by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA

[Posted: 9:30 AM EDT] | PDF

Good morning.  Although U.S. risk markets are trying to stage a rally, U.S. equity futures are struggling to hold gains.  The pattern for the week has been for overnight rallies to fail.  It is a bearish pattern, as rallies seem to bring out selling.  We suspect this pattern won’t last.  Barring outright policy tightening by the Fed, there is a long-standing tendency for equities to rally into year’s end.  We expect something similar this year too.  But clearly, the combination of the Fed talking about withdrawing stimulus and the new Omicron variant are hurting investor sentiment.

Our coverage this morning begins with economics and policy.  We have comments on the supply chain situation.  Up next is China news, with notes on recent comments from Japan regarding Taiwan.  Pandemic news comes next, and we close with the international roundup; the turmoil in Turkey continues.

Economics and policy:  We lead with comments on the supply chain.

• Supply chain issues remain an important factor in the path of inflation. The rise in prices we have seen is a combination of supply constraints (shifting the supply curve to the left), demand stimulus from fiscal spending, and the wealth effect (shifting the demand curve to the right).  We expect policy tightening next year.  Although we have our doubts about the efficacy of QE on the economy, there appears to be a wealth effect factor, so ending the balance sheet expansion could adversely affect asset prices.  Since GDP is a flow measure, there will be an unavoidable fiscal drag next year; simply put, we are not going to see another $4.0 trillion of emergency spending.  Those factors should move the demand curve to the left, at least a bit.  On the supply side, it’s not easy to get a clear picture of what is happening.  The anecdotal evidence is mixed.  There are reports that goods are starting to flow.  Our own observations of local retailers suggest fewer out-of-stock labels.  On the supply issue, we observe a couple of points.

First, the ISM data suggests modest improvement; at least, conditions aren’t getting a lot worse.

Supplier deliveries showed some improvement last month.  They are still elevated (we would like to see a number around 52 to confirm we have returned to normal) but are showing some signs of getting better.

On the other hand, we need to take note of the fact that China’s impact on inflation may be shifting.  For years, China exported deflation.  It suppressed its labor costs and maintained an undervalued exchange rate.  Although this policy played havoc on U.S. manufacturing, it kept inflation under wraps.  Recently, the CNY has been appreciating, and there is a modest positive correlation between CPI and the CNY’s effective exchange rate.

If China continues to allow its exchange rate to appreciate, its exports will become more expensive.  Over time, other nations may undercut China to gain access to U.S. markets.  But given China’s size, the substitution impact may not be all the powerful.  Although these results are preliminary, they suggest that (a) we will almost certainly see supply chains heal, which will bring down inflation from current levels, and (b) changes in labor markets and trade probably means trend inflation settles in at around 3% instead of 2% in the future.

• The Senate is continuing to struggle to avoid a government shutdown. Current funding will expire at noon Saturday, EST.
• The Fed’s Beige Book report suggests supply snarls are crimping growth.
• The OECD is forecasting higher inflation for the group of industrialized nations.
• The pandemic has caused changes to the economy and markets, and it is still uncertain which changes are permanent and which are temporary. The increase in self-employment has been significant.  Technology has probably made this transition easier.  It is also possible that the experience of the pandemic has re-sorted priorities.  The idea of being one’s own boss has become more attractive.  If this change is permanent, it will likely require firms to rethink hiring and processes; a corporation may become a manager of freelancers.
• The FTC has requested information from large distribution firms on supply-chain issues. At this point, the request appears to be more about gathering information and not about an enforcement action.  However, it is possible that this study could bring policy recommendations designed to make the supply chain more resilient and likely more costly.
• Although there was speculation that OPEC+ wouldn’t increase production, as previously expected, due to COVID-19 concerns and the SPR release, Russia apparently is pushing to boost output. Oil prices have slid on the news.
• The House Financial Services Committee will host a group of crypto CEOs on December 8.
• Know someone looking for a career in high demand? There are 597,767 unfilled openings in cybersecurity.

China news:  Comments from former PM Abe about Taiwan raise hackles, and the future of the variable interest entities is uncertain.

• As readers know, we are very concerned about the situation between China and Taiwan. However, an area that is another risk factor is Japan’s change in its stance on Taiwan.  For years, Japan was non-committal on Taiwan; it supported the “one China” policy and generally didn’t question that China would eventually control the island.  That is no longer the case.  Japan has become increasingly active in defending Taiwan’s independence.  This change in stance is partly due to Taiwan’s critical position in Japan’s defense.  If Beijing controlled Taiwan, it could easily project power into the island chain, mostly controlled by Japan, which would lead China to the main Japanese islands.  As Japan’s position hardens, it raises the risk that simmering tensions between Japan and China, which have been in place for centuries, trigger stronger reactions than currently expected.
  • Former PM Abe raised tensions by suggesting a Chinese invasion of Taiwan would trigger an “emergency” for Tokyo.
• Variable interest entities (VIE) have been used by Chinese firms to list on U.S. markets. The structure creates a vehicle that gives the holder most of the rights of direct ownership but avoids Chinese rules about foreign ownership.  Yesterday, there were reports that Beijing was going to end this practice, although officials in China denied that the VIEs were being eliminated.  There is a chance China will prevent firms from using this tool to list in the U.S., but we suspect yesterday’s conflicting reports were a trial balloon from Beijing.
  • Beijing has unveiled new rules on ride-sharing and tech advertising that suggest a deepening crackdown.
  • Online fraud in China is growing rapidly.
• As readers know, we have been closely monitoring the growing divide between the U.S. business community and the political community over China. The former clearly wants to continue to do business in China, while the latter is moving headlong into separation.  China has been trying to exploit this difference.  Beijing’s most recent action is to encourage business leaders to oppose a boycott of the winter Olympics.  Meanwhile, Ray Dalio has been making very public statements supporting investment in China.  This position looks at odds with the general trends in public sentiment.
• The WTA has made it clear that professional tennis is willing to oppose China; the group has suspended tournaments in China over the Peng Shuai situation.
• China Electronics Corporation (BMG2122L1054, HKD, 0.71), an SOE, released a new messaging app that is designed for government agencies. Recently, the government told its workers to stop using private messaging services over security concerns.
• For years, Chinese students wanted to acquire a western college degree. It seemed this was the path to better jobs.  That is apparently no longer the case, which is bad news for U.S. higher education.
  • Reports suggest Chinese authorities are extending their surveillance of Chinese students in America, restricting their activities.
• China’s digital CNY is struggling to gain acceptance.

