The Market is Desperate for A Vaccine

Dear Reader,

US markets rallied again overnight as investors continue to naively think that everything will go back to normal in a few months. As in normal, plus central bank and government support…

Meanwhile, in the real world, significant risk remains.

Hong Kong is the elephant in the room that everyone is ignoring. To pay attention would shatter the bullish narrative. The Financial Review reports:

The powerful global market rally on hopes for a V-shaped recovery will be put to the test as geopolitical tensions mount between the US and China, with Hong Kong emerging as the new flashpoint in the increasingly fraught relationship between the world’s two biggest economies.

Another day of street protests in the central business district of the Asian financial hub came as US President Donald Trump warned of acting “very powerfully” in response to Beijing’s plans to enact new security legislation that would allow it to take a harder line on democracy activists.’

I just published an in-depth report on China for subscribers of my newsletter, Crisis & Opportunity. The issue is a much deeper one than human rights. The rights of the citizens of Hong Kong are just a casualty of an economic war that has been raging for years now.

I won’t go into the detail of it here. But it’s about to flare up again.

Investors in Hong Kong know it. Take a look at the recent performance of the Hang Seng Index:

The Rum Rebellion

Source: Optuma

[Click to open in a new window]

It had a decent bounce from the March lows, but it has since turned down as capital seeks an exit from the communists.

So enjoy the liquidity-fuelled rally, but keep an eye on Honkers…

I say a ‘liquidity-fuelled rally’, but in truth there are some genuine reasons for it.

One is that stocks were pricing in a six-month lockdown back in March. Instead it’s been closer to two months. Still, things are a long way from getting back to normal.

Vaccines are all the rage right now

We’re too dumb to make our own decisions and take responsibility for our actions, so strict social distancing regulations will remain in place for some time. If you’re in the café or restaurant industry, yes you can open (just not yet in Victoria) but you can’t have too many people, so don’t expect to turn a profit.

Which is why the market is so desperate for news on a vaccine. Not that I would take it, but I would imagine that a vaccine stamp in your passport would be necessary for international travel in the future. Something sensible like temperature monitoring wouldn’t be enough.

Anyway, vaccines are all the rage right now. You might remember a few weeks ago, the Dow Jones Index soared 900 points on news that US company Moderna had good results from phase one trials.

Then, earlier this week, news that another US company, Novavax, was starting human trials for a vaccine in Australia saw our market get a strong boost.

My initial reaction to these reports was pfft…

I’ve followed biotechs on and off for ages. Medicines and vaccines take years to develop. Why is the market buying airlines and cruise liners? A vaccine won’t be ready for a long time, if ever.

But my mate Ryan Dinse, who writes the excellent Exponential Stock Investor, has been talking about this space for a while now. We have regular meetings where the various editors chew the fat about what’s happening in the market.

Ryan kept bringing up this thing called ‘synbio’.

I am a simple man. Tech has never been my forte. I’ve watched the NASDAQ rise for 10 years in the biggest bull market in history with a certain amount of confusion and awe.

So, to tell you the truth, I rolled my eyes when I heard Ryan talking about synbio.

‘Sounds like another tech fad/gimmick’, I thought.

I might be simple, but I’m not entirely stupid. Even I can see that success on the vaccine front would do wonders for society and the global economy.

So I got talking to Ryan about this synbio stuff. As it turns out, this world of ‘synthetic biology’ is pretty interesting. Even I got excited about it.

I figured you might be just like me when it comes to this stuff. That is, tech terms tend to put you to sleep. So I suggested to Ryan that we record a series of short clips explaining what it’s all about.

Ryan does a great job in explaining complex concepts in a simple way. His job is to look for industries on the cusp of explosive growth. I think he’s found one here…

The first video is below. I hope you get as much out of it as I did. Then, be sure to click here to read Ryan’s essay on how synbio will be to the 2020s what the internet was to investors this past decade.


Greg Canavan,
Editor, The Rum Rebellion

Greg Canavan approaches the investment world with an ‘ignorance is bliss’ philosophy. In a world where all the information is just a click away at all times, Greg believes we ingest too much of it. As a result, we forget how to think for ourselves, and let other people’s thoughts cloud our own.

Or worse, we only seek out the voices who are confirming our biases and narrowminded views of the truth. Either situation is not ideal. With regards to investing, this makes us follow the masses rather than our own gut instincts.

At The Rum Rebellion, fake news and unethical political persuasion are not in the least bit tolerated. It denounces the heavy amount of government influence which the public accommodates.

Greg will help The Rum Rebellion readers block out all the nonsense and encourage personal responsibility…both in the financial and political world.

Learn more about Greg Canavan's Investment Advisory Service.

The Rum Rebellion