People queue at a streetside Covid-19 testing booth in New York’s Times Square on Dec. 20, 2021.
AFP via Getty Images
The Omicron variant has usurped Delta as the dominant coronavirus strain in the U.S. in just a matter of weeks.
The extent of the new variant’s transmissibility and rapid spread was evident in stark data from the Centers for Disease Control and Prevention. It published its latest weekly variant proportions tracker on Monday—Omicron accounted for 73.2% of sequenced cases in the week ending Dec. 18, up from a revised 13% the previous week—less than a month ago that figure was 0.1%.
The White House unveiled new steps to protect the U.S. early Tuesday, focusing on supporting hospitals and growing vaccination capacity. Significantly, there were no new restrictions, although there was a strong warning for unvaccinated people.
Across the pond, however, the picture is different, as many European countries are imposing restrictions. In the U.K., Prime Minister Boris Johnson is under increasing pressure to do so, while also juggling opposition to new measures within his own party.
On top of all that, investors learned yesterday that a booster dose of Moderna ’s vaccine appears to be protective against Omicron.
This close to Christmas, the markets are in no fit state to properly digest this flurry of Covid-19 news. Monday’s sharp selloff, exacerbated by Sen. Joe Manchin’s (D., W.Va.) rejection of President Joe Biden’s Build Back Better plan, gave way to a gentle rebound early Tuesday.
Volumes will only get thinner in the days ahead but the Covid newsflow is unlikely to slow down. It may be early January before markets fully digest developments and make a significant directional move, by then we will know a lot more about the new variant’s severity.
—Callum Keown
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Omicron Overtakes Delta Variant in the U.S.
The Omicron variant made up close to three-quarters of analyzed U.S. infections for the week from Dec. 12 to 18, up from less than 1% two weeks ago, according to the CDC. Cases are doubling every 1.5 to three days in places.
- Moderna said booster doses of its Covid-19 vaccine increased the immune response against Omicron in lab tests, raising levels of antibodies to 37 times their level prebooster. Moderna said it would start clinical trials of an Omicron-specific booster in early 2022, if needed.
- The American Pharmacists Association said pharmacists are burned out and “overwhelmed” by Covid-related workplace stresses. CVS Health
and Walgreens Boots Alliance are adding breaks, hiring more staff, and raising wages. Rite Aid is closing stores an hour early. - World Health Organization director-general Tedros Adhanom Ghebreyesus urged countries to rein in national holiday events because of the Omicron variant. Better to cancel events now and celebrate later “than to celebrate now and grieve later,” he said.
- Los Angeles canceled its outdoor New Year’s Eve celebration in Grand Park, Rhode Island reinstated its indoor mask mandate for large venues, and Boston Mayor Michelle Wu said people must show proof of vaccination to enter restaurants, bars, and other businesses starting in January.
What’s Next: The World Economic Forum is postponing its annual meeting in Davos, Switzerland, for the second straight year, saying the gathering planned for Jan. 17 to 21 will be held online, and an in-person gathering will take place in early summer.
—Janet H. Cho
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Schumer to Take Up Biden’s Spending Plan in January
Senate Majority Leader Chuck Schumer (D., N.Y.) said Democrats would take up Biden’s $1.7 trillion education, healthcare and climate spending package early in the new year, pressing ahead despite Manchin’s vow not to vote for it.
- Senate Democrats need Manchin’s vote to pass the bill. Manchin told a West Virginia radio host he won’t be pressured into supporting it. Progressive Caucus Chair Pramila Jayapal (D., Wash.) called for Biden to take executive action on the Build Back Better bill.
- Goldman Sachs economists lowered their forecasts for U.S. gross domestic product growth in 2022, to 2% in the first quarter from 3% previously, saying a failure to pass the bill has “negative growth implications.” They lowered projections to 3% and 2.75% growth in subsequent quarters.