COVID-19:  The number of reported cases is 263,655,098, with 5,227,696 fatalities.  In the U.S., there are 48,692,582 confirmed cases with 782,100 deaths.  For illustration purposes, the FT has created an interactive chart that allows one to compare cases across nations using similar scaling metrics.  The FT has also issued an economic tracker that looks across countries with high-frequency data on various factors.  The CDC reports that 575,721,925 doses of the vaccine have been distributed, with 462,263,845 doses injected.  The number receiving at least one dose is 233,590,555, while the number receiving second doses, which would grant the highest level of immunity, is 197,363,116.  For the population older than 18, 71.2% of the population has been fully vaccinated, with 59.4% of the entire population fully vaccinated.  The FT has a page on global vaccine distribution.

• The Omicron variant has been detected in the U.S. The good news is that the infected person suffered a mild case.  The person had been vaccinated but had not received the booster.  Although authorities warned the new variant was likely already in the U.S., the news sent risk markets lower yesterday.
• Reporting from the WSJ details an expected tradeoff; states that had stricter rules in dealing with the virus had fewer fatalities but weaker economic growth. States with looser rules had more people die but their economies did better.  Although this tradeoff makes intuitive sense, the data in this article confirms the tradeoff notion.
• The OECD is warning that the Omicron variant may affect supply chains.
• The U.S. will require foreign visitors to have WHO-approved vaccines. International travelers will face new test requirements, and the mask mandate has been extended.  The U.S. will also reimburse for home test kits for COVID-19.
• Germany is tightening restrictions to contain the new virus.

International roundup:  Turkey’s turmoil deepens, and the U.S. and EU try to contain Russia’s threats against Ukraine.

• Yesterday, Turkey’s central bank intervened to slow the decline of the TRY’s depreciation. The currency is falling again this morning after the country’s finance minister, Lutfi Elvan, resigned and was replaced by regime loyalist Nureddin Nebati.  Nebati is close to President Erdogan’s son-in-law and former finance minister Berat Albayrak.  Elvan was the last orthodox holdout.  By replacing him, Erdogan has eliminated all opposition to this unorthodox policy of cutting interest rates to reduce inflation.
• U.S. and EU security and international relations officials are meeting over the situation in Ukraine. SoS Blinken is warning Putin over his aggression and calling to defuse the current tensions.  What does Putin want?  It appears he wants a rollback of NATO away from Russia’s borders. Russia’s geopolitics revolve around creating buffers to force invaders to march long distances and then allow the Arctic winter to end offensives.  Preventing Ukraine from joining NATO is likely the goal.
• The EU is restricting asylum rights on the Belarus border, likely to discourage refugees from lingering in Belarus.
• Russia and the U.S. are expelling diplomats. In June, the U.S. expelled 50 Russian diplomats over hacking and election interference.  These actions usually result in a similar action by the Russians.
• The U.S. and South Korea are updating war contingency plans over South Korea. The action appears tied to recent short-range missile tests by North Korea.
• The EU has revealed its response to China’s belt and road project, with a €300 billion program to support development.
• The U.S. and U.K. have not resolved steel tariffs, but underlying this inaction is the U.S. reluctance to make a trade deal with Britain, worried that the U.K. will break the Good Friday Agreement regarding the border with Northern Ireland.

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by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA

[Posted: 9:30 AM EST] | PDF

In today’s Comment, we open with Federal Reserve Chair Powell’s testimony to Congress yesterday, which contributed to the day’s big pullback in risk assets (which is on track to be at least partly reversed today).  We next review a range of international developments, most of which focus on national security threats.  Finally, we take a look at the latest developments regarding the coronavirus pandemic and the new Omicron mutation.

U.S. Monetary Policy:  In testimony before the Senate Banking Committee yesterday, Fed Chair Powell signaled he has come around to the idea that today’s high inflation rates may not be temporary.  It may be appropriate to start withdrawing monetary stimulus more quickly than policymakers had planned.  Specifically, Powell suggested the Fed’s bond-buying could be wrapped up months earlier than anticipated, allowing the benchmark fed funds interest rate to be raised in the first half of 2022.

• Coming on top of the latest red flags regarding the new Omicron variant of the coronavirus, Powell’s unexpectedly hawkish comments helped drive risk assets sharply lower yesterday.  His comments also undercut what otherwise would likely have been strong bond-buying from investors spooked by Omicron.
• Powell will continue his testimony before the House Financial Services Committee today, so investors will be watching closely to see if he reiterates his statements, tries to soften them, or even doubles down on them.  Going forward, the policymakers at the Fed will have a tough time threading the policy needle between hiking rates to tamp down demand and cool inflation pressures while still keeping policy loose enough to preserve economic growth in the face of Omicron.  In any case, the apparent shift toward tighter monetary policy could well keep markets volatile in the coming days and weeks.

U.S. Financial Conditions:  In a sign that consumer spending could keep driving the economy, a survey by the New York FRB found that almost 27% of U.S. consumers had applied for a credit card in the 12 months ended in October. That is the highest level since 2019 and well above the record low of 16% recorded a year ago.

United States-China:  For the first time since the Ronald Reagan Presidential Foundation and Institute began surveying Americans about national security four years ago, a majority of Americans—52%—named China as the nation posing the greatest threat to the U.S., while Russia came in at a distant 14%.  In other findings:

• Some 37% of those polled listed East Asia as the region where the U.S. should dedicate most of its military forces.  The Middle East came in second, with 17%.
• The survey found that 45% of Americans have a “great deal” of trust in the military, a drop from 70% three years ago. An additional 10% of respondents said they had “not much” trust in the military, compared with 2% three years ago.

China-Taiwan-Japan:  At a conference on Taiwan, former Japanese Prime Minister Abe said a Chinese attack on the island would constitute an “emergency” for Japan and the U.S.-Japan security alliance.

• Abe’s comment echoes statements by other key Japanese politicians in recent months that suggest Chinese aggression against Taiwan would be enough to meet the threshold for military action in Japan’s pacifist constitution.
• In fact, Abe went even further, advocating for a trilateral security dialogue between Japan, Taiwan, and the U.S.  Previously, Japanese leaders have shied away from such a proposal out of concern over antagonizing China.
• Abe remains a key player in Japan’s ruling Liberal Democratic Party, so his statements provide more evidence that Japanese leaders are toughening their stance against China’s geopolitical aggression in the Indo-Pacific region.  Indeed, Japan is rapidly becoming perhaps the linchpin ally for the U.S. in its effort to counter Chinese ambitions.

