“Be Patient – There’s the Rarest Thing On Wall Street” – Jeff Saut

1. Congress Passes $900 Billion Aid Package That Includes Stimulus Checks — Congress approved $900 billion in economic relief for Americans and businesses hit hard by the coronavirus pandemic. The relief package, attached to the $1.4 trillion spending bill that will fund the federal government through September, includes stimulus payments for Americans, federal unemployment benefits, relief for small businesses, among other things. Americans who earned $75,000 or less in 2019 will receive $600 checks. Starting Dec. 27, those receiving unemployment benefits will receive an additional $300 a week in federal benefits through March. An eviction moratorium is also extended through January 2021.
Additional relief includes about $325 billion for small businesses, $55 billion into funding for vaccines, testing and tracing, $82 billion for schools, and $45 billion for transportation. The bill also extends a tax credit for businesses that retain employees.
2. Walmart Accused in Lawsuit of Fueling Opioid Crisis — The U.S. Justice Department is suing Walmart, alleging the company helped fuel the opioid crisis.
The civil complaint claims Walmart violated rules for dispensing opioids and its duty to detect and report suspicious orders. Walmart was “woefully understaffed” to review such orders, and managers put “enormous pressure on pharmacists to fill prescriptions,” according to the suit.
Walmart’s violations of the Controlled Substances Act as both a pharmacy and a distributor “had disastrous results, harming individuals who filled prescriptions at Walmart and then abused the drugs,” the lawsuit claims. “Given the nationwide scale of those violations, Walmart’s failures to follow basic legal rules helped fuel a national crisis.”
3. More Than 1 Million People in the U.S. Have Gotten Covid Vaccine Doses — three states have now vaccinated more than 1% of their populations: North Dakota, West Virginia, and Alaska. California leads in total vaccinations at 128,000 shots. The numbers fall short of a U.S. goal to administer 20 million shots in 2020. Shots are rolling out from Pfizer Inc. and Moderna Inc., focused at first on hundreds of thousands of health-care workers around the country who have been battling the virus on the front lines in hospitals. The vaccines require two shots weeks apart to deliver the highest level of protection. Urgency is rising as a wave of winter infections washes over the northern hemisphere. New variants of the disease have been detected in the U.K. and South Africa. The mutations appear to make the virus more contagious and may be increasing infections among healthy young people. In the U.S., more than 2,500 people are dying every day.
4. Trump Signs Relief Package, Calls on Congress to Increase Stimulus Checks to $2,000 Per Person — Sunday night, President Donald Trump signed a relief package that he previously objected to that includes $900 billion in pandemic relief and $1.4 trillion to fund the government through September. The legislation passed in Congress last week with bipartisan support. Trump rejected the package, saying the proposed $600 direct payments to Americans should be increased to $2,000 per person.

“Investing is a popularity contest, and the most dangerous thing is to buy something at the peak of its popularity. At that point, all favorable facts and opinions are already factored into its price, and no new buyers are left to emerge.” ― Howard Marks

