Bouncing nearly 600 points today to 34,821,50, the Dow Jones Industrial Average took a one-day breather from the steep sell off from the presence in the U.S. of the highly contagious and possibly vaccine-resistant Omicron virus. But just a markets got a welcomed breather, the European Union reported new restrictions going into effect to combat what promises to be a new wave of Covid-19 infections. Wall Street jumped the gun thinking that Omicron wouldn’t be a big deal, often lagging weeks behind what happens in Europe. Unlike the U.S. South America and Asia, Europe is contiguous to the African continent so disease spreads first to the European Continent before arriving in the U.S. European Commission President, 53-year-old Ursula von der Leyen announced today new emergency measure to “activate the emergency brake,” blocking flights from South Africa and other neighboring countries.
Von de Leyen knows that it’s already too late in the EU with the Netherlands reporting the first case of Omicron Nov. 19, now spreading rapidly around the 27-country union. Suddenly there’s no talk of a Russian troop build up on the Ukrainian border, only concerns about a new surge of the deadly novel coronavirus deaths. Over 1.4 million deaths have been recorded in the EU since the World Health Organization first declared a global pandemic March 11, 2020. More than 5,247,506 have died worldwide, with many third-world and developing countries having limited access of vaccines. Between Europe’s wide Southern, Eastern and Western borders there’s been 79 confirmed cases of Omicron, now promising to engulf the 27-member union in the next few weeks. Wall Street’s Omicron fears yesterday will once again resurface in short order, prompting another steep sell-off.
At least for one day the Dow, Nasdaq Composite and S&P 500 can boast about one-to-two percent increases today, only short-live because Omicron has yet to start wreaking havoc in the U.S. Moderna, a government-funded biotech that produced the second mRNA vaccine, announced today that it was working on a new booster to deal with the Omicron variant. Scientists expect Omicron to replace the India-born Delta variant in the next few weeks, sending a warning shot across Wall Street’s bow, U.S. authorities have minimized Omicron, a variant that could resist current available vaccines. European Center for Disease Prevention and Control attributed the Omicron variant to travelers from South African states. WHO announced that Omicron was now in 23 countries, 13 of which were in Europe, including Belgium, Sweden, Germany, Portugal and Spain.
Norway’s Prime Minister Jonas Gahr Store announced that 50 fully vaccinated people contracted Omicron, attesting to what scientists feared that the highly contagious variant seems to elude today’s Covid-19 vaccines. Whether the sudden jump in Omicron cases involves more testing, it reflect the highly contagious nature of the variant, with 32 mutations from the original novel coronavirus. Once it’s clear that Omicron has started to spread like wildfire, replacing Delta as the dominant variant, Wall Street won’t be in rally mode, looking for the next Christmas rally. But like so many disconnects on Wall Street, major averages are driven today by high-speed day-trading, running up stocks to take short-term profits, leaving long-term investors on a roller coaster ride. Omicron now looms as the best excuse Wall Street has to take profits after years of inflated share prices, making stock unaffordable.
Wall Street has its news du jour to justify either buys or sell-offs, depending on what’s necessary to sell the public. Omicron becomes a convenient excuse, sounding more legitimate than profit-taking, selling on highs to end up buying on dips. Even brokerage houses like JPMorgan advise clients to buy on dips, even though they discourage market timing. Market timing models haven’t had much success timing the best times to buy-and-sell. When it comes to the Covid-19 global pandemic, Wall Street has rode out the ups-and-downs, creating more ups-than-downs for the long-term investor. As Omicron numbers mount in the United States, there will be pressure on Wall Street to sell off. Other more legitimate factors affecting the market involve earnings, especially when considering how the Federal Reserve will deal with interest rates and its bond-buying programs AKA quantitative easing.
As the EU gets engulfed with Omicron cases, scientists know that it’s a matter of time before the same thing happens in the U.S. When Omicron makes more headlines, look to Wall Street to pump the brakes, start more profit taking, driving market averages lower. EU scientist Salvador Macip, a cellular biologist author of “Modern Epidemics,” thinks that Omicron will be the dominant variant, replacing Delta by the end of December. Scientists at Pfizer and Moderna are studying whether or not their vaccines can stop the spread of the Omicron variant. So far, Pfizer and Modern’s mRNA’s vaccines have done an OK job of dealing with the Delta variant. Reports from Norway about most Omicron infecting double-and-tripple vaccinated patients raise red flags about the efficacy of mRNA vaccines against the Omicron variant. When Wall Street hears that, look to more profit taking.
