Week in a Glance: Omicron, Evergande Default, US Inflation

13 дек. 2021 г.

The last week can definitely be written as an asset for buyers of risky assets. US stock indices closed in positive territory in the immediate vicinity of all-time highs. At the same time, the reality was far from so unambiguous. And by and large, everything was determined by the angle of incidence of sight on events.

Take a pandemic, for example. If desired (and it definitely was), the positive could be considered. At the start of the week, a study from South Africa was published (very preliminary, on a very small sample), according to which the disease caused by Omicron is milder than in the case of Delta.

That is, we can witness the end of the pandemic, when everyone will quickly get sick without consequences and herd immunity will naturally form. Markets liked this idea so much that all other news related to the pandemic ceased to interest them.

But there were also studies that showed that omicron breaks through the immune defense, which from it after 2 doses of Pfizer is 40 (!) Times lower than in the case of Delta. They also ignored the statistics from South Africa, which shows not only an explosive increase in the number of cases of the disease, but also in hospitalizations (which in itself hints that the consequences are still there and everything is not so smooth). The markets did not care for the fact that the number of diseases based on Omicron in Britain doubled every 2-3 days (!), as a result of which the country began to tighten social distancing measures.

In general, if the markets decide to see the other side of the coin, things can change at any moment.
But life is not limited to just one pandemic. There are two other top 3 risks besides a pandemic, according to New York Fed research. This refers to the development sector in China, as well as inflation and a change in the vector of monetary policy by central banks.

So in this regard, everything is extremely bad. Evergrande was officially defaulted last week. And along with it, also the Kaisa Group did. The total volume of their issue of bonds exceeds $ 30 billion.

Well, consumer inflation in the United States reached its maximum since 1982 (!). Taking into account that the FOMC will announce the results of its two-day meeting this week, everything looks quite alarming for buyers in the US stock market.

In general, the week promises to be extremely busy: the results of their meetings will be announced by the Central Banks of the USA, Eurozone, England and Japan, data on retail sales in the USA, China and Great Britain, inflation statistics from the Eurozone, Great Britain and Canada and much more will be published.

Let's see if the markets manage to grow further. And to all adherents of the idea that stock markets are only growing, let us remind you that out of more than 50 high-tech companies that went public in 2021, all (!) Are now in the minus relative to the peak values ​​of quotations. Moreover, this is not some 5-10% that can be attributed to local correction. These are full -30% + (Rivian), -60% + (Didi) and even -70% + (Robinhood).