Pfizer and BioNTech’s announcement on Monday that their Covid-19 vaccine was more than 90% effective in preventing the virus has led to big market moves so far this week. While the rally in global equities is remarkable, that isn’t what has captured my interest. It is the big selloff in FANG+ internet platform stocks and the reallocation of funds into economic sensitive sectors that has been more fascinating. The NYSE FANG+ index declined 3.2% on Monday and fell by another 2.5% on Tuesday. Meanwhile, Banks, Travel and Energy stocks have all seen double digit gains over the first two days of the week.

Long term bond yields in the US and most other developed nations have risen by more than 10 basis points, which also supports the move into cyclical stocks and the selling of industries that have benefited the most from the pandemic.

However, this trend seems to have reversed on Wednesday with Tech companies contributing the most to the 0.76% gains in the S&P 500, while Basic Materials, Energy and Financial stocks all closed in negative territory.

The vaccine-related rotation has quickly faded as investors have realised that the pandemic won’t disappear as fast as it arrived. While the vaccine remains the best news received since the virus spread, life won’t return to normal in a matter of days or weeks. It largely depends on when a widespread vaccination campaign becomes available and how fast economic activity returns to pre-pandemic levels. Lockdowns and social restrictions remain in place for many nations through the winter season, particularly in Europe, and so we will continue to rely on stay-at-home companies for some time.

If the second wave hitting Europe and third wave in the US isn’t as dangerous as the first one, we may still see adjustments in investor’s portfolios by reducing Tech exposure and tilting towards economic sensitive stocks. But this won’t be in a straight line, and won’t necessarily lead to another a more prolonged selloff in Tech. After all, Covid-19 may have already started major structural changes in the way we do business and many of those differences may prove to be permanent.

A risk that is being totally ignored at the moment is a US constitutional crisis. You only have to look at President Trump’s Twitter account to see what I mean. The lame duck President continues to reject the outcome of the election and doesn’t seem willing to concede or stand down. However, with no evidence thus far of his claim of illegitimate votes, the markets are ignoring his tweets and actions. If Trump’s legal attacks result in a delay of certifying the election results, then we may see this tail risk priced into equities and other asset classes.