1. Electoral College Confirms Biden Presidency — following several failed attempts by the Trump campaign’s legal team, and 17 Republican attorneys general, to challenge the election results in court, electors from states including Nevada, Georgia, Pennsylvania, Arizona, Michigan and Wisconsin confirmed Biden’s win, 306 electoral votes to Trump’s 232. Russian President Vladimir Putin congratulated President-elect Biden for the first time since the election after the Electoral College confirmed the result.
2. U.S. Begins Vaccine Rollout — the effort to roll out Covid-19 vaccines will be the largest immunization effort in the U.S. since the successful administration of millions of polio vaccine doses in the 1950s. Initial doses of the vaccine are reserved for health care workers and nursing home residents. Pfizer has a deal to provide 100 million doses to the U.S. government and is in talks to provide another 100 million doses—enough to vaccinate about a third of the U.S. population. More Americans could be vaccinated sooner if, as expected, Moderna’s vaccine is approved for emergency use by the Food and Drug Administration later this week. Twenty million doses of that vaccine will be available in the U.S. in December.
3. Apple Is Reportedly Boosting 5G iPhone Production — Nikkei Asia reported that Apple will produce as many as 96 million iPhones in the first half of 2021, up nearly 30% from the same period this year. Over the course of the next year, the company will make 230 million iPhones. One executive at an Apple supplier told Nikkei that demand has been stronger than anticipated for the iPhone 12 Pro and iPhone 12 Pro Max, but that demand for the smaller iPhone 12 Mini is a “bit sluggish.” Apple did not comment.
Wall Street currently expects Apple to produce 215 million iPhones in 2021, Wedbush analyst Dan Ives said. Ives has the equivalent of a Buy rating on the company and expects “an unprecedented upgrade cycle for Apple with a major holiday season on the horizon over the coming weeks.”
4. Lawmakers Reach Stimulus Deal — after months of deadlock, the House and Senate reached a deal on coronavirus stimulus Sunday evening, capping a weekend of furious negotiations aimed at striking a compromise. The bargain includes $600 direct payments to most Americans, $300 a week in supplemental federal unemployment checks, funding for vaccine distribution and additional small business aid. It also includes $15 billion in funding specifically for airline industry workers wages and a requirement that the industry bring back 30,000 furloughed workers. Senate Minority Leader Chuck Schumer said that while he supported the approximately $900 billion deal, more aid should be passed next year. “While this short term deal is necessary to meet the urgent and growing needs that so many people are facing immediately going into the winter, this bill is not sufficient.”
5. New Covid-19 Strain in the U.K. Brings Chaos To Europe— the British government that a new strain of Covid-19 that is 70% more infectious is driving up coronavirus cases in the U.K., setting off a chain reaction of new lockdowns and travel bans, a looming logistics crisis, and a slide in stocks. British Prime Minister Boris Johnson canceled plans for an easing of restrictions over Christmas, plunging around 18 million people in southeast England into a new lockdown on Saturday, and causing thousands of people to flee London in the hours before restrictions took effect. The U.K. recorded its highest-ever daily rise in infections with 35,928 new cases reported on Sunday.
More than 20 countries have instituted new bans or restrictions on travel from the U.K. The new mutation of the virus is believed to be linked with cases in Italy, the Netherlands, Denmark, and Australia.
The closure of France’s border with the U.K. has halted trade between key ports and through the Eurotunnel for 48 hours. British retailers are playing down fears of shortages in the busy run-up to Christmas, when around 10,000 trucks a day typically move between Dover and Calais, but are warning of disruptions if the closure continues.

The week ahead — Economic data from Econoday.com:

“when risk bearing doesn’t work, it really doesn’t work, and people are reminded what risk’s all about.”
― Howard Marks

1. U.S. Health Officials Push for Quick Vaccine Rollout — the Trump administration is planning for a rapid rollout of the first round of vaccinations, with as many as 24 million Americans immunized by mid-January. President Donald Trump is expected to sign an executive order Tuesday that would ensure Americans receive priority access to any vaccine procured by the U.S. government before people from other countries. Pfizer’s vaccine could be approved by the end of the week, with shots starting immediately thereafter for nursing home residents and health care workers. The Food and Drug Administration is expected to release analyses of the vaccine Tuesday that show how it works with different demographic groups.
2. Georgia Recertifies Biden Win After Third Recount — Georgia’s Republican Secretary of State, Brad Raffensperger, recertified the state’s election results Monday after a third recount showed President-elect Joe Biden defeating President Donald Trump.
“We’ve never found systemic fraud—not enough to overturn the election,” Raffensperger said at a news conference at the state’s Capitol. Biden won the state by more than 12,000 votes.
On Monday, a federal judge dismissed a lawsuit by former Trump campaign lawyer Sidney Powell seeking to overturn the election results in Georgia, calling the effort “perhaps the most extraordinary relief ever sought in any federal court in connection with an election.”
3. White House Gets Involved in Stimulus Talks — the Trump administration proposed a $916 billion stimulus package Tuesday night that included a liability shield for employers, another round of direct payments to Americans of at least $600 per person, and aid to state and local governments. The White House offer, announced in a statement by Treasury Secretary Steven Mnuchin, is a departure from Republican Senate Majority Leader Mitch McConnell’s package. Earlier Tuesday, Democrats rejected an offer by McConnell for a smaller measure that excluded the liability shield, stimulus checks, and state and local government funding. McConnell said a package this year should drop those items in favor of focusing on funding for vaccine distribution, health care providers, and small businesses. The majority leader said there would be another opportunity once President-elect Joe Biden takes office to tackle other issues.
4. Airbnb Valuation Tops $100 Billion IPO — Airbnb Inc. shares more than doubled in their trading debut, propelling the home-rental company to a $100 billion-plus valuation. The stock opened Thursday at $146 apiece, above the $68 initial public offering price. Airbnb’s market value, based on its outstanding shares, makes it the world’s biggest online travel company. Its $88 billion market cap exceeds Booking Holdings Inc.’s $86 billion market capitalization, and eclipses Expedia Group Inc. and TripAdvisor Inc.
5. Americans Will Start Getting the Pfizer Vaccine This Week — Pfizer has said it would deliver 25 million doses to the U.S. in 2020, including 2.9 million doses shipping this week. Some 636 health departments and hospitals across the U.S. will receive shipments between Monday and Wednesday. The nation’s 21 million health care workers and 3 million residents of long-term care facilities are expected to be inoculated between now and January, followed by other essential workers, adults with high-risk medical conditions, and those ages 65 and older.
The Moderna vaccine will be reviewed for emergency use authorization on Dec. 17, and the Federal Reserve is likely to weigh how the prospect of an end to the pandemic in 2021 should factor into monetary policy when it meets this week.
6. AAII Bullish Sentiment — latest notes from Bespoke Investment Group flagged elevated overbought condition ““Investor sentiment has unfortunately gotten quite bullish over the last month or so. This is something to continue to keep an eye on as we look for ‘frothiness’ in the market,” they said, highlighting the chart below overlaying the S&P 500 over the AAII bullish sentiment survey reading.

