The Predictable Omicron Equities Playbook

Here we go again.

This time, the new Covid-19 variant that has markets spooked is named "Omicron," which sounds like an evil machine the Transformers must rally to vanquish. Just how ominous the Omicron variant will be remains to be seen. Like clockwork, however, the overall market dipped and wavered as word of a new Covid-19 strain—predictable as this was—went viral.

Now, we should always treat the appearance of a new strain—or worse, a new novel disease altogether—with a modicum of caution. Biden and team were right to shut down flights to and from South Africa and other Southern African nations believed to be the original source of the new variant. Chances are, however, it's already here and there is little we can do.¡  

Equally predictable as a new variant is the market's reaction. Oil and blue chips went down, while (some) Covid-19-fighting stocks went up.

Longer-term, if this variant spreads as ubiquitously as the variants before it, Amazon AMZN will be a clear winner. The stock is up over 6% in a month hitting the high of $3,696 per share last week.  AMZN has fallen since and is down since rebounding on Cyber Monday. At around $3,522.61 per share as of midday Tuesday, AMZN is a buy. While news of Omicron hasn't helped it move upwards, more bad Omicron-related news (within reason), will likely bode well for the e-commerce giant.

Covid-19 Is Far From Over; So Are 2020-Style Lockdowns

I do not expect another real lockdown so any idea that investors should return to the "good" ole days of March 2020 is misguided. Investors should not start gobbling up shares of stay-at-home stocks across the board. We are not going back to a place where we just play video games and eat soup and ride the exercise bike and drink ourselves into a state of relative calm. Peloton PTON is not going to ride some crazy Omicron wave, in my view. And Campbell Soup CPB should not be the stock—or the dinner—of choice. While the era of Covid-19 is far from over, the Covid-19 era of uber lockdowns and nostalgia for old American staples is.

The vaccine group of stocks: Pfizer PFE, Moderna MRNA, BioNTech BNTX are bound for a bounce if Omicron turns out to be a game-changer in the worst of ways. However, the reason that Pfizer is up while the others are not, is because Pfizer doesn't just have the vaccine when it comes to Covid—they have that pill as well. 

Management says it thinks the pill will work to prevent the worst-case scenario for patients stricken with Omicron. As for Moderna and BioNTech (the latter of which teamed up with Pfizer for the Covid-19 vaccine), time will tell if promises of an Omicron-specific vaccine—currently in the works—does the job. If so, the stocks rise. If not (and if the current vaccines offer little to no protection against Omicron) then Pfizer will be the clear—if not the only—vaccine stock winner in the epic battle against The Omicron.