“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. Merck Ends Covid-19 Vaccine Programs as U.S. Cases Top 25 Million — Merck announced that it will stop the development of its Covid-19 vaccines after early trial data showed the experimental shots did not boost immunity to the virus when compared with natural infection. The company will instead focus on two therapeutic candidates.
Merck’s news comes as the total number of reported Covid-19 cases in the U.S. tops 25 million and the Biden administration and U.S. health officials ratchet up their criticism of President Trump’s handling of the vaccine rollout.
2. Millions of Americans Face Tough Choices as Mortgage Protections May End — since early November, about 2.7 million, or 5.5%, of American mortgage holders have been putting off payments, according to weekly data released by the Mortgage Bankers Association. That’s down from a peak of just over 8.5% in early June. The ability of homeowners to pause mortgage payments was itself a product of the CARES Act signed into law last March. It allowed borrowers with federally-backed mortgages, which account for about three-quarters of U.S. home loans, to postpone payments for up to a year. President Biden has signed an executive order extending a federal moratorium on evictions and foreclosures through March 31. He has also asked federal agencies to extend the deadline for accepting new applications for forbearance at least until then.
3. Xi Warns U.S. as Biden Pushes Ahead With Buy American Initiative — Biden is expected to continue some of the work done by his predecessor to blunt China’s rise, marking a continued departure from several decades of U.S. policy that favored increased ties and an overall friendly relationship with Beijing. President Biden has pointedly said he would not remove tariffs on Chinese goods put in place by his predecessor. He also signed an executive order Monday aimed at strengthening American manufacturing. While not a direct blow to China, the implication of a preference for American goods over Chinese ones is clear. The order tightens the rules for federal government procurement to increase purchases of American-made products. Meanwhile, Chinese President Xi Jinping sent an indirect but clear warning to the Biden administration, which is preparing to enlist allies in efforts to contain China’s economic and diplomatic influence.
4. Biden’s Climate Policies Could Hit the U.S. Oil Industry— the U.S. oil industry is likely to be an early target of President Joe Biden’s policies to fight climate change, beginning with a ban on new drilling leases on federal land. Biden is set to sign an executive order Wednesday halting new oil and gas leases on federal lands, The Wall Street Journal reports. While drilling on those lands accounts for just under 10% of U.S. onshore oil and gas production, fossil fuel companies want to maximize their access to those reserves. The president has also proposed spending several trillions of dollars investing in U.S. infrastructure, with an eye to pushing clear energy items, and has vowed to spend $20 billion replacing the entire fleet of federal government vehicles with electric cars.
4. U.S. Economy Shrank in 2020 Despite Fourth-Quarter Growth — despite a strong rebound in the second half of last year, the economy contracted 3.5% in 2020, measured year over year, the first decline since the financial crisis and the largest since 1946. U.S. gross domestic product rose at a 4.0% seasonally and inflation adjusted annual rate in the final quarter of last year
5. Johnson & Johnson Vaccine Shown Effective as South African Variant Emerges in U.S. — Johnson & Johnson reported its vaccine was 66% effective against moderate to severe cases. the company said that the Phase 3 trial, involving more than 43,000 participants, had shown that the vaccine is 85% effective at preventing severe disease, and completely prevented hospitalization and death from Covid-19 at 28 days after vaccination. The company will seek authorization from U.S. regulators in early February. Novavax said that early trials of its vaccine candidate indicate it is 90% effective overall and 50% effective against the South African strain. Moderna has said its vaccine would likely produce a weaker immune response against the South African strain and that it’s working on a booster shot. Pfizer reported more promising findings, saying that results from a study that has yet to be peer-reviewed found its Covid-19 vaccine is effective against both the South African and U.K. strain and “do not indicate the need for a new vaccine to address the emerging variants.”

The week ahead — Economic data from Econoday.com: