By Goldman strategist Chris Hussey
US stocks traded sharply lower Friday, and on pace for another decline this week, as investors reacted to a new virus variant, strong business sentiment surveys, and Friday's decidedly mixed labor report -- and contemplated how to position into a now-volatile year-end.
...is this what it looks like?
As we leg further into the last month of 2021 and the post-pandemic era, this week may be raising the question: are we starting to see what the 'new normal' looks like?
It's not unreasonable to look at the Omicron variant as an anomaly that 'surprises' markets and represents a left tail risk. But after enduring the original COVID-19 outbreak followed by waves from the Beta and Delta variants, investors may be determining that COVID waves are becoming a regular thing -- seasonal like the flu the perhaps.
For now, we don't yet know how much of an impact the Omicron virus will have, but what we might be learning is that the virus is still having an impact, even if that impact is not as great as it first was back in early 2020.
And beyond the virus, this week may also have delivered a clearer view of what else may become 'normal' in the post-pandemic era: from inflation, to labor, shopping, sentiment and volatility. A few things to consider:
- high inflation. Leading into this week, our economists revised our forecast for Fed Fund rate hikes to 3 in 2022, from 2, as inflation is remaining remarkably sticky. Fed Chair Powell's testimony before Congress earlier this week only reinforced our view that the FOMC is concerned about high inflation. And high commodity prices are unlikely to provide a relief valve for inflation pressures as Jeff Currie discusses in the latest Commodity Watch. We now see a 28%+ total return for commodities over the next 12 months.
- tight labor. Friday's payrolls report revealed that fewer non-farm payroll jobs were added in November (210k vs 546k a month earlier) but also that fewer people are unemployed than expected (the unemployment rate fell to 4.2%). So while its tempting to look at the 210k new job adds as a disappointing indicator of US growth, the 4.2% unemployment rate may tell us more about the economy -- everyone who wants a job, has one. Also interesting in Friday's report, despite the ultra-low unemployment rate, wage growth moderated to +0.3% mom from +0.4% a month ago. But will wage pressures continue to ease in a world where so few are looking for a job but 'Help Wanted' signs seem to appear on every store you walk by? One other note on payrolls: from December 2011 through February 2020 (8 years+ of pre-pandemic data), monthly non-farm payroll additions averaged 200k (meet the new payrolls, the same as the old payrolls).
- Black Friday now takes place on Black Monday. The post-Thanksgiving holiday shopping stats have been somewhat uninspiring, another reason, perhaps, to doubt the growth pace of the US economy. But Eric Sheridan and Kate McShane point out that people are still shopping, they just are starting their holiday shopping a lot earlier than they used to. Perhaps people are starting to shop on October 19th rather than November 29th. And our weekly retailer activity tracker continues to show strong shopping activity throughout November.
- Business sentiment is very strong. On Friday, the ISM Services index was reported to have reached a new all-time high at 69.1. And the ISM Manufacturing Index rose to 61.1 in the latest survey -- near its highest level in the last 10 years (only this past March's spike to 64.7 exceeds November). Supply chain bottlenecks partly reflect the strong demand for industrial products and the inflationary impulse that such bottlenecks support. But the strong business sentiment may also reflect how Corporate America is adjusting to the 'new normal' of the post-pandemic era -- and likes what it sees.
Stock market volatility is high. In the past week, the VIX has spiked back up to 32, highlighting the uncertainty that is permeating around stocks now.
As we wrote in Thursday's Midday, "price discovery," the spike in volatility appears to simply reflect the increased difficulty in determining the price of risk assets in a world of rising inflation, virus waves, and normalizing growth. And as we step into the 'new normal', perhaps such uncertainty is likely to persist such that volatility remains elevated for longer than we have seen in past cycles. One other note on the VIX: in the 3+ years prior to the pandemic from December 2016 through late-February 2020, the VIX had a median weekly level of 13. Since the VIX picked up on the pandemic risk in late-February 2020, the VIX has registered a median of 22.
