After just three months, the Covid-19 pandemic that put the whole world in lockdown isn’t that newsworthy anymore.

At least to the market, that is.

This may seem strange, even flippant. After all, about 1,000 Americans still die of Covid-19 every day, and most states are still under some form of lockdown or restrictions.

And yet the markets don’t react to news about Covid-19 anymore.

For example, Texas was one of the first states to begin reopening. This past Saturday, the Lone Star State reported its highest increase in Covid-19 cases yet.

Traders shrugged it off.

North Dakota and Alabama are also seeing a rise in new cases after beginning to reopen.

These are numbers that a month ago would have sent traders into a tizzy.

Even during the coronavirus, we’re winning again… and again… and again.

But this weekend, traders ignored it.

Maybe traders have just gotten tired of hearing about the pandemic, and of being locked up at home. Maybe they think the pandemic is now “under control.”

I’m sure they and others do, to some extent.

But what’s really happening here is very different.

See, this perception that the pandemic doesn’t matter to the stock market anymore – it’s wrong – as we saw on Monday morning when the Moderna (MRNA) Phase 1 vaccine trial data helped add fuel to the fire lit underneath markets by Fed Chair Powell.

The pandemic is definitely the most important issue for the economy, the markets, and for traders…

Just not right now.

Let me show you the Reality Gap… and what’s going to be moving markets for now…

The rally we’ve seen the past few weeks sped up this morning, with the Dow up 3% at the open. The Russell 2000 index of U.S. small caps was up even more, a whopping 5%.

Even though we had two investing legends say last week that things were looking bad for both the stock market and the economy.

That’s this week’s Reality Gap. Let me explain…

Look, today’s rally was to be expected. As you saw me saying last week on Fox Business’ Varney & Co., on our own Money Morning Live livestream, and read here in Straight-Up Profits, I had a very consistent message that the Fed’s and Congress’ financial stimulus allowed traders to move markets up above the key support levels, and pushed them up big-time late on Friday.

Then Fed Chairman Powell appeared on 60 Minutes to say that he has plenty of ammunition left if more stimulus is needed, and that the economy could recover over the second half of this year. Two quotes from the Fed Chair were particularly important in driving he market’s reaction. The first was showing that the Fed is not “out of ammunition” to fight further economic downturn: “There’s really no limit to what we can do in lending programs.” The second was an intermediate-term pronouncement on economic possibilities: “Assuming there is not a second wave of the coronavirus, I think you will see the economy recover steadily through the second half of this year”.

And this morning, biotech firm Moderna Inc. (MRNA) announced positive results from its early trial of an experimental vaccine against Covid-19. This Phase 1 study looked only at safety, and there were no significant side-effects among the patients. But the fact that all the patients in the small dose vaccine subset developed antibodies the same as a recovering Covid-19 patient really stoked the stock markets. Here’s the market’s reaction to both events: