-- Is it not easy for vaccines to deal with variants? yes;
-- Will it have an impact on the economy? probably;
-- Will it have an impact on earnings? no;
-- Will it have an impact on the cost of money? For the Fed, yes;
-- What matters may be more from geopolitical variants;
We have gone through the first wave of pandemic, the second, the third, … . Given more waves coming, the economy will still be that economy and business still seeing earnings.
If there is something that the stock market should be worried about, it should not be earnings but, and it has always been, the return of money’s alternative investment to equity, something that is more directly determined by the cost of money.
According to the Fed, from “2% inflation target, full employment target, transitory inflation”, to the recent “no tapering and interest hike for however high the inflation goes”, the market has calmed down.
However, the alert is always there because the Fed may be wrong, as it is often, about where the inflation is going. Therefore, at this moment when everybody is nervous, if the necessity of cheap money is more affirmed, for example, by the new possible pandemic wave, the bond market will cheer up surely and the stock market may be more likely to pick the negative one over mixed impacts.
It is obviously not necessary, however, for the stock market to be worried about the negative impact, such as, on earnings, since we have been enjoying product/service price hikes without having to worry about interest rate hikes (https://lnkd.in/d3RpAEC), enjoying consumption and spending that government provided without having to worry about tax hikes, enjoying unprecedented liquidity and low required return rate without having to worry about collapse of state credit (https://lnkd.in/dQjmG7e)