No new normal? Jefferies’ Chris Wood is suggesting this trade amid positive vaccine news

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Updated: Nov 16, 2020 10:58 AM

Chris Wood said that he is going to institute a “no new normal” trade this week to monitor the relevant market action.

Going ahead on the vaccine front, Chris Wood says that conversations with biotech experts have led the firm to believe that there is little doubt that there will be more than one vaccine readily available by the middle of next year.

Pfizer and BioNtech’s covid-19 vaccine trial results helped global equity markets surge in the previous week. This sharp upward movement came with a price for investors to pay — the stay-at-home stocks. Shares of companies like Zoom, Netflix, Google, and Amazon all were seen tumbling down as investors saw hope and said no to the ‘new normal’ of staying at home. Global market strategist Chris Wood in his weekly newsletter Greed & Fear talks about a ‘no new normal’ trade that he is about to institute to ride on the positive news flow around a coronavirus vaccine.

The “no new normal trade”

Chris Wood said that he is going to institute a “no new normal” trade this week to monitor the relevant market action. It’s a trade GREED & fear recommends investors to put on any short term pull back. “That is to go long Ryanair, whose CEO Michael O’Leary called commendably this week for no government bailouts of British airlines, and short Zoom,” said the global head (equity strategy), Jefferies. He adds that Zoom Video is a reliable medium when it comes to virtual set up, but says that Zoom as a stock has been the ultimate beneficiary of the pandemic and the related postulated “new normal”.

More than one vaccine

Going ahead on the vaccine front, Chris Wood says that conversations with biotech experts have led the firm to believe that there is little doubt that there will be more than one vaccine readily available by the middle of next year. “It is also the case that there is likely to be positive news on the Moderna vaccine sooner or later. The bottleneck is rather producing the vaccine on a mass scale,” he adds.

Gold may continue to shine

The yellow metal too is favoured by the market veteran along with Bitcoin. Chris Wood remains a believer in Gold despite the fact that the commodity fell $100 intraday last week when the Pfizer, BioNtech Coronavirus vaccine news broke and even after the “most bullish electoral outcome for gold” the Blue Wave did not happen. Gold stocks are also on Wood’s radar. “The NYSE Arca Gold BUGS index declined by 6.8% on Monday, compared with a 4.5% decline in gold bullion. But GREED & fear still likes them,” he noted. Gold stocks, in his view, are discounting a gold price of only around US$1500 while the latest results from the gold miners continue to show rising cash generation and rising dividend payouts.

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