One day after a historic resurgence in value/growth/reflation stocks on the back of optimism the Pfizer vaccine could lead to a quick end to the covid pandemic, the reflation rotation appears to be rolling over with the Nasdaq surging even as the Dow and small caps are again rolling over.
While there has not been any one clear catalyst for the fizzle of the value rally, some have cited the realization that a Pfizer vaccine would take a long time to be disseminated and taken by a majority of the population. Another, more likely reason, is the concurrent realization that before we get to the hopeful 2021 we still have to get through the dismal winter and spring quarters. As a reminder, just yesterday Dallas Fed president Robert Kaplan said that while the U.S. economy is likely to have a strong recovery from the pandemic-induced slump in the second half of the 2021 though the resurgence of Covid-19 jeopardizes the next two quarters.
“We have a couple of very difficult quarters in front of us,” Kaplan said Tuesday in a virtual interview at Bloomberg’s Future of Finance 2020 event. Citing business contacts, Kaplan said, “Over the horizon, the future looks bright and we’ll have a strong year next year but we have got to get through the next couple of quarters.”