Weekly Market Update: Biden Lands on Powell but Pandemic Fears Resurface from South Africa's Omicron Variant
2021-11-26T13:14:45.907
US stocks opened the week with a bit of a relief rally after it was confirmed President Biden was nominating Federal Reserve Chairman Jerome Powell for a second term. US Treasury yields extended higher, particularly at the short end of the curve and futures markets saw projections for multiple Fed rate hikes next year solidify. Heading towards the Thanksgiving break indices traded mixed with lingering relative weakness seen in the NASDAQ amid rising rates. US and EU manufacturing data largely remained solid while weekly initial jobless claims fell below 200K for the first time since 1969. US retailer earnings largely met or bested expectations, albeit amid ongoing gross margin headwinds which caused consternation among some investors. As expected, the US led a cadre of countries in formally announcing plans to tap strategic petroleum reserves into the end of the year in an attempt to alleviate upward pressure on oil prices.
By Friday though, when US markets resumed trading investor sentiment plunged. Global risk off trade momentum exploded after dozens of countries restricted travel to and from South Africa and neighboring nations, in an attempt to contain a fast-spreading new COVID variant that may be more contagious and potentially evade current MRNA vaccines. The World Health Organization convened an emergency meeting where they named this new South African variant (Omicron) and labeled it a “variant of concern”. MRNA vaccine makers were quick to remind everyone they could easily pivot production by manufacturing a tailor made vaccine against the variant within fairly short order, but they would need a couple weeks of data before determining what path will be necessary. Oil prices plunged more than 12%, further calling into question whether OPEC+ producers will continue to bring on additional barrels when they meet early next month. The VIX surged more than 50% on Black Friday. The US 10-year yield fell right back to 1.5% and traders pared bets for the 2nd and 3rd Fed rate hikes in 2022. The Greenback moved away from recent 16-month highs on Friday while Bitcoin and cryptos came under pressure too. For the week the S&P fell 2.2%, the Dow lost 2% and the NASDAQ gave back 3.5%.
SUN 11/21
(RU) Ukraine Defense Intelligence Agency chief Budanov: Russian troops prepare to attack Ukraine by end-Jan 2022 or early Feb 2022
TIT.IT Reportedly KKR expected to make a €0.505/shr cash offer for Telecom Italia in €10.8B deal - press
MON 11/22
VG To be acquired by Ericsson for $21.00/shr in ~$6.2B all-cash deal; Transaction expected to be accretive to Ericsson’s EPS from 2024
(EU) EU commission said to issue a set of new recommendations on non-essential travel in the region on Wednesday, Nov 24th - press
(DE) German Chancellor Merkel: Tighter curbs are needed as the pandemic situation remain dramatic and worse than anything seen so far
AVYA Reports Q4 $0.77 v $0.72e, Rev $760M v $744Me
*(US) PRESIDENT BIDEN NOMINATES FED CHAIR POWELL FOR SECOND TERM; BRAINARD AS VICE-CHAIR - WHITE HOUSE
(TR) Turkey President Erodogan: Will punish those who raise prices unjustly; Happy to see that CBRT kept rate low; Inflation will not come down with tightening
*(US) TREASURY SELLS $58B IN 2-YEAR NOTE AUCTION; DRAWS 0.623%; BID-TO-COVER RATIO: 2.36 V 2.69 PRIOR AND 2.54 OVER THE LAST 12
(US) Treasury Sec Yellen: We do have to be concerned about inflation
KEYS Reports Q4 $1.82 v $1.65e, Rev $1.29B v $1.28Be; Authorizes new $1.2B share buyback (3% of market cap)
(RU) US is reportedly considering sending extra weaponry and military advisers to Ukraine amid growing fears of Russian invasion - CNN
(US) Treasury Sec Yellen: Expect monthly CPI 0.2-0.3% in H2 2022, price pressures to subside as life normalizes in 2022
005935.KR Expected to build $17B US Chip factory in Taylor, Texas [in line], to begin production by end of 2024 - press
TUES 11/23
BINANCE.IPO Said to be in talks with sovereign wealth funds on investments into Crypto [the specific funds were not mentioned] - FT
*(FR) FRANCE NOV PRELIMINARY MANUFACTURING PMI: 54.6 V 53.1E (12th month of expansion)