Russia-NATO:  As NATO foreign ministers meet to discuss a strategy to address Russia’s threatening stance toward Ukraine, Russian President Putin warned he would respond if NATO continued building up its infrastructure in the region, holding joint exercises, and providing advanced weapons to Ukraine.  Perhaps to drive home the point, Belarus has announced it will conduct joint military exercises with Russia on its southern border with Ukraine.

• As Putin tries to pressure Ukraine into submission as a part of Russia’s sphere of influence again, he has become perturbed by NATO countries’ support for Kiev, including new, advanced weapons systems that the Ukrainians have recently deployed against pro-Russian separatists in the country’s east.
• Putin’s buildup of forces around Ukraine could be meant to merely intimidate Kiev and warn off the NATO countries, but it is nevertheless building up tensions.  On top of that, U.S.-Russia relations remain tense, with Russia today announcing it will expel more U.S. diplomats in the latest in a series of tit-for-tat expulsions.
• In any case, such standoffs always carry the risk of escalation or miscalculation.  Rising tensions with Russia, therefore, are likely to be an added worry for investors as they continue trying to assess the new Omicron mutation of the coronavirus, rising inflation, and the prospect for tighter monetary policy around the world.
• There are also domestic political ramifications in the U.S., where Republicans in the Senate are blocking confirmation of dozens of President Biden’s foreign-policy nominees and disrupting approval of the annual defense authorization bill to protest the president’s decision not to sanction Russia’s Nord Stream 2 natural gas pipeline to Germany.

Turkey:  The Turkish central bank today announced it would return to intervening in the currency markets to prop up the plunging lira, despite its limited foreign reserves.  The announcement boosted the currency around 5% to approximately 13.2 per dollar, but that still left it down more than 40% for the year to date.

Afghanistan:  A new UN report forecasts that Afghanistan’s gross domestic product will contract by one-fifth over the next year, representing one of the worst downturns in history.

• The report attributes the expected decline to a number of factors, including not just the withdrawal of U.S. troops and aid last summer but also the impact of frozen assets, Taliban economic policies (such as restrictions on women working), drought, and the coronavirus pandemic.
• Whatever the cause, the economic crisis threatens to spark political and social instability within Afghanistan, potentially setting the stage for a new regional refugee crisis and increased terrorist activity.

COVID-19:  Official data show confirmed cases have risen to 263,003,778 worldwide, with 5,219,663 deaths.  In the U.S., confirmed cases rose to 48,560,280, with 780,241 deaths.  (For an interactive chart that allows you to compare cases and deaths among countries, scaled by population, click here.)  Meanwhile, in data on the U.S. vaccination program, the number of people who have received at least their first shot totals 233,207,582.  The data show that 70.2% of the U.S. population has now received at least one dose of a vaccine, and 59.4% of the population is fully vaccinated.

Virology

• As scientists race to better understand the new Omicron mutation of the virus, they are paying close attention to cases in southern Africa, where the variant was first discovered on November 9.  New infections in South Africa totaled 4,373 yesterday, compared with less than 250 in the first few days of November.  Experts estimate Omicron is responsible for about 90% of the new infections in the country.
  • Salim Abdool Karim, director of the Centre for the AIDS Programme of Research in South Africa and one of the country’s leading epidemiologists, said on Monday he expected cases to reach 10,000 a day by the end of the week.
  • Another troubling trend is that many people who had earlier been infected with the Delta variant of the virus are now coming down with the Omicron variant.
• Meanwhile, the Biden administration is reportedly considering stricter COVID-19 testing requirements for travelers entering the U.S., including U.S. citizens, to slow the spread of the emerging Omicron variant.
  • The rules under consideration would require all travelers, regardless of their vaccination status, to present a negative test within 24 hours of boarding a plane to the U.S., rather than the 72 hours currently allowed for vaccinated travelers, the people said.
  • Travelers could also be required to take a second test three to five days after arriving in the U.S.
• In vaccine politics, a federal judge in Louisiana imposed a temporary injunction against the Biden administration’s mandate that all healthcare workers at facilities participating in Medicare and Medicaid be vaccinated.
• An outside panel of scientific advisers narrowly recommended the FDA authorize an experimental oral antiviral from Merck (MRK, $74.91) and partner Ridgeback Biotherapeutics LP.  The treatment is about 30% effective at reducing the risk of hospitalization for those infected with the virus.  If the FDA accepts the recommendation and authorizes the drug, it would be for high-risk patients only.

 Economic and Financial Market Impacts

• In its latest semiannual Economic Outlook, the OECD warned that the Omicron mutation could intensify the global supply chain disruptions that have been pushing up inflation and slowing economic growth.  Although the organization made little change to its growth forecasts, it said it now expects inflation mostly in the rich, developed countries of the OECD to average 4.4% in 2022, up from 3.9% previously.

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by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA

[Posted: 9:30 AM EDT] | PDF

Good morning and happy Monday!  Risk markets are higher after a rough day on Friday.  It’s a big week for Fed speakers, with Chair Powell speaking to Congress tomorrow on pandemic policy.  We expect Powell will get lots of questions on inflation today as well.  Vice-Chair Clarida and Gov. Bowman also speak tomorrow.  Atlanta FRB President Bostic talks on Thursday, along with Gov. Quarles, San Francisco FRB President Daly, and Richmond FRB President Barkin.  Financial markets are trying to project the path of monetary policy, so this week will offer us some clues.

Our coverage begins with comments on Friday’s market action, along with some preliminary discussion of the Omicron variant.  Our pandemic coverage comes next, followed by economics and policy.  We then discuss China news and close with an international news recap.

More like red Friday:  On Friday, news of a new COVID-19 variant sent risk assets tumbling.  Oil prices fell over 12%, and the major equity indices fell over 2%.  The news of this variant, dubbed Omicron, is bad, but for now, we don’t really know how bad.  South African researchers were able to identify the new strain early; the thing about early warnings is that the earlier you get them, the less you know.  The number of mutations to the spike protein of the B1.1.529 variant raises the risk that it will be able to evade current immune defenses.  But we don’t know if this new variant is more lethal than the current versions.  It appears that it spreads more easily but early indications hint that this variant may not be as potent, although we warn this is anecdotal evidence.  One complicating factor is that South Africa has a young population, so the lethality may be skewed by this factor.  Simply put, we don’t know what exactly we are dealing with quite yet.

