How Dangerous Is “Omicron” for Stock Bulls?
Health experts are simply saying it is still too early to understand the full threat this new variant may pose. It could be a couple of weeks before they know more specific details. President Biden commented yesterday that the new variant will not lead to lockdowns or other restrictions in the U.S. Fed Chair Jerome Powell is schedule to testify before the Senate Banking Committee today about the threat the new variant may pose to the U.S. economic recovery.
In prepared testimony released yesterday, Powell pointed to the overall recent rise in U.S. Covid cases as well as the emergence of Omicron as downside risks to the economy but also noted how quickly the economy rebounded once the summer’s Delta wave began to fade.
Earnings in the spotlight
Most on Wall Street still seem to be looking for the Fed to hike interest rates two times in 2022 with several insiders thinking we might see more like three rate hikes.
Today, investors will be turning attentions back to earnings for some late-in-the-season entries from key tech companies Salesforce, Hewlett Packard, and GlobalFoundries. As the world’s third-largest chipmaker, GlobalFoundries is of particular interest with investors anxious to hear output projections. The company, which specializes in inexpensive chips used by the auto industry, only went public in late October so this is also its first earnings report.
As for economic data, the Case-Shiller Home Price Index will be closely watched amid concerns about the impact soaring home prices are having on overall inflation levels. Prices are expected to show a gain of over +1% that would push the year-over-year gain to nearly +20%. Consumer Confidence for November is also out today with most insiders expecting a slight decline from last month, when the gauge rose for the first time since June.
Turning to oil markets, traders this week are keeping an eye on Iran with the U.S. and other global leaders resuming talks to revive the 2015 nuclear deal. Most political experts doubt much will come of the new negotiations as Iran is taking a hard stance that all sanctions be lifted first, which is pretty much a non-starter for the U.S. However, the country’s economy is in tatters so closed-door talks may sound different than what’s being said publicly. Oil traders are also anxious for OPEC+ final meeting of the year being held on Wednesday and Thursday this week to determine whether or not to the group will continue its planned production increases.
Don’t forget, we have the highly anticipated monthly US Jobs Report scheduled for release on Friday. This is also the same day the current US budget will expire.