Those who write about such things have attributed virtually every stock-market rally since March 23 to ‘vaccine hopes’.  They have overworked and over-hyped this phrase with no sense of irony or awareness; for it is not so much ‘hope’ that has powered stocks to insane levels, but monetary stimulus pumped liked steroids into a beast that was rabid to begin with.  This is the kind of ‘hope’ that T-Rex must have felt when it cornered a chubby dinosaur half its size, or that a drug addict might feel after springing the lock on a cartel storage locker filled with white powder.  ‘Hopeful’ is far too modest and gentle an adjective to explain the mass psychosis that has gripped Wall Street over the last ten months.

When Bad News Is Bad News

Now that a vaccine has finally arrived, however, it is fair to ask what will keep speculators’ hopes inflated to infinity.  Under the best imaginable circumstances, it will probably be at least two years before we can look back on the pandemic and marvel at how we finally beat it.  We’ll know this has happened when salad bars re-open, subway cars are packed with commuters, and nursing homes welcome visitors with open arms. Does anyone on Wall Street actually believe this is how things are about to play out? More realistically, the stories we will be hearing — about vaccines that have never been tested on animals or even on significant numbers of humans — will be scary ones: injection-related deaths, bizarre symptoms, transmission of Covid by the inoculated and the asymptomatic, sterility, vaccine-resistant mutations, inscrutable infection spikes in places locked down like fortresses.  At that point, such hopes as remain will be vested in the central bank and its perceived willingness to step up interventions on bad news. If investors are counting on the bad-news-is-good-news delusion to persist in 2021, however, they are in for a rude awakening. They have bought the rumor for nearly a year; now it is time to sell the news before it becomes gravely worse.