South Africa’s reward for providing an early warning was to be hit with travel restrictions.  Although that response makes sense, it may discourage nations in the future from disclosing the information.  There are concerns that if this new variant leads to breakthrough infections and is more lethal, it may be hard to reimplement social restrictions.

At the same time, Friday’s market reaction looks a bit severe, most likely due to a combination of bad news colliding with thin, holiday market conditions.  Once trading stops are high in a falling market, it will tend to build on itself.  Risk markets are recovering this morning, but we are still well off from Wednesday’s level.  We would expect markets to trend higher in the aftermath of the selloff.

COVID-19:  The number of reported cases is 261,629,689 with 5,202,472 fatalities.  In the U.S., there are 48,234,746 confirmed cases with 776,647 deaths.  For illustration purposes, the FT has created an interactive chart that allows one to compare cases across nations using similar scaling metrics.  The FT has also issued an economic tracker that looks across countries with high frequency data on various factors.  The CDC reports that 572,190,175 doses of the vaccine have been distributed with 454,447,737 doses injected.  The number receiving at least one dose is 231,367,686, while the number receiving second doses, which would grant the highest level of immunity, is 196,188,756.  For the population older than 18, 70.9% of the population has been fully vaccinated, with 59.1% of the entire population fully vaccinated.  The FT has a page on global vaccine distribution.

• After South Africa announced the Omicron variant, it appears to be spreading rapidly, with Canada, Australia, and EU nations reporting cases of the variant.
• Vaccine makers are rushing to see if the current vaccines are effective, and, if not, moving to create new boosters.
• Those with knowledge of the Greek alphabet would note that the WHO skipped a couple of letters. When news broke on the variant, wags were already doing a “who’s on first” with Nu, which was the next letter in line.  The WHO also skipped the next letter, Xi, likely worried about offending the leader of the CPC.
• One of the public policy debates is whether vaccines or infections offer a better immune response. Early studies suggested that vaccines were better; however, with other infectious diseases, the immune response from the infection tends to grow over time.  New studies suggest that may be happening with COVID-19 as well.  If so, it may mean we are closer to herd immunity than previously thought.
• Merck’s (MRK, USD, 79.16) antiviral treatment, molnupiravir, isn’t as effective as early test results suggested.
• Hospitals are preparing to lose staff over the vaccine mandates.

Economics and policy:  The economy is roaring, and port conditions are improving.

• Although we have been getting questions about “stagflation,” the current state of the economy might be better described as “growthflation.” Inflation is clearly rising.  Although Q3 GDP was soft, the Q4 data are suggesting a stunning rebound.

The Atlanta FRB’s GDPNow forecast, which plots the path of GDP for the current quarter based on the flow of economic data, is projecting a growth rate of 8.6%.  Although we think the FOMC will move slowly to raise rates (and the Omicron variant will likely support that point), if the Fed wanted to raise rates, there is enough economic growth to support tighter policy…at least for now.

• There is better news on the port snarls. Wait times for containers are declining, suggesting that there is some improvement at the ports.  Empty containers are being removed by “sweeper ships,” which are freeing up space on the docks to move full containers into port.  Although the ports are still backed up, progress is being made.
• December will be a busy month for legislators. The debt ceiling, the defense bill, and the budget are all on the docket.  We suspect that the Build Back Better program gets delayed into next year.
• As we mentioned earlier, the West Coast dockworkers’ contract expires next summer. Talks will be starting soon.  We suspect that the only way a strike can be avoided is with significant pay increases.
• Although the expansion of online shopping has changed “Black Friday” for good, stores did report increased traffic this year.
• The old idea of rent caps is making a comeback. While capping rents helps keep costs down for renters, it doesn’t do anything to boost units.  Zoning restrictions have tended to reduce apartment construction which is leading to higher rents.  Rent caps are not a good solution, but in the absence of aggressive apartment construction, it isn’t surprising that rent caps are returning.

China news:  The U.S. is hinting at nuclear talks with Beijing, and the Commerce Department expands the Entity List.

• The recent silo building activity and the hypersonic missile test have led Washington to consider nuclear talks with Beijing. The U.S. and China don’t have the same level of nuclear protocols that the U.S. and Russia have, a holdover from the Cold War.  There is no “hot line” and China hasn’t been part of nuclear weapons talks.  Now that China is clearly embarking on building a more sophisticated nuclear arsenal, it would make sense to create some of the basic ground rules to avoid an accidental nuclear exchange.
• At the same time, the U.S. is expanding its Entity List to Chinese companies working on quantum computing. Twelve new companies were added to the list which restricts technology exports.
• There is an underlying skepticism about China’s economic data. In general, we find it useful to assume that any number with a hard target will likely be manipulated.  Thus, data that isn’t on Beijing’s radar can sometimes offer insights into China’s economy.  China’s CO₂ emissions unexpectedly fell in Q3, which probably reflects the downturn in the property sector.
• There are reports that local governments are issuing “coal coupons,” which are ration cards that give the holder a certain amount of coal. As coal prices rise, it may become difficult for households to purchase heating fuel on the open market.  The ration cards provide fuel at a set cost.  Coal coupons were common during the Mao era and reflect the degree of scarcity of heating fuels.  Basic economics suggests that such measures usually lead to shortages as companies dislike providing the product at below-market prices.
• China has asked Didi (DIDI, USD, 7.88) to delist from U.S. markets so as to avoid disclosing sensitive data.
• In a speech, a former government official suggested that tech companies should pay a tax when they trade their users’ personal data. Huang Qifan, the former mayor of Chongqing, made the argument.  This disclosure may be a trial balloon to judge the firms’ reactions, but a data tax would be another tool in controlling Chinese tech firms.

International roundup:  There were contested elections in Honduras over the weekend, and Ukraine warns of a coup.

