“Achieving gains usually has something to do with being right about events that are on the come, whereas losses can be minimized by ascertaining that tangible value is present, the herd’s expectations are moderate and prices are low. My experience tells me the latter can be done with greater consistency.” ― Howard Marks

1. Biden Keeps Powell as Fed Chief, Names Brainard Vice Chair — President Joe Biden selected Jerome Powell for a second four-year term as U.S. Federal Reserve chair and elevated Governor Lael Brainard to vice chair, maintaining consistency at the central bank as it grapples with the fastest inflation in three decades and the lingering effects of the coronavirus. Brainard would replace Richard Clarida in the vice chair slot and may face opposition from Senate Republicans for her confirmation given her tough line on bank regulation. She was interviewed by Biden for the chair position and was seen as a strong contender for the separate job of vice chair for supervision, which remains vacant.
2. Biden Orders Release of U.S. Oil Reserves in Challenge to OPEC+ — the U.S. will release 50 million barrels of crude from its strategic reserves in concert with China, Japan, India, South Korea and the U.K. — an unprecedented, coordinated attempt by the world’s largest oil consumers to tame prices that risks a backlash by OPEC+. Of the 50 million barrels, 32 million will be issued from the U.S. Strategic Petroleum Reserve as an exchange over the next several months, while 18 million will come from an accelerated release from previously authorized sales, the White House said in a statement Tuesday. It represents one of the biggest drawdowns ever from the reserve, surpassing U.S. interventions amid Libyan unrest in 2011 and Operation Desert Storm in 1991.
3. WHO Identifies New Covid-19 ‘Variant of Concern’ Omicron as Strain Triggers Global Fears — the World Health Organization said a new strain of the coronavirus first detected in southern Africa was a global “variant of concern” and that preliminary evidence suggested that it presented a higher risk of a person falling ill with Covid-19 for a second time. The WHO also said that the variant’s fast spread in South Africa indicated that it may be more transmissible than other strains of the virus and that more research was being done to understand the full effects of its many mutations. Dozens of countries have already restricted travel to and from South Africa and neighboring nations, hoping to contain the spread of the new variant. The Biden administration will restrict travel to the U.S. from South Africa and seven other countries beginning Monday, according to senior officials.
4. China Asks Didi to Delist From U.S. On Security Fears — Chinese regulators have asked Didi Global Inc.’s top executives to devise a plan to delist from U.S. bourses, people familiar with the matter said, an unprecedented request that’s likely to revive fears about Beijing’s intentions for its giant tech industry.
The country’s tech watchdog wants management to take the company off the New York Stock Exchange because of concerns about leakage of sensitive data, the people said, asking not to be identified discussing a sensitive matter. The Cyberspace Administration of China, the agency responsible for data security in the country, has directed Didi to work out precise details, subject to government approval, they said.
5. Merck’s Covid-19 Pill Was 30% Effective in Final Analysis — Merck MRK -3.79% & Co. and Ridgeback Biotherapeutics LP said a final analysis of their experimental Covid-19 pill found the drug less effective than an early look, prompting U.S. health regulators to continue a staff review of the drug’s application days before an outside panel meets. The FDA said it is still conducting its review of molnupiravir, after the companies told the agency earlier this week the pill was 30% effective in a final analysis of the late-stage study results. After taking an early look at results, the companies had reported in October that molnupiravir was 50% effective.

The week ahead — Economic data from Econoday.com:

“It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong.” — George Soros

1. Biden Signs $1 Trillion Infrastructure Bill Into Law — President Biden signed into law a roughly $1 trillion infrastructure bill to repair the nation’s aging roads and bridges, upgrade the electrical grid and expand access to broadband internet. State transportation agencies will likely see the first infusion of highway funds from the infrastructure package by the beginning of December, said Jeff Davis, senior fellow at the Eno Center for Transportation, a think tank. The infrastructure legislation included a roughly 30% increase in highway formula funding. The measure sets aside $50 billion to bolster infrastructure against climate change and cyberattacks. Another $55 billion will go toward clean drinking water and $65 billion will go toward broadband infrastructure and development. The legislation invests $21 billion in removing pollution from soil and groundwater, job creation in energy communities and a focus on economic and environmental justice. The legislation will include $73 billion to update and expand the power grid.
2. Pfizer Moves to Allow Cheap Versions of Promising Covid Pill — Pfizer Inc. reached a licensing agreement that will allow generic-drug manufacturers to produce inexpensive versions of its Covid-19 pill for 95 low- and middle-income countries, following a similar move by Merck & Co. Pfizer won’t receive royalties from sales in low-income countries, and won’t get royalties from sales to middle-income countries covered by the pact as long as Covid-19 is classified as a public-health emergency, according to the statement.
3. U.S. Buys 10 Million Treatment Courses of Pfizer’s Covid-19 Pill for $5.29 Billion — Pfizer Inc. PFE -0.48% said Thursday it agreed to a $5.29 billion deal with the U.S. to provide enough supplies of its promising Covid-19 pill to treat 10 million people, should health regulators give it the green light. The company’s antiviral drug, Paxlovid, is under review by the U.S. Food and Drug Administration, and a decision could come before the end of the year. Under the terms of the deal, the government will pay about $529 for each course of treatment consisting of 30 pills over five days. Twice a day, patients would take two pills of Paxlovid and one pill of another antiviral called ritonavir.
The Paxlovid price is below the approximate $700 per course of treatment the U.S. agreed to pay for molnupiravir, an oral antiviral from Merck MRK -0.38% & Co. and Ridgeback Biotherapeutics LP that is also under review by the FDA. The U.S. has agreed to purchase 3.1 million courses of molnupiraivir for about $2.2 billion.
4. Covid Boosters Cleared for All Adults as FDA Widens Access — Covid-19 booster shots from Moderna Inc. and the partnership of Pfizer Inc. and BioNTech SE were cleared by U.S. regulators for all Americans 18 and older, making millions more people eligible for extra protection as concern about a potential winter wave of infections grows. Adults who received their second dose of the drugmakers’ shots at least six months ago are now eligible to receive a third, according to separate statements from the companies and the the U.S. Food and Drug Administration

The week ahead — Economic data from Econoday.com:

“Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” – Bruce Kovner

1. General Electric to Split Into Three Public Companies — the plan is being unveiled three years after Larry Culp took over the troubled company and tried to stabilize its operations by selling off business units and paying down the company’s debt load. But GE’s stock price, despite a 1-for-8 reverse split, has lagged behind the S&P 500 and rivals. What remains today are three businesses—aviation, healthcare and power. The company will now spin them off into separate publicly traded companies. GE said it is spinning off GE Healthcare, which makes MRIs and other hospital equipment, in early 2023, with GE expecting to retain a stake of 19.9% that it plans to sell over time. In 2020, the unit had about $17 billion in revenue.GE plans to combine its power unit and renewable energy unit, which make turbines for power plants and wind farms, respectively, and spin off that operation in early 2024. The company’s remaining digital division will also be moved into the power business. Those units together had about $33 billion in revenue in 2020.
That would leave behind a GE focused on making and servicing jet engines.
2. Pfizer, BioNTech Ask FDA to Expand Covid-19 Booster Use to All Adults — Pfizer Inc. and partner BioNTech asked U.S. health regulators to expand the authorization of their Covid-19 booster to people as young as 18 years old, as the government explores expanding access to extra doses. The application opens the door for authorization of the extra dose potentially before the end of the year, which could provide millions of people with another layer of security as winter drives many indoors where the risk of transmission is higher.
The Food and Drug Administration in September cleared a third dose of the Pfizer-BioNTech vaccine for adults who are 65 years and older or are at risk of severe disease and death, including because of their jobs or where they live. The government has also cleared booster shots of vaccines from Moderna Inc. and Johnson & Johnson, and is backing mixing-and-matching the extra doses.
3. U.S. Inflation Hit 30-Year High in October as Consumer Prices Jump 6.2% — the Labor Department said the consumer-price index—which measures what consumers pay for goods and services—increased in October by 6.2% from a year ago. That was the fastest 12-month pace since 1990 and the fifth straight month of inflation above 5%. The core price index, which excludes the often-volatile categories of food and energy, climbed 4.6% in October from a year earlier, higher than September’s 4% rise and the largest increase since 1991. The inflation surge is complicating the Federal Reserve’s strategy for unwinding easy-money policies the central bank imposed early in the pandemic. It has also emerged as a political factor affecting the Biden administration’s economic agenda.
4. Elon Musk Sells About $5 Billion in Tesla Stock — Elon Musk sold about $5 billion in Tesla Inc. shares this week as he exercised stock options that he received as part of his compensation package, according to regulatory filings made public late Wednesday. After selling less than 1% of his holdings Monday, he sold about 2% over the subsequent two days, the regulatory notices show. He sold around 4.5 million shares in total over the three days, shrinking the size of his stockholdings in Tesla even after exercising the options.
5. Beijing Cancels Events as Covid Cluster Hits 17-Month Record — Beijing is hunkering down after experiencing more Covid infections in the current cluster than at any time in the past 17 months, with officials asking for events and activities to be moved online. Organizers of the winter Olympic games to be held in February said that two foreign athletes tested positive for the virus in the test events underway in China, the Associated Press reported Friday. The organizers didn’t share more details, according to the report.
Beijing has detected 45 cases in the latest wave, the most since June 2020. The country is struggling to contain its fourth outbreak with the more infectious delta variant in the past five months. With more than 1,000 locally-transmitted infections spread across 21 provinces, it is already the broadest flare-up since the virus first emerged in Wuhan.

