This has been a week to again try to play doctor in assessing our oil investments – and I hate this game.
It’s not only that I’m not a doctor and have no perspective on the latest Covid-19 variant that grips the equity and oil markets at the moment.
It’s also that the REAL doctors out there are being very careful about drawing any conclusions about the trajectory of this latest variant as well. And without their insight, it’s kind of forcing ALL of us to play a bit of doctor.
I’d love to get a competent virologist to give me their educated guess about Omicron, but I certainly understand their reticence to do so. What if their premature announcements turn out to be wrong? So, in it’s place, I am forced to look at the varying data and preliminary thoughts about that data and try to make a judgment myself. And in the end, you’ll have to do this as well.
This is the link to the latest on Omicron from my friend Noah Smith, who collates all of this good stuff for dopes like me. READ IT HERE.
Here are the (perhaps premature) takeaways I see from all this:
Omicron is more transmissible, but less deadly. It has a better ability to sidestep current vaccines, so even those who are triply vaccinated (2+booster) have a higher likelihood of being infected compared to previous variants – but like with other variants, vaccinated people are still far less likely to be infected and their outcomes far less severe than those who are not.
Here’s my added dumbo bonus thought: It seems that these viruses all seem to mutate towards more transmissible but less deadly strains – even today’s common cold, the way I understand it, is likely one of several long-mutating viruses that never fully disappeared, but become nothing more nasty than, well, a common cold. I’m not saying Omicron is like a cold – far from it – but it seems that the nature of this variant is on that road towards becoming less dangerous, if more, well, COMMON.
From a numbers point of view, even if all this is true (and it doesn’t have to be), it doesn’t tell us much as energy investors. Here’s why:
Infection numbers here in the US and worldwide are about to spike from Omicron – big time. But it doesn’t seem like the numbers of deaths from it are about to equally spike.
But does this matter? To humanity, of course it does. But to the markets, maybe not. Governments are going to overreact at this point to any large spiking of confirmed cases, no matter how the outcomes to those cases turn out, and their ability to slow growth and the global economy from those reactions has been well proven in the last two years. I wouldn’t be surprised to see some limited lock-downs from Omicron in the near future.
For now, I’m not talking about what’s right or wrong – or cautiously smart or otherwise reckless. I’m talking about what I think is likely to happen.
Today, I’m watching the markets and it’s rallying fantastically on the latest word of Omicron’s reduced virulence.
Will that continue when the confirmed case numbers here in the US rocket higher? Because they’re going to.
Bottom line is, I’m not buying ANYTHING on the days when the market is rallying. I’m happy to look at some very well-played paper winners we’ve collected on days when the markets were tanking, and wait again for another of those grey-skies day to buy. Because I’m pretty sure we’re not over the gloom from Omicron and those days will certainly come again.
