A Terrified Wall Street Reacts To The Nu Variant

Tyler Durden's Photo
by Tyler Durden
Friday, Nov 26, 2021 - 03:40 PM

"Black Friday" has quickly mutated into red Friday for markets, where panicking traders sell first and only ask questions later if at all. So for those who are too pressed for time to read out primer on the "Scared Nu World", but want to catch up to speed on consensus, here is a snapshot of analyst kneejrek reactions to the market's latest obsession.

Citi - Andrew Baum

  • Pfizer can make a new variant-specific jab within 100 days if we all still care about "Nu" three months from now.

  • "In the event that vaccine-escape variant emerges, Pfizer and BioNTech expect to be able to develop and produce a tailor- made vaccine against that variant in approximately 100 days, subject to regulatory approval," Pfizer spokeswoman confirmed in an emailed statement to Bloomberg.

  • As for Baum, he published a note to clients that by now has been seen across Wall Street and the corporate world: "Novel oral anti-virals should retain activity against Nu but resistance may emerge with time," Baum said.

  • "The next two weeks with be critical to determine whether Nu will displace delta in countries with high background rates such as U.K. and Germany," writes Baum.

Barclays - Emmanuel Cau

  • “With many equity markets at an all-time high, thin year-end liquidity and Covid cases up again, a pull-back seems logical,” says strategist Emmanuel Cau

  • “We have advised a more barbell sector allocation and downside hedges at these levels, but we believe resilient growth and patient central banks should continue to provide cushion on a medium-term horizon, while investors have dry powder to buy dips”

  • “What is key is to find out whether current vaccines remain effective against the variants, or not. Covid uncertainty might force central banks to err on the side of caution.”

Berenberg - Holger Schmieding

  • “At this stage, it is too early to assess the potential economic consequences,” says chief economist Holger Schmieding

  • “Any new wave could cause serious economic damage. As one potentially mitigating factor, the world is now on high alert and has ramped up its capacity to develop, adjust and produce vaccines”

Comdirect Bank - Andreas Lipkow

  • “European stock markets are literally put to the ultimate test today,” says strategist Andreas Lipkow

  • “The timing for this price move is extremely inopportune. On the one hand shortly before the weekend and on the other hand on a shortened U.S. trading day”

  • “The DAX continues to lose momentum as market participants in Europe, and especially in Germany, are unable to find any isolated arguments to buy the dip amid the current explosive situation”

Donner & Reuschel - Martin Utschneider

  • “The short-term indications have literally changed overnight,” says head of technical analysis Martin Utschneider.

Sumitomo Mitsui DS Asset Management

  • “Even before this news, virus cases were back on the rise in the U.S. and Europe, so investors are now wary of the possibility that with a new variant, infections could spread all at once,” says chief market strategist Masahiro Ichikawa

  • There’s a risk the Nikkei 225 will break below the 29,000 mark; if it breaches that level, there’s a possibility the measure will finish the day in the 28,000-yen-range

  • “Today would have been a quiet day if not for the news of the variant”

BlackRock International - Wei Li

  • The root of debate is if the new variant represents a bigger challenge to vaccine efficacy, Wei Li, global chief investment strategist, said on Bloomberg TV

  • “That would be determining our take on what’s happening right now: if what we see represents a delay to the restart story that we’ve seen back and forth, rather than a fundamental derailment”

IG Markets - Kyle Rodda

  • “The fact we have North America off the desks means there’s a wall of buyers missing” at a time when there are ‘scary’ headlines about the new Covid-19 variant, says analyst Kyle Rodda

  • Virus-related headlines “may have caused a knee jerk reaction,” and “thinner markets make for more pronounced moves”

  • Some weakness through cyclicals, implying markets are also concerned about growth and an aggressive Fed that may slow the global economy

Lombard Odier Investment Managers - Nivedita Sunil

  • While a more pronounced global risk-off move would impact Asian credit markets in tandem with global markets, the direct impact may be more limited and manageable, according to Nivedita Sunil, portfolio manager for Asia and emerging-market debt

  • This is because mobility restrictions in Asia are already among the most stringent due to zero-Covid strategies until recently

Daiwa Capital Markets - Bernard Shaw

  • In a scenario where the new variant becomes a bigger issue, markets may see less rate hikes and a slower pace of tapering in the U.S., according to Bernard Shaw, Asia bond syndicate banker

  • Policy rates in Asia Pacific are still low and provide a cushion for corporate credits during sell-offs

United First Partners - Justin Tang

  • Good thing is countries such as U.K. are acting fast to curtail the spread of any new variant, says Justin Tang, head of Asian research

  • “Given that the world has gone through this before with delta, there is already a playbook for such situations -- even if the new variant overstays. New mutations are expected and not something unknown”

Pictet Wealth Management - CIO Cesar Perez Ruiz:

  • “We need to be careful as we do not have enough data yet, but if it is immune to vaccines, it will for sure impact growth significantly.”
  • “The problem is that the market has gone up a lot this year, valuations are high and given the uncertainties the market sells first and asks questions later.”
  • “We are better prepared to fight against it -- also new vaccines could be produced rapidly -- and we know the reaction function of Central Banks and policy makers will mitigate the impact.”

Cowen - head of EMEA trading Carl Dooley:

  • “This is a big shock for people waking up seeing the news and levels.”
  • “Uncertainty and fear will remain high and maybe we aren’t going back to new highs straight away. But buying panic has been a good strategy, and based on today’s moves this is the biggest panic session of the year.”

Abrdn - head of European equities Ben Ritchie:

  • “The equity market has been able to look through a series of new virus strains over the last 18 months. Ultimately, it hasn’t as yet proven a major brake on economic growth, and hasn’t really derailed the recovery,”
  • “If it turns out that this can make the vaccine significantly less effective then that’s going to be a significant shift. But even if that turns out to be the case, I suspect its impact would not be as negative as the original virus because we know so much more about it.”

Swedbank - Head of Strategy and Allocation Mattias Isakson:

  • “Its far too early to revise any 2022 outlook, but it’s clear that short-term risks increase on the news. We will hold back for now -- what the WHO says about this variant maybe significant.”

Salm-Salm & Partner - Frederik Hildner:

  • “Every trader in New York will be rushing to the office now,” and news of the new variant could mean the end of the inflation and tapering debate.

Reyl & Cie. - CIO Cedric Ozazman:

  • “Markets were approaching overbought condition, meaning they need a pretext to slump. I am not sure it will last too long,”
  • “It is a healthy consolidation so it’s still possible to get some downside exaggeration but this would represent opportunities to buy the dip.”

Swissquote - Ipek Ozkardeskaya:

  • The new variant “could hit the economic recovery, but this time the central banks won’t have enough margin to act to counter another economic downturn. They can’t fight inflation and boost growth at the same time. They have to chose,”
  • “There is one hope though: if the new variant hits the energy demand, then we could see easing in energy prices which could tame the inflation pressures and help central banks keeping a more-dovish-than otherwise line next year.”

Source: Bloomberg