• Honduras held elections yesterday. Early indications suggest the leftist candidate, Xiomara Castro, is ahead of Nasry Asfura.  Castro is the wife of former President Manuel Zelaya, who was ousted in a 2009 coup.  Asfura is the mayor of Tegucigalpa.  Castro and Asfura are trying to replace Juan Orlando Hernández, considered to be a drug trafficker by the U.S.  Pre-election polls suggest a tight race and it isn’t clear if either candidate will accept a loss.  With tensions running high, there are fears that unrest will follow the vote regardless of the outcome.  At the U.S. border, Hondurans are the second-most common nationality, so a surge in unrest would likely increase those trying to enter the U.S.
• The president of Ukraine is accusing Moscow of fomenting a coup against his government. President Zelensky claims to have uncovered a coup plot.
• Last week, a new government was formed in Germany. The FDP was awarded the finance ministry.  All eyes now are on who the government picks to run the Bundesbank.  This person will represent Germany on the ECB.
  • Germany is boosting its minimum wage by 25%. The wage covers about 5% of the workforce.
• Germany has asked the U.S. Congress not to sanction the companies involved in the Nord Stream 2 pipeline. We would be surprised of Congress complies.
• Turkey has been facing significant financial stress as President Erdogan has interfered with the central bank to require easy monetary policy. The central bank says that the financial system is still “strong.”  However, there are growing reports of “dollarization,” where Turks are scrambling to acquire and use USD in transactions and saving.
• Iran and the U.S. are preparing to talk about restoring the 2015 nuclear deal. We will be covering the progress in detail in our Weekly Energy Update report but suffice it to say that we have very little hope of full restoration of conditions.  Meanwhile, Israel and Iran are engaging in a cyberwar that is increasingly targeting non-military sectors.
• Japan announced additional military spending to its already record defense budget for this year.

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by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA

[Posted: 9:30 AM EDT] | PDF

N.B.:  HOLIDAY SCHEDULE – The Daily Comment will go on hiatus after Tuesday’s report and will return on Monday, November 29.  A Weekly Geopolitical Report was published yesterday, and the next report will be available on December 6.  There will be no Asset Allocation Weekly report or podcast this Friday; it will return next week on December 3.  There won’t be a Weekly Energy Update either; it will return a week from Thursday on December 2.  From all of us at Confluence Investment Management, have a great Thanksgiving. 

In today’s Comment, we open with international news, including an unexpectedly good print for Eurozone economic activity and increasing tensions over the Russian troop buildup around Ukraine.  We also review new developments in key commodity markets before turning to U.S. developments.  We close with the latest news on the coronavirus pandemic.

Eurozone:  IHS Markit said its “flash” composite purchasing managers’ index for the Eurozone unexpectedly increased to 55.8 in November compared with 54.2 in October.  The data suggest the Eurozone economy is weathering the latest resurgence in the coronavirus pandemic and rising inflation, at least for now.  The data also contains some tantalizing hints that supply-chain disruptions may be easing somewhat in Europe.  The chart below shows the IHS Markit composite, manufacturing, and services PMIs over the last two years.

Russia-Ukraine:  Responding to a series of briefings U.S. intelligence officials have given to European allies in order to explain why they think Russia may be preparing to invade Ukraine, the Kremlin said Russian forces were merely conducting routine exercises and other necessary drills and that they aren’t threatening anyone.  The statement also suggested the U.S. warnings could be a ruse intended to cover up what it described as Ukrainian leadership’s aggressive intentions.  In contrast, Ukraine’s intelligence chief said Russia could launch an attack by late January or early February.

• Previously, Russia’s main “red line” regarding Ukraine was that it might be allowed to join the North Atlantic Treaty Organization (NATO).  More recently, President Putin has become concerned about NATO countries providing advanced weaponry and training to Ukraine, so he has begun to consider such ties as a red line as well.
• In a briefing to European allies last week, U.S. Director of National Intelligence Haines provided updated information on Russian troop movements, a growing disinformation campaign against Ukraine and the EU, and details on an unprecedented unofficial call-up of Russian reservists.
• Without a doubt, a Russian attack on Ukraine would be extremely destabilizing for Europe and would likely spark a major geopolitical crisis.  In such an environment, risk assets would likely turn very volatile, while investors would likely flood into safe-haven assets such as Treasury obligations and precious metals.
• In what may be an economic vote of support, the IMF yesterday approved a long-delayed $700 million disbursement to Ukraine to support economic recovery and structural reforms.  The new funds mark the second tranche of a $5 billion program agreed to in the spring of 2020. It follows a $2.7 billion IMF allocation of special drawing rights to Ukraine this summer, as well as €600 million in EU financing provided last month.

Turkey:  The Turkish lira is in yet another free fall today, following a fiery speech in which President Erdogan praised the central bank’s recent interest-rate cuts and vowed to continue his unorthodox economic policies.  So far today, the currency has dropped some 9%, surpassing the psychologically important level of 12 to the U.S. dollar and bringing the total decline in 2021 to more than 40%.

Pakistan:  Central bank Governor Baqir has warned that emerging markets are vulnerable to a taper tantrum-style shock if advanced economies do not act sooner to manage rising global inflation.  According to Baqir, the risk is that central banks in the major developed countries might have to jack up interest rates sharply if they let inflation get out of hand, in which case investors would likely dump their holdings of emerging-market assets.

Global Oil Market:  The U.S., the U.K., Japan, South Korea, China, and India today are planning to release tens of millions of barrels of oil from their strategic reserves in an effort to bring down surging energy prices.  However, the rare, coordinated release is widely seen as mere political messaging since the total volume released is likely to be too small to have any lasting impact on the market.

North American Lumber Market:  North American lumber prices are again surging, this time in response to major flooding in the Canadian province of British Columbia.  The flooding has washed out roads and bridges, caused landslides, and cut off rail lines, leaving the province’s large lumber producers isolated from both their forest supplies and their customers.

U.S. Monetary Policy:  As widely expected, several key Republican senators voiced their support for President Biden’s nomination of Federal Reserve Chair Powell for a second term.  Since most Democrats in the Senate are also expected to support Powell, the Fed chief appears on track to keep control of U.S. monetary policy in the coming years.

• As we noted yesterday, Biden also nominated Fed Governor Brainard to be Vice Chair.  Biden also has two additional open spots on the board to fill, including the Vice Chair for Supervision.
• Continuation of Powell’s dovish stance was initially greeted warmly by the financial markets yesterday.  Although, the euphoria eventually evaporated, and risk markets closed lower, apparently reflecting some investors were pricing in a Brainard nomination for the chair and even looser policy ahead.
• More broadly, a new report by Moody’s shows that in response to long years of low-interest rates, U.S. life insurers have increasingly turned to riskier, less-liquid, but higher-yielding assets to meet their obligations to policyholders.

COVID-19:  Official data show confirmed cases have risen to 258,400,173 worldwide, with 5,162,970 deaths.  In the United States, confirmed cases rose to 47,889,750, with 772,412 deaths.  Vaccine doses delivered in the U.S. now total 566,766,665, while the number of people who have received at least their first shot totals 230,732,565.  Finally, here is the interactive chart from the Financial Times that allows you to compare cases and deaths among countries, scaled by population.