The week ahead — Economic data from Econoday.com:

“Achieving gains usually has something to do with being right about events that are on the come, whereas losses can be minimized by ascertaining that tangible value is present, the herd’s expectations are moderate and prices are low. My experience tells me the latter can be done with greater consistency.” ― Howard Marks

1. Fed Dials Back Bond Purchases, Plots End to Stimulus by June — the Federal Reserve approved plans to begin scaling back its bond-buying stimulus program this month and end it by June, a major step toward withdrawing its aggressive, pandemic-driven economic support amid a recent inflation surge. The Fed will reduce its bond purchases by $15 billion a month in November and by a further $15 billion in December, the central bank said Wednesday. It said similar reductions in the pace of net purchases “will likely be appropriate each month,” though officials would be prepared to adjust that pace “if warranted by changes in the economic outlook.” It also has been buying at least $120 billion a month in Treasury and mortgage securities—initially to stabilize financial markets and later to hold down longer-term interest rates.
2. Zillow Quits Home-Flipping Business, Cites Inability to Forecast Prices — the firm’s termination of its tech-enabled home-flipping business, known as “iBuying,” follows Zillow’s announcement about two weeks ago that it was halting all new home purchases for the rest of the year. At the time, Zillow pointed to labor and supply shortages for its inability to renovate and flip houses fast enough. Chief Executive Rich Barton said Zillow had failed to predict the pace of home-price appreciation accurately, marking an end to a venture the company once said could generate $20 billion a year. Instead, the company said it now plans to cut 25% of its workforce. Zillow and other tech-powered house flippers, known as iBuyers, purchase homes, renovate them and then try to sell them quickly, making money on transaction fees and home-price appreciation. Zillow used an algorithm to make home price estimates, called the “Zestimate,” and determine what it would pay home sellers.
3. Pfizer Says Covid-19 Pill Is 89% Effective in Preliminary Assessment — Pfizer Inc. announced in a preliminary look at study results found that its experimental pill was highly effective at preventing people at high risk of severe Covid-19 from needing hospitalization or dying, the latest encouraging performance for an early virus treatment.
The company’s drug cut the risk of hospitalization or death in study subjects with mild to moderate Covid-19 by about 89% if they took the pill within three days of diagnosis, Pfizer said Friday. The drug, called Paxlovid, was also found to be generally safe and well-tolerated in the early look at ongoing study results, the company said. Pfizer plans to ask the Food and Drug Administration to authorize the drug’s use this month, and the company could deliver doses this year. If authorized, there could be two Covid-19 pills that people could take at home before the end of the year to keep them out of the hospital. An antiviral from Merck & Co. and Ridgeback Biotherapeutics LP was cleared for use in the U.K. this week and is up for U.S. authorization.
4. Biden Wins Infrastructure Deal — the legislation will inject $110 billion in funding for roads, bridges and major projects, along with another $39 billion to modernize and make public transit more accessible to elderly commuters and the disabled. Major city transit systems, such as New York City’s, will see significant increases in funding based on federal funding formulas.
The spending will be paid for with a variety of revenue streams, including more than $200 billion in repurposed funds originally intended for coronavirus relief but left unused; about $50 billion from delaying a Trump-era rule on Medicare rebates; and $50 billion from certain states returning unused unemployment insurance supplemental funds.

The week ahead — Economic data from Econoday.com:

There will not be any Weekly Re-Cap for the week of Oct 29, 2021. We are away for some needed R&R.

The staffs at EGS.