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Things you need to know –

  • Moderna CEO Bancel is apparently the new Siren….
  • We went from ‘don’t worry’ to ‘not so sure it isn’t worse’ – which I think is debatable.
  • Oil, stocks, crypto and the dollar all under pressure, Bonds up, Gold Up
  • J&J (Jay and Janet) to address the Senate today….Concerns are rising
  • OPEC to meet next week – will they increase, decrease or do nothing?
  • Try the Roasted Cauliflower Soup on a cold night.

Joey says that ‘Omicron is not a cause for panic’,  some of the drug companies telling us that the current vaccines should do well at protecting us and that if you are due for a booster – you should get it……Dr. Angelique Coetzee also tells us that the symptoms are ‘unusual but mild’ nothing more than exhaustion and soreness but did clarify saying that she does think that it could cause complications for the immune compromised, elderly and the unvaccinated… – OK…What’s new about that?  Not much…that has always been the case for all forms of Covid as well as so many other diseases…. the immune compromised, the elderly and the unvaccinated have always been at risk….

And so, investors reconsidered the headlines from Friday and came back strong…buying stocks across the board…. Tech – XLK being the biggest beneficiary +2.5% – partly because it was the sector that has been under pressure of late….and so if buyers are looking for ‘bargains’ then where better to go than the group or groups that have suffered the most.   Consumer Discretionary – XLY up 1.5%, Utilities – XLU up 1.5%, Real Estate – XLRE up 1.3% and then the rest fell in line……Communications, Energy, Financials and Consumer Staples all up less than 0.5%.

10 Yr. treasuries were all over the place yesterday…..sending yields as high as 1.56% by 10 am only to end the day yielding 1.49% as rumors late in the day began to cause a sense of concern yet again – Moderna CEO Stephane Bancel telling us that it could take months to develop a omicron specific vaccine…..….then word that the virus has now been found in 19 countries suddenly gave buyers a reason to back off as they considered what’s next.  Were these countries going to impose new lockdowns?  New travel restrictions? New working restrictions?   Joey assured us that this would not be the case in America…. that lockdowns and closures would not be happening – all while Dr. Fauci wasn’t so sure…. suggesting that nothing is off the table….

The Russell which opened strong went negative by 10:30 only to surge again after Joey made his statement only to fail again as the afternoon turned to evening. By the end of the day – the Russell ended in negative territory – down 4 pts all while the other indexes managed to hold onto gains – but gains that were well off the intraday highs. The Dow added 236 pts, the S&P up 60 pts, the Nasdaq up 290 pts and the Transports of 150 pts.

BUT – today is a new day and the tone is once again clearly negative as fear drives the action….….

Oil – which by now you know got absolutely slaughtered on Friday – falling 10% – rose 3% yesterday to end the day at $70.06 after trading as high as $72.90 by 9:50 am.  Recall that OPEC + is due to meet next week and it is there that they will decide what to do next.  Will they increase supply or not?  Will they punish those nations that released oil from their respective SPR’s, or will they stick to the plan… which called for an increase in supply.  Expect that they will argue that  the new variant poses a demand issue and therefore there is no reason to increase supply…..What do you think the response will be considering the variant has caused investors to pull back already sending oil lower….…..this morning it is off 2% – giving back everything it gained yesterday…putting it now down 10% off its most recent high….so more supply will only cause prices to retreat more…which is good for the consumer but not good for OPEC+.  So – figure it out…

The dollar index like the other asset classes was also all over the place trading as high as 96.45 before ending the day up 0.1% at 96.13 and this morning it is lower again…. falling 62 cts at 95.71.

The VIX which surged by 50% on Friday lost 20% yesterday as the tone appeared to calm down but today it is up again as fear takes over….at 5:30 the VIX is up 18% and likely going higher if the negative tone does not change. ….and Crypto’s managed to rebound a bit after the drubbing they took on Friday as well but like so many other assets classes – are under pressure again this morning.  Bitcoin trading at $56,700 and Ethereum trading at $4450.

BUT – again – today is a new day and the tone is once again clearly negative as fear drives the action….…. Moderna CEO Bancel – who apparently is the new face of Omicron now telling the Financial Times that ‘existing vaccines will be less effective at tackling omicron, and it may take months before a variant – specific ‘jab’ would be available…. Others chiming in saying that the information we have to date is ‘sketchy’ and that no one really knows anything about it yet… (which I think is debatable – but I am not a scientist).  And so, investors are once again in risk off mode….