One last item for the 'new normal' file: rates. While the stock market is going through another bout of elevated uncertainty and a spike in the VIX, yields on 10-year Treasuries have retreated back to 1.36%, well above the lows we saw at the heart of the pandemic in 2020, but at the very bottom of the range we experienced in the post-Great Financial Crisis era. Praveen Korapaty forecasts that yields will rise to 2.00% by year-end 2022 but it is interesting to see that as the economy 'normalizes', yields on 10-year Treasuries are not pushing higher -- even as inflation does. Inflation markets this week began to price in less inflation in the future -- contributing to the lower 10-year yield. But regardless of the technical factors that may be holding rates down, an ultra-low 10-year Treasury yield has provided a good backdrop for stock price appreciation in the past - especially the Tech-laden, 'long duration' US stock market.
Interesting fact: beyond the Tech-laden, 'long-duration' S&P 500, index returns this year have been quite a bit less impressive. The Russell 2000 Small Cap stock index, for example, is now up less than 10% for the year.
Easyjet share price down 3% as pandemic losses hit £2.2 billion
The EasyJet share price shed over 3% today to give up a chunk of…
The post Easyjet share price down 3% as pandemic losses hit £2.2 billion first appeared on Trading and Investment News.
The EasyJet share price shed over 3% today to give up a chunk of the gains the budget airline had made earlier in the week. The new slide came after it announced a £213 loss for the last quarter of the year covering the Christmas period, taking losses for the Covid-19 pandemic period to £2.2 billion. The airline also told investors it is still burning through £150 million in cash every month as it struggles to build capacity back up.
The short-haul airline that makes most of its income shuttling holidaymakers and business travellers around Europe said it is still only operating at around half of its pre-pandemic capacity. However, it is hopeful that pent-up demand and an end to travel restrictions mean it will return to pre-pandemic levels by summer and enjoy much brisker trade than of late over the Easter and spring period.
But before then the airline company will again have to absorb deep losses over the current quarter, which is traditionally its weakest of the year. Even a strong summer period, think most analysts, will be insufficient to see the company return to profit this year. EasyJet’s value is still less than half of what it was in February 2020 before the coronavirus-induced market sell-off that hit later that month and saw markets dive into March before starting to recover. The share prices of rival budget airlines Ryanair and WizzAir have recovered much more strongly in comparison to EasyJet’s and are now close to their pre-pandemic levels. There have been concerns around whether EasyJet could survive the pandemic but investors contributed £1.2 billion last autumn to bolster its balance sheet.
The EasyJet share price is closing the week at around £6.15 compared to over £15 before the pandemic. However, there is now hope the worst may be behind the airline and it can begin its, potentially long, journey back to health. Chief executive John Lundgren attempted to soften the announcement of another hefty loss with a bullish statement on where things go from here for his company:
“Booking volumes jumped in the UK following the welcome reduction of travel restrictions announced on January 5, which have been sustained and given a further boost from the UK government’s decision this week to remove all testing requirements.”
“We believe testing for travel across our network should soon become a thing of the past. We see a strong summer ahead, with pent-up demand that will see easyJet returning to near-2019 levels of capacity, with UK beach and leisure routes performing particularly well.”
For now, however, forward guidance for the immediate quarter remains cautious with the company admitting it has fallen short of its expectations to be at 80% capacity by this quarter, sitting at just 67%. However, with most analysts confident the company will eventually return to strength, and profit in the 2022-23 financial year, EasyJet shares could offer a good buying opportunity at current levels.The post Easyjet share price down 3% as pandemic losses hit £2.2 billion first appeared on Trading and Investment News. testing pandemic coronavirus covid-19 europe uk
Xi Jinping Seeking “Global Domination”: Mike Pompeo
Xi Jinping Seeking "Global Domination": Mike Pompeo
Authored by Nathan Worcester via The Epoch Times,
Mike Pompeo said Chinese leader Xi Jinping wants “global domination—hegemony for the Chinese Communist Party,” warning that the…
Mike Pompeo said Chinese leader Xi Jinping wants “global domination—hegemony for the Chinese Communist Party,” warning that the rise of the Chinese Communist Party (CCP) could destroy the rules-based international order in place since the end of World War II.
“It’s not about putting a Chinese tank division in Taiwan. It’s about accreting political power and influence throughout the world,” Pompeo said.
Pompeo, who served first as CIA director and later as Secretary of State under President Donald Trump, made the statement in an appearance at the Argus Americas Crude Summit 2022.
He said his tenure as CIA director came at a time when U.S. attention had to shift from terrorism to other threats, foremost among them the CCP.
He added that a “global awakening” is taking place about what he sees as the ambitions of the CCP.
“Most of the credit goes to Xi Jinping. He foisted a virus on the world, for goodness’ sake, and refuses to let anybody go figure out where it came from,” Pompeo said.
The CCP has met with international criticism for blocking access to the Wuhan Institute of Virology (WIV) and related facilities in Wuhan by the United Nations. Many scientists and journalists suspect the CCP virus that causes COVID-19 originated at the WIV.
Pompeo also commented on ongoing trade-related conflict between the United States and China, raising questions about the United States’ initial decision to open up to China in the context of its primary Cold War conflict with China’s then-rival, the Soviet Union.
“Maybe it was the right thing to do in 1972—but the trade war long predates the Trump administration.”
“We encouraged business together. I don’t fault the businesses who went there. Notice the past tense of this. America’s policy encouraged connectivity with the Chinese Communist Party. Today, that is an enormous liability for the world, and Xi Jinping knows that,” Pompeo said.
Authoritarian Madness: The Slippery Slope From Lockdowns To Concentration Camps
Authoritarian Madness: The Slippery Slope From Lockdowns To Concentration Camps
Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute,
“All the Dachaus must remain standing. The Dachaus, the Belsens, the Buchenwal
“All the Dachaus must remain standing. The Dachaus, the Belsens, the Buchenwald, the Auschwitzes—all of them. They must remain standing because they are a monument to a moment in time when some men decided to turn the Earth into a graveyard. Into it they shoveled all of their reason, their logic, their knowledge, but worst of all, their conscience. And the moment we forget this, the moment we cease to be haunted by its remembrance, then we become the gravediggers.”
- Rod Serling, Deaths-Head Revisited
In the politically charged, polarizing tug-of-war that is the debate over COVID-19, we find ourselves buffeted by fear over a viral pandemic that continues to wreak havoc with lives and the economy, threats of vaccine mandates and financial penalties for noncompliance, and discord over how to legislate the public good without sacrificing individual liberty.
The discord is getting more discordant by the day.
Just recently, for instance, the Salt Lake Tribune Editorial Board suggested that government officials should mandate mass vaccinations and deploy the National Guard “to ensure that people without proof of vaccination would not be allowed, well, anywhere.”
In other words, lock up the unvaccinated and use the military to determine who gets to be “free.”
These tactics have been used before.
This is why significant numbers of people are worried: because this is the slippery slope that starts with well-meaning intentions for the greater good and ends with tyrannical abuses no one should tolerate.
For a glimpse at what the future might look like if such a policy were to be enforced, look beyond America’s borders.
In Italy, the unvaccinated are banned from restaurants, bars and public transportation, and could face suspensions from work and monthly fines. Similarly, France will ban the unvaccinated from most public venues.
In Austria, anyone who has not complied with the vaccine mandate could face fines up to $4100. Police will be authorized to carry out routine checks and demand proof of vaccination, with penalties of as much as $685 for failure to do so.
In China, which has adopted a zero tolerance, “zero COVID” strategy, whole cities—some with populations in the tens of millions—are being forced into home lockdowns for weeks on end, resulting in mass shortages of food and household supplies. Reports have surfaced of residents “trading cigarettes for cabbage, dishwashing liquid for apples and sanitary pads for a small pile of vegetables. One resident traded a Nintendo Switch console for a packet of instant noodles and two steamed buns.”
For those unfortunate enough to contract COVID-19, China has constructed “quarantine camps” throughout the country: massive complexes boasting thousands of small, metal boxes containing little more than a bed and a toilet. Detainees—including children, pregnant women and the elderly— were reportedly ordered to leave their homes in the middle of the night, transported to the quarantine camps in buses and held in isolation.
If this last scenario sounds chillingly familiar, it should.
Eighty years ago, another authoritarian regime established more than 44,000 quarantine camps for those perceived as “enemies of the state”: racially inferior, politically unacceptable or simply noncompliant.
While the majority of those imprisoned in the Nazi concentration camps, forced labor camps, incarceration sites and ghettos were Jews, there were also Polish nationals, gypsies, Russians, political dissidents, resistance fighters, Jehovah’s Witnesses, and homosexuals.
Culturally, we have become so fixated on the mass murders of Jewish prisoners by the Nazis that we overlook the fact that the purpose of these concentration camps were initially intended to “incarcerate and intimidate the leaders of political, social, and cultural movements that the Nazis perceived to be a threat to the survival of the regime.”
As the U.S. Holocaust Memorial Museum explains:
“Most prisoners in the early concentration camps were political prisoners—German Communists, Socialists, Social Democrats—as well as Roma (Gypsies), Jehovah's Witnesses, homosexuals, and persons accused of ‘asocial’ or socially deviant behavior. Many of these sites were called concentration camps. The term concentration camp refers to a camp in which people are detained or confined, usually under harsh conditions and without regard to legal norms of arrest and imprisonment that are acceptable in a constitutional democracy.”
How do you get from there to here, from Auschwitz concentration camps to COVID quarantine centers?
Connect the dots.
You don’t have to be unvaccinated or a conspiracy theorist or even anti-government to be worried about what lies ahead. You just have to recognize the truth in the warning: power corrupts, and absolute power corrupts absolutely.
This is not about COVID-19. Nor is it about politics, populist movements, or any particular country.
This is about what happens when good, generally decent people—distracted by manufactured crises, polarizing politics, and fighting that divides the populace into warring “us vs. them” camps—fail to take note of the looming danger that threatens to wipe freedom from the map and place us all in chains.
It’s about what happens when any government is empowered to adopt a comply-or-suffer-the-consequences mindset that is enforced through mandates, lockdowns, penalties, detention centers, martial law, and a disregard for the rights of the individual.
The slippery slope begins in just this way, with propaganda campaigns about the public good being more important than individual liberty, and it ends with lockdowns and concentration camps.
The danger signs are everywhere.
Claudio Ronco, a 66-year-old Orthodox Jew and a specialist in 18th-century music, recognizes the signs. Because of his decision to remain unvaccinated, Ronco is trapped inside his house, unable to move about in public without a digital vaccination card. He can no longer board a plane, check into a hotel, eat at a restaurant or get a coffee at a bar. He has been ostracized by friends, shut out of public life, and will soon face monthly fines for insisting on his right to bodily integrity and individual freedom.
For all intents and purposes, Ronco has become an undesirable in the eyes of the government, forced into isolation so he doesn’t risk contaminating the rest of the populace.
This is the slippery slope: a government empowered to restrict movements, limit individual liberty, and isolate “undesirables” to prevent the spread of a disease is a government that has the power to lockdown a country, label whole segments of the population a danger to national security, and force those undesirables—a.k.a. extremists, dissidents, troublemakers, etc.—into isolation so they don’t contaminate the rest of the populace.
The world has been down this road before, too.
Others have ignored the warning signs. We cannot afford to do so.
As historian Milton Mayer recounts in his seminal book on Hitler’s rise to power, They Thought They Were Free:
“Most of us did not want to think about fundamental things and never had. There was no need to. Nazism gave us some dreadful, fundamental things to think about—we were decent people‑—and kept us so busy with continuous changes and 'crises' and so fascinated, yes, fascinated, by the machinations of the 'national enemies', without and within, that we had no time to think about these dreadful things that were growing, little by little, all around us.”
