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F’ing Friday – Markets Screwed Over by New Covid Variant


This is why we hedge, people.  The Dow dropped 800 points while the markets were closes, all the way back to 34,800 while the S&P 500 bottomed out at 4,600, and 16,150 (again) on the Nasdaq and 2,220 on the Russell is back to where we were in February – so much for 2021 being such a fabulous recovery, right?  

 What happened while we were taking a day off in the States is that a dangerous new Covid mutation has broken out in South Africa.  You know – one of those places the GOP blocked Biden from sending vaccines to since we shouldn't be spending money helping other people wipe out Covid – we just do it in the US and pretend the rest of the World doesn't exist.  Of course, we didn't wipe out Covid here either and we never will if we keep coddling the anti-vax, anti-mask lobby.

I guess we'll have to go back to drinking bleach if this new strain is getting around the vaccines.  You see (and it's sad that I have to explain this) when you vaccinate 2/3 of the people and let the virus run wild in 1/3 of the people – you have given the virus a puzzle to solve (your immunization).  Fortunately, you have allowed the virus to experiment with variations of itself on 100,000 people a day in the US and millions globally and then, when the virus figures out a variation that gets around the vaccines – it begins to spread rapidly again through the vaccinated population and we're right back to where we were 2 years ago – making America great, again.

ONLY when you immunize EVERYBODY and leave the virus no one to infect, can you truly eradicate it.  We have decided to try to get along with the virus and this is the inevitable result of that idiocy. 

B.1.1.529 is now responsible for around 90% of cases in South Africa’s most populous province, Gauteng, home to the political and economic capitals of Pretoria and Johannesburg, quickly crowding out the Delta variant. It has also been detected in neighboring Botswana and in a South African traveler in Hong Kong, said Prof. de Oliveira. 

The Daily Jaws on Twitter: "#COVID19, politics and the reading of #Jaws in  the current pandemic, featuring a video by #horror director and writer  @HarrisonSmith85 #ShowMeTheWayToStayHome #coronavirus ...The WHO will make a determination today that will either be reassuring or doom and gloom.  With Christmas around the corner, however, there will be a huge amount of pressure for them to downplay the risk into the holidays which, like keeping the beaches open in Jaws – only makes things worse in the end.  

We were going to pick our Stock of the Year for 2022 and I was saying I think it should be TZA (the ultra-short on the Russell 2,000) and, wouldn't you know it, the Russell dropped almost 5% since yesterday morning already.  Fortunately, we just reviewed our Short-Term Portfolio (STP) on November 16th and we boosted our hedges – including TZA – considerably:

We haven't made any changes in the week since but the STP has gained $31,817 on the recent weakness.   We'll see how much of a hit we take to our Long-Term Portfolio on this pullback and we'll see whether the pullback lasts at all since all we had yesterday was the sellers overwhelming the buyers with the US markets closed.  

We'll hold off on making our Trade of the Year selection until Monday – when we hopefully have a bit more clarity but you can see today why we continued to back PFE and MRNA in our Long-Term Portfolio:

Have a great weekend, 

- Phil


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  1. What do we know about the new ‘worst ever’ Covid variant?

  2. Good Morning.

  3. Good morning

  4. How US gun culture stacks up with the world

  5. Phil – Trade of the year —--  Do I'm confused – what is it?  

  6. Batman, read yesterdays headline for the post! …. (not announcing yet)

  7. Phil / Stock –  The site was not updated yesterday with the full updated on all the positions you are considering… ..  I'm on the West coast so until 10PM my time the site had —- " in progress"   was not till Friday AM that it updated and I saw the full update….   I see now it's being delayed…..   Not sure why the site was not updating

    Phil – Can you look into why the site did not update yesterday – all day the last line I saw was in progress, I even updated the site ,, signed out signed back in an nothing.    Thanks.

  8. so this is how its going to be from now on?   the bug is going to keep mutating to stay ahead of the game and we ( humankind ) will always be one step behind.  Its already found its way to deer and guessing other animals are next.  If it ever get to dogs and cats we are doomed.  SNOW, is that possible?

  9. wow. look at BA today 

  10. Stock / Phil – I missed the headline…..    site was still not updated … 

  11. Good morning!  

    Trade of the Year is on hold as we wait to see how bad this new virus variant is and how badly people are going to freak out about it.  

    In Progress/Batman – I only finished it this morning, that's why.  I got busy and then had to go to dinner with the family which ran later than expected and, when I got home at night – the uncertain market made me decide it was better to go to sleep and wait for Europe to open.  Then, this morning – it's still not clear what's going to happen so picking a top stock for next year to meet an arbitrary deadline seems like a really bad idea.  

    "I'd rather get things done right than done on time." – Phil Davis

    How it will be/Stock – There is a point at which, hopefully, we develop a general herd immunity but a virus goes through one generations every 4 days while a human goes through a generation once in 20 years (7,300 days) so a virus has 1,825 chances to kill you before you can produce a more immune offspring.  That's why you can't "live" with a deadly virus which is also highly transmissable.  This is why people completely freak out when Ebola starts spreading but, fortunately, Ebola disables the host before it gets very far – Covid does not make that mistake.  

    If we ignore it and let it simmer in unvaccinated parts of our populations – it will always figure out a way to get back in.  

    Sadly, we (US, many parts of the World) do not take this thing seriously and we are doomed to suffer from it until we do.  I've been saying we need to take it more seriously all summer and how many people were sick of me saying it and wished I would move on?  I can't let it go as it's like an undervalued stock – you don't know exactly when it's going to pop but it's bound to happen some time….

    BA took a nice hit.  Getting more attractive but, as I said in Thursday's post – you never know when we'll all be clear to fly again.

  12. Phil / TZA

    Is it time to stop out of the TZA 2023 $50 calls in STP?

