Dec. 20, 2021
There is a little bit of déjà vu out there today.
Stocks are slumping amid concerns over the Omicron coronavirus variant and fresh restrictions being imposed by a number of countries, including the Netherlands, which is re-entering lockdown.
That is all happening against the backdrop of thinner trading volumes, as it’s the final week before Christmas—not too dissimilar from the post-Thanksgiving slump when Omicron first rattled investors. Markets are still digesting the Federal Reserve’s hawkish pivot, as they were in late November.
But there is another factor at play this time, courtesy of Sen. Joe Manchin (D., W.Va.), who said Sunday he cannot support President Joe Biden’s $1.7 trillion Build Back Better social spending and climate change bill.
Barring a change of heart, the bill, in its current form at least, looks dead in the water. The potential impact of Manchin’s move is already being assessed. Goldman Sachs economists cut their U.S. 2022 growth forecast and are now expecting gross domestic product to grow 2% in the first quarter, down from 3%.
In a particularly volatile period, it’s something markets really didn’t need.
It may well be thinner trading heading into Christmas, but investors are getting less bullish on the U.S. stock market in the near-term, according to the latest American Association of Individual Investors survey. Just 25% are bullish, the lowest in three months and the second-lowest weekly reading in six months.
Don’t hold your breath for a Santa Claus rally in what could be a week of choppy trading.
Democrats Press Ahead Despite Manchin’s ‘No’ on Biden Agenda
Democrats criticized comments made by Manchin on Sunday that he wouldn’t support Biden’s Build Back Better bill, casting its future in doubt, though party members vowed to continue to press forward with it.
- Manchin has been haggling with fellow Democrats for months, and meeting with Biden, who has tried to secure his support for the bill. On Sunday, Manchin cast that all aside, telling Fox News its passage is a “no” to him.
- White House press secretary Jen Psaki said Manchin’s comments were an abrupt reversal of assurances he earlier gave Biden. “We will continue to press him to see if he will reverse his position yet again,” she said. But the White House will “find a way to move forward.”
- Senate Democrats had hoped to pass it by Christmas with a simple majority vote, though Biden conceded last week that it would likely get pushed into the new year because of ongoing talks with Manchin.
- Pursuing separate smaller bills would require at least 10 Republicans to support them in the Senate under regular voting rules. Rep. Suzan DelBene (D., Wash.) said child tax credits, subsidies for affordable healthcare, and climate programs should be priorities.
What’s Next: Manchin’s stance could thwart Democrats’ attempts to pass significant social safety net legislation before the midterm elections next year, when a razor-thin majority in the House and a tie in the Senate will be put to the test.
Omicron Cases Will Put ‘Significant Stress’ on Hospitals
Dr. Anthony Fauci, the White House’s chief medical advisor, said he expects the nation’s coronavirus cases to reach record highs this winter, putting “significant stress” on hospital systems in some regions with low vaccination rates, driven by the highly contagious Omicron variant.
- With 50 million Americans eligible for vaccines still unvaccinated, and Omicron cases doubling every two to three days, “it’s going to be a tough few weeks to months as we get deeper into the winter,” he told CNN’s State of the Union. About 61% of Americans are fully vaccinated.
- The Omicron variant is 50% of cases in some parts of the country, “which means it’s going to take over,” Fauci said. Omicron has been confirmed in 89 countries and at least 39 states and is expected to become the dominant U.S. strain within weeks.
- Fauci urged people to get vaccinated, get their boosters, and keep wearing masks in public indoor settings, even if vaccinated. “Do not do things like go to gatherings where there are people who you do not know what their vaccination status is,” Fauci told ABC’s “This Week.”
- Fauci said testing supplies will increase in coming weeks. Demand for Covid at-home tests such as the one by Abbott Laboratories has soared, with reports of widespread shortages and long lines for testing at pharmacies and other sites.
What’s Next: Biden will give an update on the country’s fight against Covid-19 and the Omicron coronavirus variant on Tuesday, as well as deliver a “stark warning” for Americans who choose to remain unvaccinated, said press secretary Jen Psaki in a tweet.
