Week of Dec 3, 2021 Weekly Recap & The Week Ahead
“The fact that a thesis is flawed does not mean that we should not invest in it as long as other people believe in it and there is a large group of people left to be convinced. The point was made by John Maynard Keynes when he compared the stock market to a beauty contest where the winner is not the most beautiful contestant but the one whom the greatest number of people consider beautiful. Where I have something significant to add is in pointing out that it pays to look for the flaws; if we find them, we are ahead of the game because we can limit our losses when the market also discovers what we already know. It is when we are unaware of what could go wrong that we have to worry.” ― George Soros
1. Powell Weighs Earlier End to Bond Tapering Amid Hot Inflation — Federal Reserve Chair Jerome Powell said officials should weigh removing pandemic support at a faster pace and he retired the word “transitory” to describe stubbornly high inflation, though a new Covid-19 strain remains a risk. The U.S. central bank is currently scheduled to complete its asset-purchase program in mid-2022 under a plan announced at the start of November to slow buying by $15 billion a month. The next gathering of the policy-setting Federal Open Market Committee is Dec. 14-15, where they could make a decision to accelerate the tapering.
2. House Approves Funding Bill in Bid to Avert Government Shutdown — The House passed an extension of government funding through Feb. 18 to avoid a partial shutdown this weekend, but a hangup in the Senate over vaccine rules threatened to slow the bill’s progress to President Biden’s desk. With current funding set to lapse at 12:01 a.m. on Saturday, Dec. 4, the legislation would also have to rapidly clear the Senate to avert a shutdown. Top Democrats and Republicans reached an agreement on the terms of the extension early Thursday. However, some Republicans are pushing to amend the bill so that it bars the Biden administration from enacting rules requiring many employers to ensure that their workers are vaccinated or tested weekly for Covid-19. The Republican demand to change the bill has raised the possibility of a drawn-out procedural process that could take several days and cause a brief shutdown. Lawmakers indicated Thursday that an amendment vote on the vaccine issue would likely clear the way to an accelerated process for the funding extension.
3. China Sets Boeing 737 MAX Directive for Flight Resumption — the Civil Aviation Administration of China required in an order released Thursday certain software installation and a revision of the jet’s flight manual, among other changes. It didn’t specify when China would allow MAX flights to resume. China was the first to ground the plane in the wake of the second of two fatal MAX crashes in March 2019. Boeing has said it hopes to resume deliveries of new MAX jets to China in the first quarter of next year, making final approval crucial to its plans to increase production and generate cash to cut its debt. While Chinese regulators are bringing the country’s current 737 MAX fleet closer to again carrying passengers, Boeing still faces other hurdles in handing over built aircraft awaiting delivery to the country’s airlines.
Despite actions by China’s aviation authority, a Chinese official with knowledge of the matter said approval from Beijing’s top economic planning agency, the National Development and Reform Commission, will also be required for the country’s airlines to take Boeing jet.
4. Omicron Variant Detected in at Least Nine U.S. States — the new Omicron variant was identified in more than a dozen people in at least nine states, early evidence of its presence across the U.S. While some of the people in the U.S. who have contracted the Omicron variant of the coronavirus that causes Covid-19 had recently traveled to southern Africa, where it was first identified last week, at least two states reported community spread of the new variant. States to report Omicron cases span the country from Hawaii to California and New York. Drug researchers and health authorities have been racing to figure out how the new variant could affect people, drugs and vaccines. Studies into those matters will take days to weeks, scientists have said. The World Health Organization has said preliminary evidence showed that people previously infected with Covid-19 may be at greater risk of re-infection with Omicron than with other variants. The variant also could be more transmissible than o5. Didi Hunts for Way to Delist in New Yorkthers, the WHO said.
5. DIDI Looks to Delists in the US, Rocking Other Chinese ADRs — the Chinese ride-hailing giant’s decision to delist its American depositary shares from the New York Stock Exchange and pursue a listing in Hong Kong marked a new stage in the decoupling of Chinese companies from U.S. markets. Didi didn’t give any rationale for the delisting, which it said has received support from its board and would later require a shareholder vote. The company ran into trouble with Beijing almost immediately after its $4.4 billion initial public offering. The IPO blindsided Chinese regulators, who launched a data-security review, pulled Didi products from Chinese app stores and began a broader overhaul of the framework for international listings by Chinese companies. Didi’s announcement came as Washington has been taking a hawkish stance on Chinese companies listed in the U.S. and Beijing is calling its companies to return home. The U.S. Securities and Exchange Commission adopted rules that will formalize the process for Chinese companies to be expelled from the U.S. stock market, if they fail to hand over their audit working papers for three years in a row.
The week ahead — Economic data from Econoday.com:
