Darker-er-est Days

Joe Biden wants more stimulus and Walmart found itself in the crosshairs of the Justice Department for allegedly fueling the opioid crisis by “fail[ing] to follow basic legal rules.”

That was about the extent of it for news flow during the US cash session Tuesday. Well, unless you count the “mutant” virus and your standard smattering of inauspicious Brexit headlines.

“Congress did its job this week and I must ask them to do it again next year,” Biden said, at a press conference, during which he warned the nation that America’s “darkest days in the battle against COVID are ahead of us, not behind us.”

It’s hard to argue with Biden about the “darkest days” bit. Hospitalizations jumped by more than 2,000 nationwide on Monday, data from The COVID Tracking Project suggests (figure above). The country is still losing more than 2,600 people per day to the disease. So, on Christmas Day, around 8,000 Americans who are alive right now and currently suffering from COVID, will be dead, assuming the recent average holds.

South Carolina Governor Henry McMaster has the virus, his office said. His wife tested positive late last week. Both attended a White House Christmas party earlier this month. The CDC cautioned that the new variant of COVID may already be in the US. In a new page dedicated to the mutation, the CDC said that,

We do not know [why the variant emerged in the UK]. By chance alone, viral variants often emerge or disappear, and that may be the case here. Alternatively, it may be emerging because it is better fit to spread in humans. This rapid change from being a rare strain to becoming a common strain has concerned scientists in the UK, who are urgently evaluating the characteristics of the variant strain and of the illness that it causes. The VUI 202012/01 variant has not been identified through sequencing efforts in the United States, although viruses have only been sequenced from about 51,000 of the 17 million US cases. Ongoing travel between the United Kingdom and the United States, as well as the high prevalence of this variant among current UK infections, increase the likelihood of importation. Given the small fraction of US infections that have been sequenced, the variant could already be in the United States without having been detected.

That doesn’t sound like the best news, but it’s not surprising. It seems likely the variant is also present across Europe. RKI President Lothar Wieler said the likelihood of the mutated version of COVID already being in Germany is “very, very high.”

While it’s far too early to say anything definitive about the new strain or whether it changes the vaccine narrative, the fact that the CDC put up an entire page dedicated to it suggests that either the government is taking this seriously and feels like it’s important to at least set out the facts for Americans, or else just enjoys indulging the public’s fascination with virology.

Whatever the case, Biden, who has been vaccinated, is cautious. And for good reason.

As far as the President-elect’s contention that Congress “did its job this week,” I’d quibble with that. They passed a bill. That’s pretty much the bare minimum.

Increasingly, the media is prone to characterizing the inaction in D.C. since August as a tragedy. My guess would be that by the end of next month, the virus toll and the associated hit to the economy will prove lawmakers’ ineptitude was catastrophic.

Read more: On Christmas, America Ponders Historic Failure Of Government

Disconcertingly, Biden also claimed the Pentagon isn’t briefing his team on potentially important subjects. He said he sees “no evidence” that the cyber attacks on the country are under control and called on Donald Trump to formally name a culprit.

Trump has, of course, been reluctant to blame the Kremlin. At one point, he floated China as the possible perpetrator and chided the media for pointing the finger at Vladimir Putin. At this point, there’s no utility in editorializing around the outgoing president and the things he says or fails to say. It is what it is. And he is who he is.

Getting back to the President-elect, Biden also said his family will stay apart at Christmas, and insisted the US needs to spend more money in the fight to contain the virus. Politico reported Tuesday that the USTR is refusing to meet with the transition team, adding to ongoing concerns that the administration isn’t cooperating.

US equities chopped around in a pre-holiday session characterized by the familiar tug of war between public health concerns in the “here and now” and hopes for brighter days in 2021. Apple had a good session because — and I’m left to simply chuckle — they’re apparently getting into the car business.

“We anticipate domestic equities will garner an increasing amount of the market’s focus,” BMO’s Ian Lyngen and Benjamin Jeffery said in a Tuesday afternoon note. “As the most real time gauge of investor sentiment, wobbles in stocks to end the year would point to more trepidation on what Q1 and beyond may hold, while the S&P 500 within 1% of Friday’s all-time high suggests a greater comfort with the trajectory of the recovery,” they added.

The Nasdaq’s outperformance Tuesday was indicative of a defensive stance from market participants. Remember, tech is synonymous with stay-at-home plays and secular growth, and secular growth is tethered to the “duration infatuation” in rates. It’s the anti-cyclical/anti-reflation trade. Apropos, Treasurys were richer by 2bps at the long-end, bull flattening the curve.

Data stateside was somewhat lackluster Tuesday, as consumer confidence tumbled and existing-home sales suggested the red-hot US housing market may be starting to cool, if for no other reason than prices are at record highs.

In any case, we’re in the pre-holiday drift. Don’t catch cold. Or mutated viral pneumonia.