvals/timing of the roll out. But perhaps there is an opportunity here.

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Initial reaction has been a pop of around 10% in energy, 10% in financials and 20-30% in travel related names and real estate. Obviously quite big moves but then again these sectors are still well below pre-COVID levels and had already sold off significantly from the summer when the initial re-opening/V shaped recovery fervour was taking steam and the market is so driven by momentum that there might be a much longer rally before the good news is fully priced in. Of course still some uncertainties re approvals/timing of the roll out. But perhaps there is an opportunity here.

 

Honestly, I'm just picking my own stocks. I was just thinking about buying something that had a 4x upside and now that it's up 20%, it's a 3x upside.  But the outlook is much more clear.  If you are buying stuff that are down 50% for the year that was cheap to start the year, I think it's still cheap after a 15-20% pop today.  There is also the element of narratives changing.  A 30 cent dollar with a narrative that takes away the structural risk becomes powerful. 

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Great news, no question.  Before getting too excited though, Pfizer's vaccine requires a follow up booster shot and must be delivered in freezing storage.  That will significantly limit the ability to mass immunize.  The test released today was only after the initial vaccine shot, not the booster.  So there's still a month or more of data to analyze. 

 

I think the J&J vaccine is much more promising in terms of ability to mass vaccinate.  It takes only the initial dose and requires cold storage but not freezer. 

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Good news, but it still sounds like the virus will be around for a while.

 

The Pfizer vaccine needs to be kept at -80c, has short shelf life, and requires 2 doses. Additionally it sounds like initial distribution is going to be split from Pfizers plants with vaccine produced in EU plants going to EU and USA produced vaccine going to US residents. With expectation of enough vaccine to vaccinate 600 million people total by the end of 2021 (1.2 billion doses). I am not sure if that includes the 100 million doses the US government already apparently has.

 

Seems like the winter is still going to be rough in USA giving the surging case numbers going into holiday season.

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I think that a no vaccine / no good therapeutics scenario was relatively low probability and that probability is no even lower. it's a fundamental positive for names dependent on life mean reversion vs a negative for current life extrapolation. the long term secular trends brought about by covid likely remain, but perhaps for less long or to a lesser degree. perhaps not.

 

I think to have owned anything involving human interaction (in my case urban apts/office) you kind of had to assume that there'd be a vaccine at some point (whether people are getting their shots in 6m or 12m or 24m was less important, at least to me). I don't think much has changed and would hypothesize the degree of these moves has more to do with positioning than fundamentals, but that's speculative.

 

i trimmed a little today in some of the more dramatic moves in urban real estate.

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Good news, but it still sounds like the virus will be around for a while.

 

The Pfizer vaccine needs to be kept at -80c, has short shelf life, and requires 2 doses. Additionally it sounds like initial distribution is going to be split from Pfizers plants with vaccine produced in EU plants going to EU and USA produced vaccine going to US residents. With expectation of enough vaccine to vaccinate 600 million people total by the end of 2021 (1.2 billion doses). I am not sure if that includes the 100 million doses the US government already apparently has.

 

Seems like the winter is still going to be rough in USA giving the surging case numbers going into holiday season.

 

All true.  If I learned something from the 2008/2009 episode is that equity is very forward looking.  Perhaps, I'm speaking mostly from my RE exposure.  RE is supposed to be a 100 year asset (for the right type), so 2020 and 2021 will be write offs.  But if that office or apartment building will be good for the next 100 years with a 90% effective vaccine, it takes away a lot of the terminal value questions. 

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I think that a no vaccine / no good therapeutics scenario was relatively low probability and that probability is no even lower. it's a fundamental positive for names dependent on life mean reversion vs a negative for current life extrapolation. the long term secular trends brought about by covid likely remain, but perhaps for less long or to a lesser degree. perhaps not.

 

I think to have owned anything involving human interaction (in my case urban apts/office) you kind of had to assume that there'd be a vaccine at some point (whether people are getting their shots in 6m or 12m or 24m was less important, at least to me). I don't think much has changed and would hypothesize the degree of these moves has more to do with positioning than fundamentals, but that's speculative.

 

i trimmed a little today in some of the more dramatic moves in urban real estate.

 

Pupil,

 

Great point.  But wuss for trimming.  JK

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Did a bit more reading and yeah only 50M doses estimated to be available by the year end enough for 25M people and that has to be divided between the US, the UK, Canada, Japan and the EU.

So it probably doesn't spare us from the possibility of rolling lockdowns through to the spring and you are right it could take some time to build out supply chains to handle the challenges of mass distribution. So the original timeline of mass distribution by summer 2021 might still be the most realistic outcome.

 

 

 

 

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