Virology

• According to the latest CDC data, 69.5% of the U.S. population has now received at least one dose of a vaccine, and 59.2% of the population is fully vaccinated.
• According to an administration official, about 95% of federal employees received their first vaccination shot or had a pending or approved exception by yesterday’s deadline set by President Biden for federal employees to get vaccinated.
• Amid the resurgent infection rates in Europe, Russia has reported four straight days of near-record COVID-19 fatalities.  Seeking to encourage more vaccinations amid the carnage, President Putin said he received a booster shot.
• In contrast with the situation in Europe, new cases and deaths in Japan are at their lowest levels since early in the pandemic.
  • On Monday, the number of new COVID-19 infections confirmed in Japan totaled 50, the lowest daily figure for 2021 and the first time the number hit 50 or lower since June 22, 2020.
  • Across the country, two new deaths linked to COVID-19 were reported, while the number of severely ill coronavirus patients increased by one from the previous day to 63.

 Economic and Financial Market Impacts

• Among the many industries upended by the pandemic, wedding businesses have been some of the most impacted.  In Japan, two new surveys show nearly 60% of newlyweds did not hold wedding ceremonies amid the coronavirus pandemic, and for those who did, the event was considerably scaled down.  However, because couples could not hold wedding ceremonies, they spent more on other things, such as wedding rings and furniture for their new homes.

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by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA

[Posted: 9:30 AM EDT] | PDF

N.B.:  HOLIDAY SCHEDULE –  The Daily Comment will go on hiatus after Tuesday’s report and will return on Monday, November 29.  A Weekly Geopolitical Report will be published today, and the next report will be available on December 3.  There will be no Asset Allocation Weekly Report or podcast this Friday; it will return next week.  There won’t be a Weekly Energy Update report either.   It will return a week from Thursday. 

From all of us at Confluence Investment Management, have great Thanksgiving. 

Good morning and happy Monday!  We have breaking news; Fed Chair Powell has been renominated (see below).  Equity futures were higher before the news and have moved to new higher levels in the aftermath.  Our coverage begins with comments on the renomination.  Up next is China news.  Economics and policy come next, with cyber news to follow.  The international roundup comes after, and we close with the usual pandemic update.

Fed nominations:  The president has been quite deliberate in making a decision on the fate of the FOMC.  But breaking reports indicate that the president will renominate Jay Powell as Chair and Lael Brainard as Vice-Chair.  We note Brainard was named Vice-Chair, replacing Richard Clarida, meaning the Quarles position of Vice-Chair for supervision remains open.   The early market reaction appears positive; equity futures and Treasury yields are up.  We also note the dollar is up as well, while commodities have reacted negatively to the news.

Although left-wing populists wanted to replace Powell, in our view, President Biden simply doesn’t have the political capital to make that move.  Replacing Powell, who is quite dovish, would have been difficult, whereas even with progressive opposition, Powell will likely breeze through renomination.  He cultivates relations on Capitol Hill and is quite popular.  This means that Biden has two governor open positions to fill on the FOMC.

China news:  Lots of news on semiconductors, and there was an apparent prisoner swap last week.

• A number of stories are circulating about semiconductor chips.
  • A South Korean firm, SK Hynix (000660, KRW, 107,500), had planned an overhaul to its chipmaking facility in Wuxi, China. The plant, which makes memory chips, wanted to improve the efficiency of the facility, but U.S. pressure has led the company to reconsider.  One worry was the company was considering using some of the leading-edge lithography machines from ASML (AMSL, USD, 857.17)[1].  The U.S. is uncomfortable with China having access to these advanced machines.
  • AMSL expects to see $2.3 billion of sales to China this year. It will be interesting to see how its sales to China will fare in the future.
  • Intel (INTC, USD, 49.52) has decided not to take over a GlobalFoundries (GFS, USD, 62.11) abandoned chip plant in Chengdu. It is a bit tone-deaf to see how the company thought this was a good idea.  The U.S. pressured Intel to abandon the project.
  • The Chinese firm SMIC (0981, HKD, 22.20) says the lack of semiconductor talent will undermine China’s goal of self-sufficiency.
• Although it wasn’t necessarily advertised or discussed, it appears that a prisoner swap of sorts occurred. Daniel Hsu, who has been blocked from leaving China for more than four years, was apparently swapped for seven Chinese nationals who were convicted of crimes in the U.S.  The administration continues to insist that there was no swap per se, but just before Xi and Biden spoke last week, the aforementioned people returned home.
• China has started a new anti-monopoly bureau. One characteristic of bureaucracy is regulatory capture.  The sector being regulated eventually gets control of the regulator.  When governments want to overcome capture, they sometimes just start a new regulatory body.  That may be the case here.
• China has downgraded its relationship with Lithuania over the latter’s warning relations with Taiwan.
• As the U.S. continues to investigate China’s hypersonic missile test from last summer, they have found that Beijing has made very important and unexpected strides in the development of the technology.
• Peng Shuai, the Chinese tennis player who seemed to disappear after being linked to a sex scandal tied to a senior CPC member, has resurfaced. It is still unclear how safe she is.
• Self-imposed austerity is being touted by “young Chinese,” at least according to state media.

Economics and policy:  Inflation dominates the newsflow.

• Richard Clarida, the outgoing vice-chair, suggests the FOMC could accelerate tapering. We are seeing a chorus of FOMC members pushing for faster tightening, which will complicate Chair Powell’s renomination.
• Although it doesn’t look like supply issues will be resolved by Christmas, there is some evidence to suggest that conditions are slowly improving.
• As home prices soar, manufactured housing is quietly staging a comeback. In general, site-built homes tend to dominate the homebuilding industry, although it is less efficient.  Factory-built homes have the benefit of assembly-line construction in a controlled environment.  Because of their efficient construction, prices are usually less.  However, manufactured homes also have a less than desirable reputation.
• The recent house bill contains tax measures to narrow cross-border corporate tax differences.
• The Senate leadership is quietly trying to prevent a debt ceiling crisis in December.
• Saule Omarova’s nomination to be the next head of the Office of the Comptroller of the Currency appears to be in trouble.
• Small business is a favorite group in Washington. Big Tech and its opponents are both trying to woo the small business lobby to its side in the antitrust fight.  Big business is actively working to curb the power of the FTC on antitrust issues.
• Walmart (WMT, USD, 142.39) is experimenting with drone package delivery.
• Vietnam is sitting on a $5.0 billion stockpile of aluminum, part of a U.S. dumping investigation that began in 2019. At that time, the world was amply supplied with the metal.  But now, supplies are tight and are forecast to tighten further in the coming years.  Aluminum is critical in the energy transition; light and strong, it is used to reduce weight in vehicles to improve their efficiency.  Although this hoard would go a long way in reducing the excess inventory issue, it remains tied up in litigation.  Furthermore, it may have sat for so long that some of it may have to be scrapped (a problem that exists with commodity storage in general).
• Pension cash has fallen to low levels. If there is a liquidity squeeze, it could trigger fire sales in liquid assets.
• Nebraska has the nation’s lowest unemployment rate of 1.9%. It is the lowest state unemployment rate on record.

