More Positive Vaccine News and Second-Order Effects on the Market

In today’s Money Morning…value shift gaining momentum…an even better vaccine?…synthetic biology is just getting started…and more…

As the ASX rushes to get its exchange up and running today, there was more positive vaccine news overnight in the US.

In case you’ve been living under a rock, the ASX bungled the rollout of a new system, just like their new website.

It’s starting to look like a pattern of ineptitude — I find their new website just as lacking as their old one.

Perhaps most frustrating for investors is the fact that they may have to wait to place more bullish bets.

This at a time where market jubilance is getting close to peak levels.

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Value shift gaining momentum

The Dow Jones Industrial Average [DJI] tacked on 1.36%, while the NASDAQ 100 [NDX] posted a more muted .39% increase.

Given the NASDAQ accumulated much of the gains so far in this run up, the shift to value on the US market at least, may be starting to gain momentum.

If the shift is well and truly on, I expect equal weight ETFs like Invesco S&P 500® Equal Weight ETF [RSP] to garner more interest.

These are ETFs that are not weighted to market cap — instead they invest equally in all the companies on an index.

For so long, these ETFs failed to capture the concentrated gains at the top end of the market, due to sluggish macroeconomic sentiment.

But this could all be changing quickly if a vaccine rollout happens sooner rather than later.

Cue the flurry of bull activity.

An even better vaccine?

The trigger for US indices today was news that (via Reuters):

Moderna Inc’s experimental vaccine is 94.5% effective in preventing COVID-19 based on interim data from a late-stage trial, the company said on Monday, becoming the second U.S. drugmaker to report results that far exceed expectations.

Moderna Inc [NASDAQ:MRNA] certainly has the right ticker symbol.

Like the Pfizer/BioNTech vaccine, it uses mRNA technology to trick the body into an immune response:

Importantly though:

Unlike Pfizer’s vaccine, Moderna’s shot can be stored at normal fridge temperatures, which should make it easier to distribute, a critical factor as COVID-19 cases are soaring, hitting new records in the United States and pushing some European countries back into lockdowns.

“We are going to have a vaccine that can stop COVID-19,” Moderna President Stephen Hoge said in a telephone interview.

Previously, concerns about how to store the Pfizer/BioNTech vaccine at the required temperature had triggered a mad rush for special fridges and dry ice solutions.

But there’s a bigger story here.

A story that goes beyond a single disease and the related vaccines, one that could make the pandemic look like a tiny blip in the grand scheme of history.

Consequences of consequences, synthetic biology just getting started

In this case, I’m talking about the second-order effects of this pandemic.

Second-order effects are defined as:

Every action has a consequence, and those consequences have consequences, which are called Second-Order Effects. Think of a line of dominoes—a single push causes a chain of events to occur. Once the chain starts, it’s difficult (if not impossible) to stop or reverse the cascade of cause-and-effect.

What started in Wuhan, lead to the advent of lockdowns, masks, and a mad rush to create a vaccine.

The next domino in the causal chain?

A large amount of money pouring into companies like Moderna Inc and BioNTech SE [NASDAQ:BNTX].

Famously, Moderna was a company without a product.

However, the money flowing towards these companies could be the launching pad for an entirely new field of science called synthetic biology.

It’s a major theme in our Exponential Stock Investor service.

In short, Ryan Dinse and I think the next few decades will be shaped by this ‘synbio’ explosion.

And for the savvy investor, this means a wealth of opportunities.

Vaccine is a smokescreen for the real opportunity

You see, BioNTech and Moderna are not just vaccine companies — if anything this is a smokescreen for what they actually do.

No, before this pandemic they were very much focused on cancer immunotherapy.

Using the body’s immune system against one of the most prevalent diseases out there.

How much is this worth?

Well, it’s a harsh reality, but the virus is not where the money is.

The cancer therapy market is projected to hit US$182.0 billion by 2023.

Now if that’s not an investment opportunity, I don’t know what is.

Renewable energy is much the same too.

While everyone is piling into solar and wind companies — the second-order effects of the green energy push may be where the most lucrative opportunities lie.

Keep your eyes peeled for more on this in the coming weeks.


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Lachlann Tierney,
For Money Morning

PS: How to Find Promising Energy Stocks — Discover why the energy market is ripe for massive disruption and how to identify innovative energy stocks. Click here to learn more.

Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:

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