The German people chose to ignore the truth and believe the lie.
They were not oblivious to the horrors taking place around them. As historian Robert Gellately points out, “[A]nyone in Nazi Germany who wanted to find out about the Gestapo, the concentration camps, and the campaigns of discrimination and persecutions need only read the newspapers.”
The warning signs were there, blinking incessantly like large neon signs.
“Still,” Gellately writes, “the vast majority voted in favor of Nazism, and in spite of what they could read in the press and hear by word of mouth about the secret police, the concentration camps, official anti-Semitism, and so on. . . . [T]here is no getting away from the fact that at that moment, ‘the vast majority of the German people backed him.’”
Half a century later, the wife of a prominent German historian, neither of whom were members of the Nazi party, opined: “[O]n the whole, everyone felt well. . . . And there were certainly eighty percent who lived productively and positively throughout the time. . . . We also had good years. We had wonderful years.”
In other words, as long as their creature comforts remained undiminished, as long as their bank accounts remained flush, as long as they weren’t being locked up, locked down, discriminated against, persecuted, starved, beaten, shot, stripped, jailed or killed, life was good.
Life is good in America, too, as long as you’re able to keep cocooning yourself in political fantasies that depict a world in which your party is always right and everyone else is wrong, while distracting yourself with bread-and-circus entertainment that bears no resemblance to reality.
Indeed, life in America may be good for the privileged few who aren’t being locked up, locked down, discriminated against, persecuted, starved, beaten, shot, stripped, jailed or killed, but it’s getting worse by the day for the rest of us.
Which brings me back to the present crisis: COVID-19 is not the Holocaust, and those who advocate vaccine mandates, lockdowns and quarantine camps are not Hitler, but this still has the makings of a slippery slope.
The means do not justify the ends: we must find other ways of fighting a pandemic without resorting to mandates and lockdowns and concentration camps. To do otherwise is to lay the groundwork for another authoritarian monster to rise up and wreak havoc.
If we do not want to repeat the past, then we must learn from past mistakes.
January 27 marks Remembrance Day, the anniversary of the liberation of Auschwitz-Birkenau, a day for remembering those who died at the hands of Hitler’s henchmen and those who survived the horrors of the Nazi concentration camps.
Yet remembering is not enough. We can do better. We must do better.
As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, the world is teetering on the edge of authoritarian madness.
All it will take is one solid push for tyranny to prevail.
Diageo share price ticks up on forecast-beating 20% sales rise
What Is Volatility in Finance? Definition, Calculation & Examples
Bitcoin dodges ‘sub-$30K liquidity grab’ — Levels to watch now
GTA condo sales reach all-time high, says TRREB
Trading Penny Stocks? Top Stock Market News for January 27th, 2022
Probiotics regulate our immune system and could help fight off COVID – new research
COVID-19 Can Be Stopped Without Massive Vaccination: Dr. Peter McCullough
Top Trending Stocks to Buy Today
FDA Asks Court To Delay First 55K Batch Of COVID Docs; Pfizer Moves To Join Case
Why These 3 Penny Stocks Are Exploding Today
Spread & Containment6 hours ago
Easyjet share price down 3% as pandemic losses hit £2.2 billion
Spread & Containment10 hours ago
Eli Lilly says FDA could deny expanded use of arthritis drug for eczema
Economics12 hours ago
Top Trending Stocks to Buy Today
Stocks18 hours ago
Why These 3 Penny Stocks Are Exploding Today
Crypto4 hours ago
How can the Metaverse help the food industry?
Science20 hours ago
Covid-19 roundup: Watchdog criticizes EU Commission over president’s texts; Novavax signs vaccine deal with Israel
Bonds23 hours ago
Neurotic Futures Tumble Despite Record Apple Quarter
Economics23 hours ago
The Global Supply Side of Inflationary Pressures