Don’t worry about the rabbit in your hat, just put on a new one


Market Update: 17 April 2020

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There’s some good news out… or at least it sounds good. It’s enough to see stocks move higher and get risk up as well. It’s a vaccine, but there’s many talked about before – so what makes this different? It’s in Phase 3 of testing. OK.. what’s Phase 3?

This is where being in the market and not having a Vaccine expert sitting nearby means like sub-prime, like tsunamis, like hurricanes and like pandemics, you need to put on a new hat pretty fast to understand the ramifications. In other words, should I jump on the bandwagon and celebrate by buying AUDJPY with my ears pinned back or shall I figure out what happens at Phase 4 and just let the markets figure themselves out until I’m satisfied.

A company named Gilead (GILD) in the US have conducted trials in Chicago with 125  patients and are getting quite positive results with their drug Remdesivir. It’s reported they’ve been able to discharge patients early. Gilead themselves came out later to tell us results won’t be released for severe patients until the end of April and then moderate patients in May. As below, anecdotes don’t satisfy scientists.

[RTRS] (GILD.O) – GILEAD – ANECDOTAL REPORTS DO NOT PROVIDE STATISTICAL POWER NECESSARY TO DETERMINE SAFETY, EFFICACY PROFILE OF REMDESIVIR AS TREATMENT FOR COVID-19

[RTRS] (GILD.O) – GILEAD – EXPECT DATA FROM PHASE 3 STUDY IN PATIENTS WITH SEVERE COV

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OK so do we sell the story? Well no, not exactly. It’s a compelling enough test so far.. it’s plausible this can go well – rather put a probability on it. But don’t forget Trump. What did he say? He’s talking about reopening 21 states soon. Really? OK when? Is there a precondition? No idea… it’s up to each state.

Again hope prevails as despite China GDP falling 6.8% YoY (a bit worse than expected), IP better at -1.1% but Retail Sales way worse -15.8% ….and by the way an additional 1,290 deaths from Wuhan was snuck in after that… markets have overlooked, deferring to the positive. Are they right? Perhaps yes to a degree. I would anticipate a vaccine cure for the world is a 10% rally – why not more? Because we’re only 15% from the highs in February and we still have some bills to pay.

Vaccines that are currently being tested or have failed.. note some failed at Phase 3.

Source: Goldman Sachs

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