Markets fall on virus concerns and Manchin's rejection on spending bill

Dow tumbled 433 (losses trimmed by late day buying), decliners over advancers 4-1 & NAZ pulled back 188.  The MLP index fell 3+ to 167 & the REIT index dropped 3+ to the 486s.  Junk bond funds were weak & Treasuries continued to see buying.  Oil was off 2+ to the 68s & gold declined 14 to 1790 (more on both below).

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Justice Brett Kavanaugh asked the Biden administration to respond to a flood of appeals of a Sixth Circuit ruling that allowed the Occupational Safety & Health Administration (OSHA) to move forward with its controversial vaccine-or-testing mandate for large businesses.  The Fifth Circuit Court of Appeals initially halted the planned implementation of the mandate – which applies to businesses with 100 or more employees – after Pres Biden announced it earlier this fall.  Due to the large number of cases against the mandate all around the country, the Sixth Circuit was chosen to hear a consolidated appeal of all of those cases.  The Sixth Circuit overruled the Fifth Circuit, prompting the many businesses, trade associations & religious groups who sued against the mandate to ask the Supreme Court to step in & block it yet again.  The Supreme Court is not considering the full validity of the OSHA ETS on vaccines.  It is only considering whether to temporarily halt the implementation of the rule while litigation in lower courts decides the issue on the merits.  If the rule goes into effect when the Biden administration wants it to, tens of Ms of workers in businesses across the country will be subject to the mandate & forced to either get a vaccination or submit to a weekly COVID testing regime.  Kavanaugh set a deadline of 4 PM, Dec 30 for the Biden administration to respond to the appeals.  It is possible the court will then take action on the case early in 2022.  

Kavanaugh asks Biden to respond to flood of vaccine mandate appeals

Coal-fired power generation is due to hit an all-time high this year, according to a report from the International Energy Agency (IEA), with the organization’s executive director calling for urgent action to mitigate emissions from the sector.  The IEA's report, Coal 2021, noted the planet’s coal power generation was on a trajectory that would see it rise by 9% in 2021, reaching 10,350 terawatt-hours.  In an announcement Fri, the IEA said the rebound was “being driven by this year’s rapid economic recovery, which has pushed up electricity demand much faster than low-carbon supplies can keep up.”  A sharp rise in natural gas prices had also “increased demand for coal power by making it more cost-competitive.”  In terms of global demand for coal, which relates to areas like steel & cement production as well as power generation, this is slated to rise by 6% in 2021.  The IEA's report said worldwide coal demand “may well hit a new all-time high in the next two years.”  In terms of coal production, the IEA said this was “forecast to reach an all-time high in 2022 and then plateau as demand flattens.”  The IEA's exec director, Fatih Birol, described coal as being “the single largest source of global carbon emissions, and this year’s historically high level of coal power generation is a worrying sign of how far off track the world is in its efforts to put emissions into decline towards net zero.”  “Without strong and immediate actions by governments to tackle coal emissions — in a way that is fair, affordable and secure for those affected — we will have little chance, if any at all, of limiting global warming to 1.5 °C,” Birol added.

Coal-fired power generation on track to hit all-time high this year, IEA says

Moderna (MRNA) said its COVID-19 booster does appear to provide protection against omicron, but the dcompany will still be developing a new shot specific to the variant currently surging across the world.  It said preliminary data from lab testing found the version of its booster currently in use in the US & elsewhere provided increased antibody levels to neutralize the virus.  But it also found that a double dose of the booster shot provided a much greater increase in those levels.  The news is the latest sign that booster shots are an effective way to protect against the new variant, which has driven a rapid increases in case numbers since first emerging last month.  MRNA said its currently FDA-approved 50ug booster was found to increase neutralizing antibody levels against omicron 37-fold compared to pre-boost levels.  Meanwhile, it found that a 100ug booster dose gave an 83-fold increase in neutralizing antibody levels.  It is still working to develop an omicron-specific booster, however, with the shot expected to advance into clinical trials in early 2022.  CEO Stéphane Bancel said the company's findings should come as “reassuring” news.  “The dramatic increase in Covid-19 cases from the omicron variant is concerning to all.  However, these data...are reassuring,” Bancel said.  Still, he said: “To respond to this highly transmissible variant, Moderna will continue to rapidly advance an omicron-specific booster candidate into clinical testing in case it becomes necessary in the future.”  “We will also continue to generate and share data across our booster strategies with public health authorities to help them make evidence-based decisions on the best vaccination strategies against SARS-CoV-2,” he said, using an alternate name for the Covid virus.  The stock dropped 18+ (6%).
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Moderna says booster effective against omicron in tests, will still develop new shot

