More transmissible, who cares?


I spent most of today doing a deep dive into the new strain of covid called B.1.1.7 or VUI 202012/01.

It's scary. There is a strong consensus that it transmits more easily and we're way beyond the point of stopping it. That means that more people are going to get sick and die and that restrictions might be tighter everywhere.

It's also clear that at this point the market doesn't care.

Maybe that changes if UK cases continue to spike but for now the vaccine is all that matters. Today is the first day of winter and thee market already knows that this winter is going to be brutal. The market is looking to mid-2021 and beyond.

So long as the vaccine works -- and there is little doubt that the vaccine will work on this variant -- then nothing really changes. Sure, it could make the covid-GDP hole a bit deeper to climb out of but that just means more government money and lower rates. Besides, it's not Wal-Marts that are being closed, it's their mom-and-pop competitors. You could argue that a lockdown is good for mega retail corps on competitive dominance.

In any case, the reaction function to virus news at this point is simple. If it's not a shift on the vaccine timeline, it doesn't matter.

Lately, all the vaccine timeline shifts have been positive. News today that 50m Americans could receive the first dose of the Pfizer vaccine by the end of January is undoubtedly positive and around the world, we're seeing a faster rollout than anticpated.

The big intraday turnarounds in charts like AUD/USD say it all: