Premarket: Apple is red

apple premarket red 11-26-21From the Wall Street Journal’s “Stock Futures, Oil Drop on Concerns Over New Covid-19 Variant” posted early Friday:

Global equity markets and U.S. stock futures fell after South Africa raised the alarm over a new, fast-spreading strain of the coronavirus, triggering concern about the potential for new travel restrictions or other curbs that could limit economic activity.

With U.S. stocks set for a shortened trading session after a one-day Thanksgiving break, market participants said the global moves were likely amplified by thin trading volumes…

South Africa’s government said Thursday it was considering new public-health restrictions to contain the new variant, dubbed B. 1.1.529. Scientists say it has a high number of mutations that may make it more transmissible and allow it to evade some of the immune responses triggered by previous infection or vaccination. The variant has been detected in a South African traveler in Hong Kong. The South African rand weakened sharply against the dollar, with $1 buying about 16.3 rand.

In Asia-Pacific, Hong Kong’s benchmark Hang Seng Index stood 2.7% lower, while Tokyo’s Nikkei 225 closed down 2.5%. Australia’s S&P/ASX 200 pulled back 1.8%.

“Everybody seems to be panicking about this new variant that is cropping up out of South Africa,” said Rob Carnell, the head of research and chief economist for the Asia-Pacific region at ING.

Charts: Yahoo!Finance sees a bearish fast stochastic pattern. Max pain is at $157.50 with a call peak at $165. Updated 7:30 a.m. Eastern:

apple premarket red 11-26-21

 

18 Comments

  1. Bart Yee said:
    In the grand scheme of things, a short holiday trading day is just a blip in the market. We’ll likely get some conflicting news over the next few weeks so that Wall Street can continue building its “Wall of worry” to fret about – examples:

    1) Covid variant concerns, travel restrictions for S. Africa and possibly Europe, and lockdowns on the table for some countries —> could lead to less oil demand, dropping oil prices. Good for US consumers (eventually), bad for oil companies (eventually), maybe tamps inflation a smidge.

    2) the Fed signals what everyone knows, inflation is here, anticipated (because that’s what happens in a rebound recovery), and the Fed will raise rates sooner than later (and it’s inevitable and a completely predictable action), but Wall Street psychologically wants to party until it has to be told No, we’re really going to raise rates. Then Wall Street predicts doom and gloom, algorithms go haywire, and we’ll see a pullback on “the news”.

    3) Holiday spending will be strong yet supply chain issues will cause several conflicts – revenue will be up for many, some expectations reduced by supply impacting sales, prices will rollercoaster depending on sales promotion aggressiveness vs reduced supply keeping prices high on the most desirable products (Apple for both?). Of course, Wall Street will be self-depressed about the post holiday lull vs year end and January sales to clear inventory and then worry further about how retailers will restock into Q1 2022 given the production and shipping issues still existent?

    4) Finally, how long will employment and labor numbers take to meet and balance job demand? Had a large portion of labor fundamentally left some service sectors and where are they going? Labor shortages have forced wages higher for the first time in a long time, its inflationary but good for workers which is eventually good for the economy because they will save AND spend, so round and round we go.

    That’s why, IMO, for analysis, you can be optimistic, pessimistic, balanced, realistic, or pragmatic. And then understand that people are gonna do what they’re gonna do, regardless of what is going on from a macro level.

    4
    November 26, 2021
    • Gregg Thurman said:
      Most excellent recap Bart.

      2
      November 26, 2021
    • David Emery said:
      Several reports I’ve heard on wages have emphasized that the wage gains are in both lower wage and younger workers. Now It’s A Good Thing that low wage workers are getting a raise. But I’m wondering about the consequences if older workers (who are more likely to have families and presumably a lot more expenses like mortgages etc) don’t see similar wage growth.

      0
      November 26, 2021
      • Kirk DeBernardi said:
        @ David Emery —

        If you happen to be referring to “the middle class” (remember them?), their wages have, at best, kept up with inflation for the past 30-40 years.

        It took a pandemic to finally rattle the wage cage.

        Oh, the irony.

        0
        November 27, 2021
  2. Bart Yee said:
    While the new B.1.1.529 could prove troublesome, it’s mutations and spread in S. Africa’s vastly undervaccinated population (through no fault of their own given their economies, population size, and vaccine supply issues) isn’t particularly surprising nor unpredictable. Given travel has spread a few sentinel cases to Hong Kong and elsewhere, countries are reacting quickly with travel restrictions but we know from past experiences now that seeding has begun in other countries and regional public health has got to make stronger efforts to track down and contact trace all travelers from affected areas so informing and infected quarantine / isolation can begin. I shudder to think though of Eastern and Southeastern US international travel hubs becoming epicenters again for variant spread as in the pandemic’s beginning.

    0
    November 26, 2021
    • Arthur Cheng said:
      How infectious is this nu variant reminds to be seen. There does not seems to be a wide spread of the cases even in South Africa. South China Morning Post reported 6 cases in South Africa. Just think, between delta and nu there have been a number of other variants like gamma and mu. None was anywhere as infectious as delta. So let’s wait and see.

      1
      November 26, 2021
  3. This newest wave is not just about the latest new variant in South Africa. One need only look at Germany to see where the US is headed. Covid-19 infections and deaths in Germany are rising faster & earlier than last winter. The 7-day incidence rate per 100,000 people is the highest ever. 2/3 of Germans are vaccinated. The spread and deaths are occurring among the unvaccinated young. This is happening in Michigan now too. The Thanksgiving gatherings will only escalate the situation and national governments are afraid of right-wing ‘freedom’ protests to enforce mandates. Retail stores can’t require the few employees that show up to be vaccinated. Here come the Black Friday crowds. I’m echoing hospital & doctors office staff I know as friends. This wave crashes where they work.
    DOW off 800 pts before the market open. Guess investors will eventually pivot to Stay at Home stocks again. Not today but over time. Netflix, Zoom, Amazon & Apple are among that set. Oil prices will drop further but fearful folks won’t be going about using their cars. The kids will fill the nightclubs not matter what.
    I’d have a more positive outlook if state governors in certain heavily populated states weren’t so opposed to masks & vaccines.

    6
    November 26, 2021
    • Bart Yee said:
      @Thomas
      Very good recap and I especially appreciate the waves crashing at medical’s (Emergency Rooms) doors. US medical systems will be stressed yet again and in those locales where vaccination rates are lower & lowest, we WILL see highest case and mortality rates plus very clear evidence (again) of unvaccinated populations of more younger people vs old becoming statistics through their decisions or non-decisions.

      Covid virus doesn’t care what you decide medically or politically. It only cares about whether you’re susceptible to infection or not. If you’re vaccinated, you have a jump started antibody response ready – you can still be infected but the infection is much lower replication wise, widely lower number of viral particles produced before antibody response kicks in, and total viral load significantly lower (for infectious shedding) as your body clears the infection. That is why vaccinated patients predominantly have less intense and fewer symptoms, less likelihood of spreading (not zero), and, always with exceptions, less hospitalizations and mortality.

      Contrast that with completely unvaccinated people with no prior Covid exposure – once infected (and more likely to since that regional cohort may eschew masking, social distancing, and for some, actively seek out venues and activities where crowding with like minded occurs – Sturgis, rallys, etc. come to mind) ), the virus has unfettered cell access and ability to replicate, turning especially respiratory cells into virus factories. Replication escalates exponentially without early and sufficient antibody response and within 5-10 days, either you do mount a decent response and hold Covid off, or you’re getting worse by the hour, lungs and oxygen transfer deteriorating, those folks now have, IMO a 75-100% chance of being hospitalized. Once in, 100% chance for at least a 5-10 day stay minimum, plus better than even chance of ICU stay where IMO you have a <50% chance of making it out alive.

      1
      November 26, 2021
  4. Greg Lippert said:
    You can’t fix stupid.
    -Ron White

    3
    November 26, 2021
  5. Jerry Doyle said:
    This is an extremely light trading day when the markets are opened only a few hours. The big boys and institutional players are not even at their desks. Market players today most likely are small retail investors sitting at home panicking. With nothing better to do they are selling off and moving the markets disproportionately. We have vaccines. We have a pill form just approved by the FDA that more folk will feel comfortable taking instead of an injection. We have previous experience developing the current crop of innovative vaccines that will facilitate and expedite development of newer vaccines. The worse response we need now is another government over reaction that panics the markets involving new mandates and quarantines. People want to get on with their lives.