Crypto news:  Hackers are apparently getting mobile phone numbers and using them to drain accounts of cryptocurrency.  Given the nature of cryptocurrencies, there is little hope of recovering the asset.  There has been a large shift into stablecoins, which may suggest crypto investors are looking for safety.

International roundup:  The U.S. warns of Russian activity, Modi backs down with farmers, and elections were held in Chile, Bulgaria, and Venezuela.

• The U.S. continues to warn the EU that Russia may be considering military action against Ukraine.
• After more than a year of protests, Indian farmers forced the Modi government to back down and withdraw legislation designed to improve efficiency in India’s farm sector. Agriculture in India is inefficient.  There are too many small farms, and the only way they can function is with price guarantees, which then leads to overproduction.  About 60% of the population works in agriculture, a sign of India’s slow development of manufacturing.  The usual pattern of development is that farming efficiency leads to fewer agriculture jobs.  These workers are then absorbed in the rising manufacturing sector.  Although the farmers have won this round, reforms are still necessary. We expect the government will have to reduce the cost of adjustment to farmers in order to make this change.
• Last week, we noted Belarus removed refugees from the border and is apparently willing to send some of them back home if the EU will accept some of them. Germany and the EU have flatly rejected the proposal.  So far, Belarus has returned just under 400 refugees to Iraq.  However, as it becomes apparent the EU isn’t going to relent on letting refugees into Europe, we may see more return to the Middle East.  Meanwhile, Poland PM Morawiecki has been traveling in the Baltic states to boost support for Poland’s position on refugees.
• It looks increasingly likely that Iran won’t return to the Obama-era nuclear deal. Iran has been moving rapidly to enrich uranium beyond the restrictions of the agreement and is reluctant to return to it.  The Biden administration won’t relent on sanctions until Iran returns to the original agreement.  We have been monitoring negotiation in the Weekly Energy Update for the past few months, and the pattern suggests that no return will be forthcoming.  Although the “no deal” outcome is bullish for crude oil, for the most part, Iran is increasing its sales to nations like China, which will tend to ignore sanctions.
• There were a number of elections over the weekend:
  • In Chile, the first round of presidential elections was held. The two most popular candidates were Jose Kast and Gabriel Boric.  The former is a right-wing figure who has defended the Pinochet regime; the latter was a former student protestor.  Essentially, when Chileans go to the polls on December 19, they will be choosing between two extreme candidates.
  • Regional elections were held in Venezuela over the weekend, with opposition participation. The fact the opposition participated suggests they felt comfortable that the process would be at least modestly fair.  It will take several days for the results to be confirmed.
  • Bulgarian President Radev won a second term.
• The junta in Sudan has relented, bringing the former PM back into power. After ousting Abdalla Hamdok earlier this year, the government has restored him to power over the weekend.  However, it is not clear that this move will satisfy the protestors, who seem to indicate they view Hamdok’s return as a ploy by the military to blunt unrest.
• The military in Myanmar is dealing with falling morale as soldiers oppose the repression of their fellow citizens.
• The growing standoff between the U.K. and EU continues. The latest round of talks ended with little progress.
• North Korean hackers have been actively stealing credentials.
• The collapse of the Turkish lira is causing economic turmoil for the country.

COVID-19:  The number of reported cases is 257,674,519, with 5,153,373 fatalities.  In the U.S., there are 47,731,237 confirmed cases with 771,118 deaths.  For illustration purposes, the FT has created an interactive chart that allows one to compare cases across nations using similar scaling metrics.  The FT has also issued an economic tracker that looks across countries with high-frequency data on various factors.  The CDC reports that 566,964,025 doses of the vaccine have been distributed with 451,453,834 doses injected.  The number receiving at least one dose is 230,298,744, while the number receiving second doses, which would grant the highest level of immunity, is 196,284,442.  For the population older than 18, 70.9% of the population has been fully vaccinated, with 59.1% of the entire population fully vaccinated.  The FT has a page on global vaccine distribution.  In the U.S., 2021 fatalities from COVID-19 surpassed levels seen in 2020.

• As cases surge in Europe, governments are responding with restrictions on movement. The resumption of lockdowns has triggered widespread and, in some areas, violent protests.
  • After Belgium implemented new rules, some 35,000 people took to the streets. The demonstration moved past authorized areas and led to tear gas being used.
  • In the Netherlands, Dutch police opened fire on protestors. The protests were described as an “orgy of violence.”
  • Austria has implemented lockdowns and mandatory vaccinations, leading to widespread civil unrest.
  • Italy has also implemented new restrictions, using an electronic vaccine passport to manage movement. The new measures have dented the popularity of Mario Draghi.
  • Although western Europe is seeing a rapid rise in cases, central and eastern Europe have been dealing with rising cases for weeks. Years of communist rule have undermined trust in government, leading to lower vaccination rates and less compliance with restrictions.
• Australia has maintained strict restrictions on movement; we are starting to see an expanding protest movement against these measures.
• In general, what we are seeing in Europe and Australia indicates that the use of lockdowns to curb infections has probably reached its limit. As we detailed last week, the surge seen in drug overdoses fatalities in the U.S. may be due, in part, to social isolation.  There are costs to lockdowns, and increasingly, citizens are pushing back against them.  If lockdowns are no longer going to be tolerated, governments will be forced to manage the stresses on the medical care system.
• Meanwhile, Asian nations, with the exception of China, are easing travel restrictions.
• Perhaps the most hopeful development in managing COVID-19 is the advancement of antiviral treatments. It is becoming increasingly clear that vaccination, by itself, probably won’t end the pandemic.  Breakthrough infections remain a risk to the most vulnerable.  Immunity seems to wane over time, and boosters will likely be necessary.  Like influenza, COVID-19 looks to become endemic.  But the antiviral treatments, at least so far, look very promising.  If taken in the early stages of an infection, the chances of hospitalization decline notably.  The combination of testing, vaccination, and antivirals holds the promise of making COVID-19 a manageable, if not persistent, malady.