Arbeter Investments also show ““While price action of the major indices looks like we are in the grind higher phase, which is generally bullish unless the slope goes parabolic, the S&P 500 is very extended above its longer term moving averages (see chart below) and the index recently rose above the upper weekly Bollinger Band,” he wrote. Bollinger bands plot a standard deviation above and below a simple moving average. — Plenty of similar episodes in the past have been followed by significant pullbacks, Arbeter noted, but added that solid market breadth indicators are likely to make any significant dips a buying opportunity.

The week ahead — Economic data from Econoday.com:

“Once in a while, however, the future turns out to be very different from the past. It’s at these times that accurate forecasts would be of great value. It’s also at these times that forecasts are least likely to be correct. Some forecasters may turn out to be correct at these pivotal moments, suggesting that it’s possible to correctly”
― Howard Marks

1. U.K. to Become First to Roll Out Covid-19 Vaccine; Moderna to Seek FDA Approval — the British government is preparing to distribute the coronavirus vaccine manufactured by Pfizer and BioNTech as soon as next week; Meanwhile, Moderna said it would submit a filing to regulators this week, requesting emergency authorizations to distribute its vaccine. The U.K. government also asked the regulator to review the vaccine developed by AstraZeneca in conjunction with Oxford University, even though its Phase three trials raised questions after a mistake that saw some subjects inoculated with only half a dose in their first injection.
Moderna released the final results from its Covid-19 vaccine trial and said Monday that its shots showed 94.1% efficacy, confirming that the vaccine is highly effective at preventing the disease. Furthermore, An advisory group to the Centers for Disease Control and Prevention has called an emergency meeting to decide on recommendations for who should be first in line for scarce Covid-19 vaccinations. The Advisory Committee for Immunization Practices is set to meet Tuesday to vote on guidance for how states should distribute vaccines after they are approved for emergency use by the Food and Drug Administration.
2. Bitcoin Tops 2017 Record — Cryptocurrency Bitcoin rose to as high as $19,850 on Monday, topping its previous intraday record of $19,783 that was set on Dec. 17, 2017, before dropping slightly but remaining well above $19,000. Bitcoin has seen its price rise in concert with a wide range of other assets, from equities to gold, as the Federal Reserve and other central banks around the world have injected trillions of dollars of liquidity into capital markets, keeping interest rates on government bonds low. Bitcoin investing has gotten easier too. PayPal now lets all its U.S. users buy and sell Bitcoin directly through its service. In July, U.S. regulators allowed banks to hold cryptocurrency assets for customers.
3. McConnell Calls for Congress to Focus on Narrow Stimulus — Democrats had pushed for more than $2 trillion in aid, while McConnell has consistently advocated for a package of about $500 billion. Negotiations have been deadlocked for months and fully broke down ahead of the November election. While the last few days have seen a flurry of activity signaling a potential restart of talks, McConnell threw some cold water on optimism by saying that the “underlying reality” of the two parties’ policy differences were always the main impediment to reaching a deal and that those are “still with us.”
4. U.K., EU Pause Brexit Talks — The two sides’ negotiators said in tweets on Friday they have paused talks because the “conditions for an agreement are not met” and will now brief their respective political leaders. The U.K. and EU haven’t yet reached agreement on three key issues: access to British fishing waters, the competitive level playing field for business, and how any overall agreement is enforced, according to the statement.
5. Boeing Wins First Big 737 MAX Order Since Grounding Ended — Europe’s largest airline had ordered 75 additional of the 737 MAX, the aircraft that was grounded last year following two fatal air crashes. The latest order increases Ryanair’s order book to 210 jets. Ryanair again selected the 737 8-200, a higher-capacity version of the 737-8, the companies said in a statement, citing the airplane’s additional seats and improved fuel efficiency and environmental performance.

The week ahead — Economic data from Econoday.com: