TheChek News Flow

Weekend Papers Summary

-The New York Times is publishing hundreds of the Pentagon’s confidential assessments of reports (obtained through Freedom of Information requests beginning in March 2017 and subsequent lawsuits filed against the Defense Department and the US Central Command) of civilian casualties resulting from US-led airstrikes in Iraq and Syria. “The documents lay bare how the air war has been marked by deeply flawed intelligence, rushed and often imprecise targeting, and the deaths of thousands of innocent civilians, many of them children.”

-A New York Times investigation found that the American air war in Iraq, Syria and Afghanistan has been plagued by flawed intelligence, poor targeting and thousands of civilian deaths.

-As the pandemic has entered its third year, resurgent thanks to the Omicron variant, experts are urging U.S. adults to get vaccinated and boosted.

Yet among vaccinated Americans, only 30 percent have received a third dose, according to the C.D.C., and the lagging response is worrying health experts.

-Americans on edge as cases rise and the holidays loom. A week from Christmas, nearly 1,300 Americans are dying every day from the coronavirus and more than 120,000 are testing positive.

- Black elected officials, from Congress down to the counties, have been drawn out of their districts or face headwinds to hold onto their seats.

-Democrats’ achievements in 2021 were overshadowed by legislative setbacks, fallout from the Jan. 6 attack and a sense that Congress was not rising to meet a perilous moment in history.

-China’s crackdown has driven most of Hong Kong’s popular pro-democracy candidates either into police custody or exile. Officials are urging the public to vote, but turnout is expected to be low.

-Once a Symbol of US Strength, the Afghan district of Marja faces dire times. Residents are growing desperate for any kind of help, a frustration that has turned to anger that the international community has abandoned them.

-Despite a bid to protect it from a contentious rezoning plan, the Elizabeth Street Garden in SoHo will be replaced by housing units.

-IVF patients are faced with a growing list of costly “add-ons.” For one such test, some say more robust research is needed to support its effectiveness.

-Israel has threatened military action to destroy Iran’s nuclear program if need be. But defense officials say Israel does not have the ability, at least not anytime soon.

-Olympic leaders have criticized China’s handling of the Peng Shuai (the tennis player) case but tried not to say anything that would jeopardize the safety of the American athletes headed to Beijing.

-Authorities in Virginia say that Anthony Robinson, the so-called ‘shopping cart killer’, met his victims via online dating sites and later transported their bodies in shopping carts to dispose of them.

The Netherlands has become the first EU country to re-enter a strict nationwide lockdown, in a response to the spread of the Omicron Covid-19 variant that will shutter swaths of the economy until at least mid-January.

-Republican Party operatives in Pennsylvania are betting that another conservative financier, Bridgewater chief executive David McCormick, will be able to walk a similar political tightrope to win the state’s US Senate race next year.

-With the labor market the tightest in four decades and worker availability expected to determine the success or failure of deliveries this season, Amazon has taken the initiative with bonuses of £1,000 to attract staff and increase its Christmas workforce to about 75,000 people this year, leaping from less than a third of Royal Mail’s peak headcount before the pandemic to almost half the size.

-A stunning by-election loss follows a series of crises that have damaged UK Prime Minister Boris Johnson’s claim to be a political winner. As a result Johnson was put on probation by Conservative MPs with warnings he could face a coup by mid-2022 unless he raises his game.

-Russia has published a set of stringent demands it is making of the US and NATO, which would end all prospect of Ukraine or any more former Soviet states joining the transatlantic alliance and rewrite many of the principles upholding European security since the end of the cold war.

-Ghislaine Maxwell declined to testify on Friday as her lawyers wrapped up her defense on criminal sex trafficking charges after two days. “Your honor, the government has not proven its case beyond a reasonable doubt, and so there is no need for me to testify,” Maxwell, 59, said on Friday afternoon, after Judge Alison Nathan offered her the standard opportunity to take the stand to testify in her own defense.

-Russia has published a set of stringent demands it is making of the US and NATO, which would end all prospect of Ukraine or any more former Soviet states joining the transatlantic alliance and rewrite many of the principles upholding European security since the end of the cold war.

-The Federal Reserve could raise interest rates as early as March in the face of “alarmingly high inflation”, according to a senior US central bank official.

-Turkey’s main stock exchange halted trading on Friday after the country’s currency crisis, already stinging bonds, spread to equities. Borsa Istanbul announced a temporary so-called circuit breaker after its main Bist 100 index fell 5 per cent. After trading resumed, the benchmark was more than 8 per cent lower.

-Blackstone is close to acquiring a stake in one of New York’s newest office towers, in a deal that would value the 70-storey skyscraper at $2.85B and signal confidence that the crisis-hit city will remain the nexus of corporate America. Built on the eve of the pandemic, One Manhattan West abuts the giant Hudson Yards redevelopment and has sweeping views of the Hudson River.

-Thierry Breton, the EU internal markets commissioner has complained that US commerce secretary Gina Raimondo is campaigning on behalf of Big Tech, days after the EU approved a common position on draft rules aimed at curbing the power of large American tech companies, fueling a transatlantic tit-for-tat among senior officials.

-Harvard University will go remote again in January due to the spread of the Omicron variant: “Please know that we do not take this step lightly,” university president Lawrence Bacow wrote in a memo to students and staff. “Public health experts anticipate the increase in COVID-19 cases to continue, driven by the Omicron variant, which we have now confirmed is already present in our campus community.”

-The national unemployment rate has dropped to a low 4.3%, but the percentage of working-age adults with jobs or looking for jobs hasn’t reached pre-pandemic levels, meaning millions have dropped out of the workforce. In 2019, the participation rate was close to 63.5% — it’s now 61.8%.

-Peloton chief executive John Foley has quietly snatched up a $55 million estate in East Hampton — even as employees of the exercise-bike company fret about their futures as its stock price tanks, The Post has learned.

-Boeing suspended its coronavirus vaccination requirement for US based employees, capping weeks of uncertainty as thousands of workers sought exemptions and challenges to a federal mandate played out in court.

* Cover Story:

-This past week, Fed Chairman Jerome Powell announced that the Treasury will accelerate the taper of its stimulus spending in a bid to combat the highest inflation rates since 1982. Therein lies the first clue that investors should not expect the kind of returns they saw in 2021. The Fed’s hawkish turn paves the way for an increase in interest rates—probably several—for the first time since 2018. Meanwhile, corporate earnings and economic growth are expected to decelerate next year. About the only constant: the persistence of Covid-19.

* Tech Trader:

Doug Clinton, managing partner at the tech investment firm Loup Ventures, thinks the landscape for tech stocks will remain challenging in 2022, at least for the first quarter. “You want to be on the side of the Fed,” he says. “We’re going to stay cautious ahead of rate hikes.” Clinton estimates that for every full percentage point increase in rates, the risk to tech stock valuations is 10% for the megacaps, and 20% for higher risk companies. “2022 might be the year of the discerning investor, after the year of the meme investor and the SPAC speculator,” he says. “Prices matter again.”

* The Trader:

-“Owning online payment stocks has been painful for the past two months. That’s created an opportunity in at least one smaller company in the space— Shift4 Payments. Everything was fine for payment stocks for much of the year. The ETFMG Prime Mobile Payments exchange-traded fund had gained 5.8% through Oct. 19—not great, but not too bad, considering its 34% rise in 2020. Then the bottom fell out. Since then, the ETF has dropped 20%, while big players like PayPal Holdings, Block—formerly Square—and Global Payments have tumbled even more.”

-“While the Fed has started to tighten monetary policy, it might be acting too slowly to do anything but contribute to a short-term selloff. If real yields remain deeply negative, the equity risk premium could fall even more. That could cause the S&P 500’s cyclically adjusted price/earnings ratio, based on operating earnings, to surge from a worrisome 35 times now to a problematic 45 times by the middle of 2023, Bannister says, putting the S&P 500 at around 6750, a gain of 46%.”

* Features:

-The Internal Revenue Service is being a bit more generous with the formula businesses and eligible taxpayers can use when they tally the tax deductions for their work-related miles on the road. On Friday, the IRS released the standard mileage rate for business-related driving in 2022. The rate will be 58.5 cents per mile for business use. That’s a 2.5-cent climb from the 56-cent rate this year. It was a 57.5-cent rate the year before that, and a 58-cent rate before that.

-“The phrase life is a game does not mean that life is silly,” writes Edward Castronova, an economist and professor of media at Indiana University, in Life is a game: What game design says about the human condition, his fascinating and delightfully weird book on the subject. “It means that life presents all people with choices, and those choices—combined with the inevitable randomness produced by the choices of others as well as Nature herself—come back in terms of gains and losses.” Money is at least one way we keep score. In 2020, when the game “Animal Crossing” became a huge hit, many marveled at how suddenly kids and adults across the world were inadvertently learning about how prices and arbitrage work.

* Europe:

-Turkish markets have been shaken in recent weeks by the combination of the central bank’s ultraloose monetary policy in the context of soaring inflation, and generous government handouts to the population.The Turkish central bank on Thursday yet again cut interest rates, to 14%, shortly after President Erdogan had announced a 50% raise of the minimum wage for 2022.

Erdogan had fired the three predecessors of the current central bank governor, Sahap Kavcioglu, for refusing to loosen monetary policy despite his increasingly vocal exhortations.

-The global semiconductor shortage has made this year a tough one for the European auto industry but it also makes the sector a potential buying opportunity heading into 2022.

Chip supply issues have forced production cuts at the world’s largest car makers, with many seeing problems continuing into 2022. European car sales hit a record low in October, according to the European Automobile Manufacturers’ Association. JPMorgan analysts see global production recovering in the second half of 2022, at which point suppliers “should clearly outperform” car manufacturers. French car parts supplier Faurecia is a top pick due to its strong exposure to fast-growing regions such as China, and customers like major manufacturers Tesla (TSLA) and Stellantis (STLA).

* Emerging Markets:

-Emerging markets are ending 2021 miserably. The iShares MSCI Emerging Markets exchange-traded fund has lost 12% since July 1, while the S&P 500 gained 9%. Global inflation has forced emerging markets to hike interest rates, clipping pandemic recoveries, while the US and Europe keep their throttles open. China, which accounts for a third of global emerging markets, has focused on deleveraging and “reform,” including unpredictable attacks on high-flying tech companies. Meanwhile, successive Covid variants keep delaying the reopening process, hitting hardest on developing world tourism.

* Commodities:

Some analysts warn that 2022 will be a difficult year for commodities, with the pandemic’s impact on economic activity set to influence trading after a volatile year marked by a rally in energy that fueled inflation, and a retreat of precious metals prices. But others like Noel Dixon, a global macro strategist for State Street, think “It will be a more challenging year for commodities in 2022 because global central banks are tightening policy.”