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[1]  An in-depth look at AMSL can be found here.

by Bill O’Grady, Thomas Wash, and Patrick Fearon-Hernandez, CFA

[Posted: 9:30 AM EDT] | PDF

Good morning! U.S. equity futures are signaling a lower open. Today’s report begins with U.S. economic and policy news, followed by our roundup of China-related stories. International news is next, and we conclude with our pandemic coverage.

Economics and policy:

• Senator Joe Manchin (D-WV) stated that he is looking favorably at supporting Federal Reserve Chair Jerome Powell for renomination.
• Automakers have decided to get into the semiconductor business. Frustrated with the chip shortages, Ford (F, $19.56) and General Motors (GM, $62.33) have both expressed an interest in forming strategic partnerships with U.S.-based semiconductor manufacturer GlobalFoundries Inc. (GFS, $64.27) in order to develop chips internally.
• Mexican President Andres Manuel Lopez Obrador (AMLO) and Canadian Prime Minister Justin Trudeau met with President Biden on Thursday. The meeting focused on a provision within the social spending bill that is being discussed amongst U.S. lawmakers. The provision would allow citizens to receive a tax write-off of $12,500 for electric vehicles assembled by U.S. union workers using American-made batteries. Both Lopez and Trudeau contend that the provision would be a violation of the USMCA trade agreement signed in 2018.
  • During the meeting, AMLO brought up the possibility of the U.S. loosening immigration restrictions in order to address the labor shortage.
• An American diplomat stated that the U.S. could attempt to persuade China and Russia to help pressure Iran to return to the negotiating table if it is unable to secure a nuclear agreement with Tehran.
• The Congressional Budget Office estimates that the social spending bill will add $160 billion to the budget deficit. The estimate contradicts the White House’s claim that the social spending bill is deficit neutral. This discrepancy has been attributed to differing projections in the amount of revenue the IRS will generate with increased enforcement. The White House estimates that the IRS will generate $400 million, while the CBO estimates the agency enforcement would increase revenue by $207 million.
  • The CBO also reported that the four-week paid family and medical leave would cost $205.5 billion.
  • Additionally, the CBO estimates that the lower prescription drug pricing in the spending bill will lead to a $160 million decrease in the budget deficit.
  • That being said, moderate Democrats appear to be ready to back the spending bill.
• The Texas electric grid is not prepared to deal with another severe winter storm as it did in February, according to the North American Electric Reliability Corp (NERC). If the state is hit with another severe winter storm, it could lead to disruptions in natural gas pipelines and power stations.
• Atlanta Federal Reserve President Raphael Bostic, a noted dove, stated he would like the Federal Reserve to start raising rates next summer. He believes that by that time jobs should have returned to their pre-pandemic levels.

China:

• President Biden is considering a partial boycott of the Winter Olympics in Beijing. It would mean the U.S. would not send government diplomats to the event.
• Chinese stocks dipped on Thursday after e-commerce company Alibaba (BABA, $143.60) warned of a drop in sales due to a projected slowdown in consumer spending in China.
• China has agreed to sell some of its reserves to help offset the rise in natural gas and oil prices. The U.S. is expected to follow suit.
• Prior to the meeting between Xi and Biden, China and the U.S. exchanged good faith offerings. China allowed an American to leave the country, and the U.S. freed seven Chinese nationals. The gestures from both sides provide further evidence of de-escalation. However, countries in the Indo-Pacific are still wary of a thaw in tensions between the U.S. and China.
• Former Secretary of State and Democratic Presidential candidate Hilary Clinton stated the U.S. should cooperate with China on some issues and avoid an aggressive buildup of military forces. Her comments reflect the growing trepidation among the political establishment regarding the ongoing tension between the U.S. and China. We suspect that her views could be a sign that there is a growing rift within the White House as to how to deal with an increasingly assertive China.
• The People’s Bank of China has warned financial institutions about taking one-sided bets against the yuan. The currency has strengthened significantly versus the dollar since the start of the pandemic and is now approaching a three-year high. If this persists, the currency could make Chinese goods less competitive, and therefore, hurt the country’s exports. In the past, China has directly intervened in currency markets when the yuan has gotten too strong. However, this time around, such intervention could risk the possibility of reigniting trade tensions with the U.S.

International news: 

• The Belarusian government has removed immigrants along its border with Poland to the relief of Brussels. Although the crisis is far from over, the move suggests Belarus has backed down in its standoff with the EU.
• Turkey’s central bank has cut rates in the face of rising inflation. The bank said the rise in price levels is due to issues outside of the government’s control. The decision to cut rates led to a sell-off in the Turkish lira, as investors have expressed wariness of the currency’s legitimacy.
• Russia has decided to send some of its diesel to the U.S. Although this is welcome news to President Biden, it may be a slight toward neighboring Europe, which is also struggling to meet its diesel needs.
• The Japanese government approved a $490 billion stimulus package as the country looks to address economic inequality and domestic supply chain issues. The stimulus package accounts for 10% of the country’s GDP and is expected to boost domestic output by 5.6%.
• The U.S. learned that China was developing a military facility at a port in the United Arab Emirates and warned the Emirates government that China’s presence could hinder ties.

COVID-19:  The number of reported cases is 256,232,609, with 5,135,360 fatalities.  In the U.S., there are 47,532,795 confirmed cases with 768,703 deaths.  For illustration purposes, the FT has created an interactive chart that allows one to compare cases across nations using similar scaling metrics.  The FT has also issued an economic tracker that looks across countries with high-frequency data on various factors. The CDC reports that 561,149,025 doses of the vaccine have been distributed, with 446,250,342 doses injected.  The number receiving at least one dose is 228,570,531, the number of second doses is 195,713,107, and the number of the third dose, the highest level of immunity, is 32,469,881. The FT has a page on global vaccine distribution.

• A new study suggests that the first known case of the COVID-19 may have come from a vendor in a Wuhan market.
• India has imposed an export ban on syringes as the country tries to implement its vaccine program to combat the spread of COVID-19.
• The U.S. will look to purchase $5.3 billion worth of COVID-19 pills from Pfizer (PFE, 51.41).
• Austria will enter a national lockdown on Monday, while Germany’s health minister stated he would not rule out a lockdown.

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