    0
    November 26, 2021
  6. Gregg Thurman said:
    Today was the best possible day for this kind of news to surface. First of all it’s Friday, the end of the news week, the dat the White House releases reports in hopes they get lost in the news cycle.

    Second it’s a shortened, holiday session. Traders took off Wednesday late afternoon for a long weekend in the Hampton. This is reflected in trading volume, even at bargain basement pricing there were no buyers or sellers

    Lastly, by the time traders return to their respective desks on Monday we’ll have a much clearer understanding of the new variant and its potential to disrupt. My guess is that the markets will respond positively at that time, as the bargain hunters load up.

    2
    November 26, 2021
  7. Bart Yee said:
    @Thomas

    “I’d have a more positive outlook if state governors in certain heavily populated states weren’t so opposed to masks & vaccines.”

    In our most populous state, California, masks and vaccines are still promoted and used, especially in coastal urban cities with a few exceptions. California’s vaccination rate is 63% fully and 78% at least 1 vax respectively for 39.3M people. Texas and Florida as next most populous states are at 55%/64% (28M pop.) and 61%/71% (21M pop) respectively. The US vaccination average is currently 59.5%/69.9%. This covers 88.3M people. If we add New York at 68.2%/77.5% (19.5M), that covers 107.8M people, fully 32.3% of the US population. I haven’t yet studied the booster uptake rates by states.

    Further below in the data cited is a breakdown of age group vaccinations by age per state and the younger groups’ uptake is interesting to review. It is good to note that the most vulnerable aged group of 65+ that is fully vaccinated is better than 90% in 32 states, 85-89.9% in 15 states, 80-84-5% in 2 states, and one state below 80%.

    Time and experience will tell whether going forward through year end and into early 2022 if population adjusted case and fatality rates differ significantly by region or state.

    Data source: Mayo Clinic vaccine tracker:
    https://www.mayoclinic.org/coronavirus-covid-19/vaccine-tracker

    0
    November 26, 2021
  8. Bart Yee said:
    From The Guardian:

    “WHO has given the new variant its own Greek name. Previously known as B.1.1.529, it has now been dubbed “Omicron.”

    “ Yesterday, Omicron had been detected in South Africa, Hong Kong and Botswana. Today, Israel announced one confirmed case and two more possible cases. The confirmed case was discovered in a person arriving from Malawi. Belgium also announced it had identified the first case in Europe. Reuters reported that the case was a young woman who “developed symptoms 11 days after returning from a trip to Egypt via Turkey.”

    The first known incident of Omicron was collected in South Africa on November 9 and formally identified Tuesday.”

    From Africa CDC:
    “ By 25th November 2021, the B.1.1.529 variant had been detected in 77 samples collected between 12-20 November from Gauteng province in South Africa, 4 samples from Botswana and 1 sample in Hong Kong.”

    And a UK science site:
    “Looking at variants over time in South Africa, the Beta variant was associated with their second wave of infection, which was replaced by the Delta variant which drove the third wave in South Africa. Initial observations suggest that B.1.1.529 was able to become established in Gauteng province and outcompete Delta. There are several explanations for this. A large super-spreader event linked to B.1.1.529 would give the impression of outcompeting Delta (which is otherwise the ‘fittest’ variant we have seen to date). But the other explanation is that B.1.1.529 can actually outcompete Delta. Further studies are required to confirm this.

    “Lineage B.1.1.529 has also very recently been detected in Botswana (n=4) and Hong Kong (n=1, in a traveller from South Africa). No cases have been confirmed in the UK. It is important not to assume that the variant first emerged in South Africa.

    “In summary, the full significance of this variant is not known.“

    https://www.sciencemediacentre.org/expert-reaction-to-b-1-1-529-variant-situation-in-south-africa-and-news-that-travellers-arriving-in-the-uk-from-several-southern-african-countries-will-have-to-quarantine-and-from-1200-uk-time-on-t/

    1
    November 26, 2021

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