- One provision of the bill is the most immediate casualty. Child tax credits of up to $300 a child expired. The program paid $15 billion a month to 35 million families this year. Without the payments, consumer spending on groceries and fuel could fall, and poverty rates could increase.
- Manchin made a counteroffer on the bill last week that included $1.8 trillion for universal prekindergarten for 10 years, expanded Obamacare, and fighting climate change, the Washington Post reported. It didn’t include extending the child tax credit.
What’s Next: Nixing the bill also kills a proposed 5% surtax on individual incomes above $10 million, an $80,000 cap on state and local tax deductions, a 15% minimum tax on corporations with annual incomes above $1 billion, and $79 billion to boost the Internal Revenue Service’s enforcement efforts.
—Janet H. Cho
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Elon Musk’s 2021 Tax Bill Will Be $11 Billion
Tesla founder and CEO Elon Musk said his tax bill this year is going to be about $11 billion, which he said is more than any American has ever paid. That is thanks to his sale of about 13 million shares, or about $14 billion, including shares acquired through options.
- In November, Musk sent out a poll on Twitter , asking people if he should sell 10% of his Tesla shares to speed up the recognition of capital-gains taxes. The Twitterverse said yes, and the selling began.
- Last week, Musk exercised management stock options granted in 2012, buying 2.2 million Tesla shares for $6.24 each. They currently trade at $889 each. He then sold 934,091 shares to pay taxes. Management stock options gains are taxed like regular income when exercised.
- Musk is the world’s richest person, with $243 billion in wealth, according to Bloomberg. He often courts controversy for railing against politicians when they say we should raise taxes on the wealthiest and make them pay their fair share.
- Tesla shares also face pressure over the possible collapse of the Build Back Better spending bill, which proposed tax credits to encourage people to buy electric vehicles, though credits for Tesla purchases would have been smaller because it uses nonunion labor.
What’s Next: Tax credits could help increase the number of electric vehicles sold in the U.S., currently about 3% of all car sales versus 20% in China. A dozen new EV models will be available to U.S. consumers next year.
—Liz Moyer
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Super Saturday Retail Sales Rose In-Store and Online
Super Saturday retail figures improved noticeably from last year, both in-store and online, despite worries about the Omicron variant. Foot traffic was up 19.4% on Super Saturday—the last Saturday before Christmas—compared with 2020, according to Sensormatic Solutions.
- That was still 26.3% less than the foot traffic recorded for in-store shoppers on the same day in 2019. The National Retail Federation’s survey said 148.2 million Americans planned to hit stores and websites on Saturday, down slightly from 150 million in 2020.
- Online sales on Super Saturday rose 13.3%, to $2.4 billion, beating last year’s number, according to data from Adobe Analytics and on track with what the research company was expecting.
- Retail stocks were broadly lower, and the S&P consumer discretionary sector is down about 6% in December, on pace for its worst month since March 2020, according to Dow Jones Market Data.
- Athletic-apparel retailer Nike reported higher-than-expected second-quarter earnings and sales despite production and supply-chain disruptions, including Covid-19-related factory shutdowns and higher costs to pay workers and ship inventory.
What’s Next: Some retailers are counting on last-minute holiday shoppers to meet their fourth-quarter sales targets. Only about 18% of consumers had completed half their shopping by Nov. 5 this year, compared with 21% in 2020, and 7% hadn’t started shopping as of Dec. 14, according to a Jefferies survey.
—Janet H. Cho
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Be sure to join this month’s Barron’s Daily virtual stock exchange challenge and show us your stuff.
Each month, we’ll start a new challenge and invite newsletter readers—you!—to build a portfolio using virtual money and compete against the Barron’s and MarketWatch community.
Everyone will start with the same amount and can trade as often or as little as they choose. We’ll track the leaders and, at the end of the challenge, the winner whose portfolio has the most value will be announced in The Barron’s Daily newsletter.
Are you ready to compete? Join the challenge and pick your stocks here.
—Newsletter edited by Liz Moyer, Camilla Imperiali, Rupert Steiner