*(DE) GERMANY NOV PRELIMINARY MANUFACTURING PMI: 57.6 V 56.9E (17th month of expansion but (lowest reading since Jan 2021)
*(EU) EURO ZONE NOV PRELIMINARY MANUFACTURING PMI: 58.6 V 57.4E (17th month of expansion)
*(UK) NOV PRELIMINARY MANUFACTURING PMI: 58.2 V 57.3E (18th straight expansion)
XPEV Reports Q3 (CNY) -0.88 v -2.16 y/y, Rev 5.72B v 1.99B y/y
ADI Reports Q4 $1.73 v $1.69e, Rev $2.34B v $2.30Be; Says as it enters FY22, its backlog and bookings remain robust, and it continues to invest in capacity
BBY Reports Q3 $2.08 v $1.93e, Rev $11.9B v $11.6Be; Raises FY21 outlook, but guides Q4 below consensus
(US) White House: President Biden confirms to release 50M barrels of oil from Strategic oil reserves in coordination with releases from China, India, Japan, South Korea and UK (as anticipated)
(US) Administration official: President Biden continues to look at additional measures including potential oil export ban - press
DKS Reports Q3 $3.19 v $1.88e, Rev $2.75B v $2.42Be; Raises guidance, again
DLTR Reports Q3 $0.96 v $0.95e, Rev $6.42B v $6.42Be; Announces new $1.25 price points in more than 2,000 additional legacy Dollar Tree stores in Dec 2021; Notes freight and supply chain disruptions continue to be the company's biggest challenge in the near term
(US) Nov Philadelphia Fed Non-Manufacturing Index:46.1 v 33.4 prior
*(US) NOV PRELIMINARY MARKIT MANUFACTURING PMI: 59.1 V 59.1E (17th consecutive month of expansion)
*(US) NOV RICHMOND FED MANUFACTURING INDEX: 11 V 11E
HPQ Reports Q4 $0.94 v $0.88e, Rev $16.7B v $15.4Be
DELL Reports Q3 $2.37 v $2.33e, Rev $28.4B v $27.4Be
(JP) Renewed reports that Japan govt plans to set aside ¥600B ($5.2B) for fund to support semiconductor firms - Nikkei
*(NZ) RESERVE BANK OF NEW ZEALAND (RBNZ) RAISES OFFICIAL CASH RATE (OCR) BY 25BPS TO 0.75%; AS EXPECTED; raises rate path outlook
(TW) Taiwan said to be considering an entry ban on senior China officials - press
WEDS 11/24
(EU) ECB's De Guindos (Spain): Inflation drivers becoming more structural - financial press
(EU) EU said to be preparing new COVID-19 travel recommendations inside union called 'Recommendation on free movement'; To be unveiled as soon as Nov 25th - press
*(DE) GERMANY NOV IFO BUSINESS CLIMATE SURVEY: 96.5 V 96.7E (5th straight decline)
700.HK China Industry Ministry (MIIT) said to have freezed all Tencent apps from releasing and updating on data privacy concerns - press
(DE) Speculation that the new German govt could announce a full lockdown to contain the virus
(DE) German parties in newly formed govt announce several talking points; Will continue to exclude nuclear power from energy mix - press
DE Reports Q4 $4.12 v $3.82e, Rev (equipment ops) $10.3B v $10.3Be; Sees healthy demand in 2022
MAERSKB.DK Exec: still sees 12-15% capacity cut from delays and congestions; Sees an improvement in equipment availability in Asia
*(US) OCT PRELIMINARY WHOLESALE INVENTORIES M/M: 2.2% V 1.0%E
*(US) INITIAL JOBLESS CLAIMS: 199K V 260KE; CONTINUING CLAIMS: 2.05M V 2.03ME (post pandemic lows)
*(US) Q3 PRELIMINARY GDP ANNUALIZED Q/Q: 2.1% V 2.2%E; PERSONAL CONSUMPTION: 1.7% V 1.6%E
*(US) Q3 PRELIMINARY GDP PRICE INDEX: 5.9% V 5.7%E; CORE PCE Q/Q: 4.5% V 4.5%E
*(US) OCT NEW HOME SALES: 745K V 800KE
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 8.6% from 8.2%
(US) Association of American Railroads weekly rail traffic report for week ending Nov 20th: 508.3K total units, -4.9% y/y
*(US) FOMC NOV MINUTES: NUMBER OF PARTICIPANTS DISCUSSED RISK THAT LONG-TERM EXPECTATIONS FOR INFLATION MIGHT INCREASE TO LEVEL ABOVE COMMITTEE'S LONG-RUN OBJECTIVE; DELTA WAVE HAD INTENSIFIED THE IMPEDIMENTS TO THE SUPPLY CHAIN
THUR 11/25
*US market closed for Thanksgiving
*(EU) ECB said to have held early talks on firm limits on riskiest leveraged loans - press
*(EU) New COVID variant known as B.1.1.529 found in South Africa reportedly shows high number of mutations in spike - press
*(UK) UK has suspended flights to 6 countries in Africa on new COVID variant - press
FRI 11/26
(IL) Israel PM office: Widens "no travel" restrictions to most of African countries - press
(US) NIH's Fauci: New COVID-19 variant from South Africa has some mutations that are raising concern; Travel ban like one imposed by UK is a possibility