—Janet H. Cho
Surging Coronavirus Cases Trigger Cancellations
U.S. coronavirus cases have surged to 125,000 a day, resulting in canceled holiday celebrations and Broadway shows, snarled corporate return-to-work plans, postponed professional sports games, and a return to remote learning at some universities.
- The National Basketball Association postponed five games over the weekend and the National Football League rescheduled three. The National Hockey League paused games for the Boston Bruins and Nashville Predators. The Rockettes canceled their remaining Christmas Spectacular shows at Radio City Music Hall.
- The Netherlands is the first European government to reinstate the closure of all shops, restaurants and nonessential businesses through mid-January. Germany will ban travelers from the U.K. starting Monday, and Ireland announced new restrictions, including an 8 p.m. curfew. for pubs and restaurants.
- NBC’s Saturday Night Live aired without its studio audience, its musical guest, and most of its cast members, showing previously taped videos of skits. SNL had planned a big Christmas show, “but Covid came early this year,” host Tom Hanks explained. Comcast owns NBC.
- Harvard University is switching to remote learning and working for the first three weeks of January. Stanford University will start the winter quarter online and is requiring students to get Covid-19 booster shots by the end of January.
What’s Next: Organizers of Times Square’s New Year’s Eve festivities will decide this week whether to go ahead with plans for an outdoor celebration with fully vaccinated attendees.
—Janet H. Cho
‘Spider-Man’ Busts Box-Office Record as Moviegoers Return
The latest installment of the Spider-Man franchise, Spider-Man: No Way Home, brought in $253 million in box-office sales this weekend, smashing a pandemic-era record despite the threat of the Omicron variant.
- Spider-Man defied expectations. Its U.S. debut was the third-best on record, and it took in more money on its opening weekend than any other film has grossed so far during the pandemic.
- The opening sales are behind only the $357 million 2019 debut of Avengers: Endgame and the $258 million 2018 debut of Avengers: Infinity War.
- YouTube TV announced Sunday it had reached a deal with Disney to return its content to YouTube TV, including networks such as ESPN and FX, live and on-demand content, keeping the $64.99 monthly subscription price.
- The notice came two days after subscribers discovered they could no longer access Monday Night Football and popular Disney channels including ESPN, ABC, Disney, National Geographic, and FX.
What’s Next: Movie-theater operators have a chance to recover significant ground next year, B. Riley analyst Eric Wold wrote in a note late Sunday, citing a slate of new releases including three Marvel universe films, four DC universe films, and sequels to Jurassic World, Top Gun, Mission Impossible, Avatar, and Transformers.
—Liz Moyer and Janet H. Cho
Airlines Bracing for New FAA Rules for 5G Service
Airlines are bracing for flight disruptions as U.S. regulators consider measures to protect aircraft from new fifth-generation cellular frequencies, which the Federal Aviation Administration said could interfere with cockpit safety systems. The wireless industry says the 5G rollout doesn’t endanger aircraft.
- Early planning comes after a regulatory order in early December that sketched out potential restrictions on landing in bad weather and other low-visibility conditions in 46 large U.S. metropolitan areas. Telecom industry officials dispute the risks.
- Officials discussed both industries’ proposals to create buffer zones around airports at a recent meeting that included Transportation Secretary Pete Buttigieg and Federal Communications Commission Chair Jessica Rosenworcel, The Wall Street Journal reported.
- AT&T and Verizon Communications , which spent $81 billion for 5G-friendly C-band licenses, delayed their planned rollout of faster cellular service until Jan. 5 to address the FAA’s concerns. They also pledged to reduce their C-band signal strength, especially near airport runways, for six months.
- Airlines are trying to assess what canceled or diverted flights could mean for their fuel, aircraft and crew needs, said George Paul, vice president for technical services at the National Air Carrier Association.
What’s Next: Flight limits could interfere with the airline industry’s attempted rebound following pandemic-era restrictions on travel. AAA forecasts that air travel is expected to jump to 6.4 million passengers for the Christmas and New Year holidays, up from last year’s 2.3 million.
—Janet H. Cho
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