Meet the 'Nu' boss, same as the old boss

and the lesson of the day

The ‘Nu’-est variant is getting hyped by the media. The market sold off and oil took a hard hit. Many are worried that this ‘Nu’ variant could lead to more heavy-handed government overreactions such as a fresh set of lock-downs. The lock-downs worked so well last time that the government would be apt to try them again in the hopes that they could work better.

The problem for the government is two-fold. First, the lock-downs have been tied to inflation. We can thank Jay Powell for that. In the Fed’s attempt to deflect responsibility, they began to talk up the idea that the lock-downs were responsible for the inflation. It was pent-up demand, they said, that has now been unleashed that is leading to shortages, back-orders, and long lead-times. This was reiterated by the administration to also deflect responsibility. Now if they were to talk about new lock-downs, the rebuttal will be, but this will lead to more inflation. They’ll have to talk down that argument while talking up the idea of new lock-downs. This will be a very difficult task for an administration that is looking more and more disconnected with reality while being helmed by a president who sometimes forgets he is president.

The second problem for the government, concerning lock-downs, is that it will be quickly realized that this ‘Nu’ variant is nothing to worry about. Variants are a natural progression of a virus. All viruses want to live forever. They want to replicate and continue to spread. This leads to two conclusions, one bad and one good. First the bad, viruses will always mutate to become more contagious. That is what makes graphs like this look so scary.

Second, viruses will always mutate to become less deadly. In fact, it has already been suggested that 2/3rds of “cases” could be asymptomatic.

I would be remiss if I didn’t elaborate on a certain factor that could change how lethal the viruses are. That factor is leaky vaccines. A curious cat has been on the case for a while now. It is possible that these vaccines could be selecting for deadlier strains, however, the jury is still out. Data is difficult to sift through because the goalposts on who is vaccinated and who is not are a constantly moving target. Something to keep in mind, if this virus is mutating to evade the vaccine, it’ll continue on its merry path towards less deadly.

I believe that the legacy media will work overtime to whip the public into a panic. It is best to take things slow and accumulate as Mr Market has given us a golden opportunity. None of the fundamentals have changed. Oil is still going to be heavily constrained due to lack of new well development. Also, OPEC will be much more likely to agree to a production freeze now that the oil market has taken a tumble. In addition, uranium is still looking like one of the most asymmetrical trades of all time. Current production barely meets demand and the Sprott Uranium trust is swallowing up available supply. I’ll have a full write-up next week about the newest developments. The biggest lesson from today is, always have cash available to put to work in the market when everyone’s brain takes a day off.