  13. TZA/Jij – The stop was supposed to be $5 on 1/2 and now it's a bit over so we have to weigh the risk of another terrible day vs maybe things calm down.  Since they are still very far out of the money and gained $1.23 today – I'd rather risk losing $1.23 more by waiting than simply give up based on a single-day move.  They can be rolled and TZA is at $28.50 so $21.50 before we hit $50 is 75% so a 25% drop in the Russell to get there and I'm sure we can add more longs to cover by then.

    You do tend to forget how violently these ultra-ETFs can snap back.



    A single speck of black carbon, inhaled, won’t stop the heart or poison the lungs, but over time, across populations, the effect is devastating. When we talk about death we always want to see a murderer. When there isn’t one, it’s a lot harder to call it a murder, rather than a tragedy or an act of God. (‘You see one person run over in the street and you’ll never forget it,’ an environmentalist observes in Choked: The Age of Air Pollution and the Fight for a Cleaner Future.* Thousands dying from the effects of dirty air ‘will never even faze you’.) But the central premise of any mortality model is that everyone dies: the question is when, and whether a certain behaviour or environmental factor hastened that end. And while none of these estimates is meant to suggest a single cause of mortality, such as a gunshot wound or a dose of poison in your morning tea, the calculus for air pollution is the same as for obesity or smoking: take the problem away, and the number of premature deaths will fall by many millions. According to new research, half of these deaths, concentrated in the developing world, are the result of consumption and fossil-fuel burning in the world’s richest countries.

    Ten million deaths a year is a hundred million a decade. The numbers are so large that even the superlatives of disaster fail. They’re so large that they strain credulity, perhaps partly because none of us can picture someone dying in the street from air pollution and partly because it seems pathetically old-fashioned for a doctor to advise a sojourn in healthier air. But the chances are that you can’t picture a death from obesity or cigarette smoking either, and yet you probably don’t doubt estimates of their toll on human wellbeing, or think it wrong to call Louisiana’s River Parishes ‘Cancer Alley’ – the presence of 150 petrochemical plants has made it an incontrovertibly unhealthy place to live, with some communities registering cancer rates fifty times the national average. Such areas are sometimes known as ‘sacrifice zones’.

  15. Inside the $130 Billion Second-Hand Fashion Market

  16. Maybe we are finding a bottom at the 2.5% lines (too late for RUT but 5% being tested):


    /NG still marches to the beat of it's own drummer:


    Gold and silver getting crushed despite weaker Dollar – everything is just selling off today:


    Nothing you can do on days like this but sit back and see what settles. I believe the market is closing at 1pm today – not sure about the Futures.

    Volume is high this morning – 67M on SPY so far – that's usually a full day.  Goes back to our rule that high volumes are bad for the market.

  17. I can confirm market close is scheduled for 1PM EST – in 35 Minutes. Yipee \\\

  18. Going to be hard to bounce back in that amount of time – Europe finished at lows:


  19. That was not a good close.  


    Stopping right at the 2.5% line (/ES) indicates additional drop is likely.  2,223 is the 5% line from 2,340 on /RTY and they got rejected at the weak bounce (2,246) on the 2nd attempt and strong bounce line (2,270) on the first attempt – also an indication we're going lower.  

    Even worse, the Dollar dropping 1% today masked a lot of market weakness.  

  21. Can America Afford to Take Care of Its Veterans?

  22. I hope everyone had a lovely Thanksgiving. 

    China’s property boom has spawned numerous developers that, like industry giant Evergrande, borrowed heavily to fund breakneck growth. Now they are inflicting unprecedented losses on international investors.5 min read

    Australia, Austria and the Netherlands joined the group of countries that have detected cases of the new Covid-19 variant, which is presenting policy makers with choices that are politically and socially difficult.5 min read

    The Omicron variant is leading U.S. companies in a range of industries to consider how safety measures could be reinstated, but many executives are saying they will hold off making changes to operations until more is known.6 min read

    Many economists think the latest increase might mark a peak for now, and therefore don’t expect the European Central Bank to raise its key interest rate next year.414 min read

    New virus strain seems to be a bit milder but more contagious.  

    Some eateries, struggling with labor shortages and the return of customers to on-site dining, are choosing to scale back at times on often less-profitable delivery and to-go orders.76 min read

  23. The Bug/all – So I was doing thanksgiving with family and friends down in San Diego, and didn't hear about this new variant until Saturday evening when we rolled back home on the train. Actually didn't even look into it much until this morning, Sunday. So:

    1. Interesting but not surprising that it came out of South Africa. The population there has around 20% HIV positive. Bugs spread fast and easily.

    2. Nobody really knows anything yet, and anyone who claims they do is lying.

    3. It might be we're getting toward end game with this, as viruses – diseases in general – usually evolve toward more contagious but much milder. That's why delta was an unpleasant surprise.

    4. To Stockbern's question – yup, we're giving it plenty of reservoirs to mutate, and it'll keep doing so. Fun question would be how many people who are anti-vax also do not believe in evolution.

    5. Also of concern – covid-19 can infect other animals, in fact originated in other animals. It seems to infect domestic pets, and, no surprise if you remember the MERS outbreak, infects ungulates – all those deer running around the eastern US. Not so much here in southern California – we have cougars. (no, not that kind)(well, okay, we do have that kind, but they mostly don't kill and eat deer).

    6. How do we stop it? See my outline from a few days ago, although I think I forgot to include a national phone app that tracks you and covid+ people, lets you know if you're exposed, warns you to go isolate. And everyone would have to use it – fat chance in the US.

  24. Best summary I’ve read on omni cv

    What is Omicron, where did it come from, and how dangerous is it?

    What is Omicron, where did it come from, and how dangerous is it?