The market’s multi-month rally has been relentless, supported by a trio of powerful bullish pillars, asserts Mike Larson, editor of Safe Money Report.
- Enormous amounts of cheap, easy money from the Federal Reserve.
- Wave after trillion-dollar wave of stimulus from Washington.
- The accelerating COVID-19 vaccination effort—and expectations the economy would soon return to “normal” as a result.
But on Tuesday, that third pillar shook...and the markets wobbled. The pressing question for investors and traders is whether something worse could follow. I’ll give you my best answers this week.
Let’s start with the news first. Federal health officials halted shots of Johnson & Johnson’s (JNJ) one-dose vaccine after a handful of recipients developed an extremely rare blood clotting disorder. The Food and Drug Administration and Centers for Disease Control said six women developed clots, and that experts would immediately convene to figure out why and what to do next.
That number “6” is important. It’s extremely small relative to the almost seven MILLION US residents who have already received the J&J shot.
At this time, we also don’t know whether the adverse events are related to the vaccine. Plus, even if that proves to be the case, regulators my decide the very small negative risk of complications is outweighed by the large positive benefit of beating back COVID-19.
That’s what British and European regulators concluded about an AstraZeneca (AZN) vaccine in use over there. It, too, may be linked to an extremely low number of adverse reactions. But they weighed the costs and benefits associated with pulling the vaccine and decided against doing so.
A few other important things to keep in mind: The other two vaccines in widespread use here rely on a different technology. So, this order does NOT impact the Moderna (MRNA) and Pfizer (PFE)/BioNTech (BNTX) shots.
Those other two vaccines are also MUCH more widespread. Almost 98 million Pfizer shots have been administered, while 85 million Moderna ones have gone into arms. That means the loss of J&J supply is more of a modest speed bump than a brick wall for the vaccination drive.
What about the other two pillars underpinning the markets? Well, this news certainly won’t prompt the Fed to hike interest rates or dial back QE any sooner. And it won’t push the Biden Administration to backpedal on infrastructure or other spending. If anything, it could have the opposite effect.
Bottom line? The news is disappointing from a public health standpoint...but it’s not a crushing deal breaker for markets or the economy. So, my advice remains the same:
Stick with reliable, higher-yielding, higher-rated stocks. Make sure you retain a reserve of cash and short-term Treasuries for safety.
Continue to invest to gold, silver, mining shares, and cryptocurrencies, all of which help you protect your wealth and profit from rampant money printing, borrowing, and spending. If you do, I strongly believe you’ll come out of this just fine. Not to mention potentially much wealthier.
Safe Money Report focuses on these kinds of stocks, which include names in the consumer staples, food and beverage, retail, and healthcare sectors. Visit Safe Money Report here.