Gold contracts closed lower, with the precious metal hit by the prospects for higher interest rates—something that was hurting appetite for equities & precious metals alike, in the short term.  Market participants also said that part of the downside for precious metals related to selling amid a lack of liquidity in thinly traded holiday markets, rather than purely a more bearish stance on the yellow metal.  Many global markets will be closed on Fri in observance of Christmas.  Despite the challenges that the economy may face in this wave of COVID-19 infections, central bankers are expected to be more aggressive about lifting interest rates, which currently stand at 0-0.25%, to combat inflation that has been rising on the back of supply-chain bottlenecks & growing demand for goods & services in the uneven economic recovery from the pandemic.  Feb gold settled $10 (0.6%) lower at $1796 an ounce, following a 1.1% decline for the most-active contract.  A number of countries already imposed fresh restrictions due to the spread of the omicron variant of coronavirus that causes COVID-19 as the holiday season gets under fuller swing.  The Netherlands reimposed a lockdown, with all nonessential shops, bars & restaurants closed until mid-Jan.  Irish Prime Minister Micheál Martin also announced new restrictions & Pres Biden is expected to deliver tomorrow an update on the fight against COVID-19.

Gold settles below $1,800 amid global selloff to start Christmas week trading

Crude-oil prices fell sharply, but ended off of session lows, as the spread of the omicron variant of the coronavirus that causes COVID-19 & the imposition of new mobility restrictions in parts of the world, amplified worries about demand.  Politics also were playing a part to undercut demand for crude after Dem Sen Joe Manchin said that he wouldn't lend support to Pres Biden’s key $2T spending bill.  Manchin said that after 5½ months of talks within his own party, he couldn't “vote to continue with this piece of legislation. I just can’t. I’ve tried everything humanly possible. I can’t get there.”  West Texas Intermediate (WTI) crude for Feb, the most actively traded US contract, ended the day down $2.11 (3%) at $68.61 a barrel after trading as low as $66.12.  WTI on Fri put in a 1.1% weekly decline.  Feb Brent crude, the global benchmark, lost $2 (2.7%) to settle at $71.52 a barrel, following last week’s 2.2% weekly decline.  Today's settlements were the lowest for the most actively traded WTI & Brent contracts since Dec 3.  OPEC+'s output continues to be below agreed upon targets.  OPEC+ compliance reportedly stood at 117% in Nov, up from 116% in the month before.  Earlier in Dec, OPEC+, decided to stick to a previously agreed upon plan of hiking output by 400K barrels per day in Jan, but left options open to “make immediate adjustments,” as needed, amid the new phase of the pandemic.  The latest forecasts from the National Oceanic& Atmospheric Administration are now showing the likelihood of below-normal temperatures spreading from the Northwest across the West & upper Midwest over the next 2 weeks.

Oil ends 3% lower amid omicron-inspired restriction

This was another brutal day for stocks, something that has been common in recent weeks.  The virus got another wind & is fighting back hard once again.  This has the makings of reducing holiday sales below the robust period that was forecast.  Rejection of the spending bill in Congress may be a plus for the economy.  More spending during a time of high inflation is not a smart way to control inflation.  Happy times for investors are taking a pause.

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