Global markets are once again in turmoil…. Asian stocks mixed…China reports Manufacturing PMI came in at 50.1 vs. the expected 49.6.  Which once again puts it in expansion mode…. that is if you believe anything that China says.  In any event – Japan lost 1.6%, Hong Kong down1.6%, China down 0.4%, ASX up 0.2%.

European markets taking Bancel’s comments in stride – buyers are pulling back, no longer sure that they should be taking stock vs. letting the sellers hit their bids…. Eurozone inflation makes a new record – clocking in at 4.9% for November – not a good read…. At 6 am…European markets are all lower by 1.5% – 2%.

And US futures?  Yup, they are getting smashed again.  Dow futures down 500 pts, the S&P’s down 50, the Nasdaq off by 75 and the Russell lower by 50 pts.  Jay Powell to address the Senate today and his comments were released overnight – reveal that he is now concerned about what omicron could do to the US and global recovery…. Saying that the ‘variant poses downside risks and complicates the inflation picture’.   Look, he will further argue that the new variant could ‘reduce people’s willingness to work in person, which would slow the labor market and intensify supply chain disruptions.   In addition, he is expected to tell them that the ‘factors pushing inflation upward will linger into next year’.  And here we go….

There is not any significant eco data today, but tomorrow we will get the ADP employment report – exp of +525k new jobs…. Market manufacturing PMI of 59.1, Construction Spending of +0.4%, ISM Manufacturing PMI of 61.2. The Fed’s Beige Book at 2 pm will reveal the state of the US economy broken down by the 12 regional Fed Reserve Banks.  On Friday we will get the monthly NFP (Non-Farm Payroll) report and expectations are for that to show an increase of 550k new jobs.

I expect the conversation today will focus on what Stephan Bancel has to say about his vaccine and any of the others……Scientists raising the flag – saying that this ‘will not be good’…. leaving it open to all kinds of speculation….and fear…. which will drive investor sentiment.  The CDC, the President, and anyone else that chooses to opine on it stepping up to tell everyone that they need to get vaccinated and boosted.  In the end – you could argue that the new mutations will become weaker vs. stronger – and just fyi – more mutations do not necessarily mean it is more dangerous…so do not jump to conclusions just yet….…. Look – Covid is here to stay for a while……and scientists do agree on one thing…. the vaccinated do appear to be able to fight this latest wave better than the unvaccinated.  Just something to consider….

The S&P closed at 4655 up 1.32% on the day…..but now looks like it will give it all back in another panic driven selloff….Which just means that it is not the time to panic….take stock of your portfolio and if you are a long term investor – get out your shopping list – there is NOT a supply chain issue in the public markets…there is plenty of stock for sale….Use your head….look at your portfolio – take the opportunity to add to your defensive names…. I am still in the camp that this new variant will NOT prove to be the disaster that today’s tone suggests…. I am operating under the assumption that this too shall pass….and the FED is on target with their announced schedule – but maybe Jay will give us a hint of a change in psychology…. I doubt it…. its way to early.

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Take Good Care

Chief Market Strategist, Consultant

Roasted Cauliflower Soup

It’s cold outside!

For this you need:  1 Large Head of Cauliflower, Olive Oil, S&P, Minced Garlic, Chopped Onion, Chicken Broth, lite Cream.

And to top it off:  Chopped Pancetta, plain croutons, Fresh Parsley

Preheat oven to 425 degrees.

Toss the cauliflower with olive oil and season with s&p.

Spread the cauliflower onto a baking sheet, and roast for 30 to 35 minutes, stirring occasionally, until lightly golden brown and tender.
While the cauliflower is cooking, put a splash of olive oil in a pot and cook the pancetta over medium heat until lightly browned, about 4 minutes.

Add the croutons stirring to mix with the oil and pancetta. Season with s&p, toss with the parsley remove and set aside.  (This to be used as the garnish).
Now in the same pan sauté the onions and garlic over medium low heat until soft, about 5 minutes.  Add the chicken broth to the onions and bring to a boil.
Add the roasted cauliflower to the pan and reduce to a simmer for 20 minutes.

Taste, and adjust salt and pepper as needed.

Add the lite cream to the pot and then puree (in batches) in a blender or food processor until smooth and creamy.
Return the soup to the pot and keep warm.

When serving – ladle soup into bowls and top with a couple of tablespoons of the garnish.

Buon Appetito.