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Siphoning market share: Lofty car prices are expected to persist amid bare dealership lots and an inventory crunch, but those who are able to deliver are poised for outsized gains. Research firm Cox Automotive estimates Tesla's (NASDAQ:TSLA) U.S. sales jumped 61% in 2021 and the EV maker's stock already climbed 13% on Monday after hitting delivery and production records (Tesla doesn't break out its U.S. sales). Shares of Ford (F) also closed nearly 12% higher on Tuesday as a rise in orders led it to double production plans for its new electric F-150 Lightning pickup truck. (118 comments) 
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Central Banking
A new era of monetary policy is starting to hit investors in the face following previous estimates that any tightening would be limited and gradual. FOMC minutes released on Wednesday showed that officials were fully on board with a faster scale back of the central bank's asset purchase program, which would give it greater flexibility to raise interest rates and could happen as soon as March. Stocks tanked on the news, with the Nasdaq ending the day down more than 3% for the worst start to a calendar year since the financial crisis.
Excerpt: "It may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated. Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve's balance sheet relatively soon after beginning to raise the federal funds rate. Some participants judged that a less accommodative future stance of policy would likely be warranted and that the Committee should convey a strong commitment to address elevated inflation pressures."
The Fed is also going to be more aggressive in reducing its nearly $9T balance sheet, and while it didn't put a timetable on a runoff (that's when it shrinks holdings by allowing bonds to mature), many are estimating the tightening could happen as soon as the summer. "Participants judged that the appropriate timing of balance sheet runoff would likely be closer to that of policy rate liftoff than in the committee's previous experience... and could warrant a potentially faster pace of policy rate normalization." Some officials even said in the minutes that they preferred to "rely more on balance sheet reduction" and "less on increases in the policy rate" to avoid flattening the yield curve.
Whoops? "Participants remarked that inflation readings had been higher and were more persistent and widespread than previously anticipated. Some participants noted that trimmed mean measures of inflation had reached decade-high levels and that the percentage of product categories with substantial price increases continued to climb. While participants generally continued to anticipate that inflation would decline significantly over the course of 2022 as supply constraints eased, almost all stated that they had revised up their forecasts of inflation for 2022 notably, and many did so for 2023 as well." (142 comments)
Excerpt: "It may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated. Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve's balance sheet relatively soon after beginning to raise the federal funds rate. Some participants judged that a less accommodative future stance of policy would likely be warranted and that the Committee should convey a strong commitment to address elevated inflation pressures."
The Fed is also going to be more aggressive in reducing its nearly $9T balance sheet, and while it didn't put a timetable on a runoff (that's when it shrinks holdings by allowing bonds to mature), many are estimating the tightening could happen as soon as the summer. "Participants judged that the appropriate timing of balance sheet runoff would likely be closer to that of policy rate liftoff than in the committee's previous experience... and could warrant a potentially faster pace of policy rate normalization." Some officials even said in the minutes that they preferred to "rely more on balance sheet reduction" and "less on increases in the policy rate" to avoid flattening the yield curve.
Whoops? "Participants remarked that inflation readings had been higher and were more persistent and widespread than previously anticipated. Some participants noted that trimmed mean measures of inflation had reached decade-high levels and that the percentage of product categories with substantial price increases continued to climb. While participants generally continued to anticipate that inflation would decline significantly over the course of 2022 as supply constraints eased, almost all stated that they had revised up their forecasts of inflation for 2022 notably, and many did so for 2023 as well." (142 comments)
Covid
The Supreme Court heard legal challenges on Friday to two of the Biden administration's COVID-19 vaccine mandates, with rulings likely to follow in short order. The first, which is estimated to cover two-thirds of the private sector, or 100M workers, would compel businesses with 100 or more employees to ensure their staff is vaccinated against COVID or are tested weekly for the virus. A separate healthcare worker mandate, which would require vaccinations for workers at facilities that treat federally funded Medicare and Medicaid patients, is currently blocked in half of the 50 U.S. states.
Snapshot: While the Supreme Court had already ruled several cases about COVID vaccine mandates (like healthcare cases in New York and Maine), this time around the case centers around actions by federal agencies. The key legal question here is not whether the mandate is reasonable or necessary in light of the pandemic, but rather if Congress has provided the Occupational Safety and Health Administration with the authority to issue such directives under relevant statutes. Employers who don't adhere to the requirements could face penalties of up to $13,653 for each reported violation, while OSHA has said it will check on compliance through company record-keeping and some in-person inspections.
The Biden administration feels that OSHA not only has the authority, but also the responsibility to act. Backing this argument is the ability for the agency to issue emergency workplace rules to protect employees "exposed to grave danger" from "substances or agents determined to be toxic or physically harmful or from new hazards." On the other side of the courtroom, a coalition of business and religious groups, Republican attorneys general or governors, and national industry associations like the National Retail Federation and the American Trucking Associations, say the mandate represents massive overreach. OSHA cannot take a step with such "vast economic and political significance" without specific authorization from Congress, according to the group, which pointed to severe consequences like labor shortages and increased costs for employers.
Nation divided: More than half of employees who work in workplaces with 100 employees or more (the size of companies covered by the federal requirement) either say their employer already requires vaccination (36%) or say they want their employer to require it (17%), according to the Kaiser Family Foundation, while four in ten (41%) say they don't want their employer to demand a jab. Meanwhile, 37% of unvaccinated workers say they would rather leave their jobs than comply with a jab or testing mandate, while another 46% would get tested weekly and 11% say they would get the shot (6% don't know or refused to answer the poll). (60 comments)
Snapshot: While the Supreme Court had already ruled several cases about COVID vaccine mandates (like healthcare cases in New York and Maine), this time around the case centers around actions by federal agencies. The key legal question here is not whether the mandate is reasonable or necessary in light of the pandemic, but rather if Congress has provided the Occupational Safety and Health Administration with the authority to issue such directives under relevant statutes. Employers who don't adhere to the requirements could face penalties of up to $13,653 for each reported violation, while OSHA has said it will check on compliance through company record-keeping and some in-person inspections.
The Biden administration feels that OSHA not only has the authority, but also the responsibility to act. Backing this argument is the ability for the agency to issue emergency workplace rules to protect employees "exposed to grave danger" from "substances or agents determined to be toxic or physically harmful or from new hazards." On the other side of the courtroom, a coalition of business and religious groups, Republican attorneys general or governors, and national industry associations like the National Retail Federation and the American Trucking Associations, say the mandate represents massive overreach. OSHA cannot take a step with such "vast economic and political significance" without specific authorization from Congress, according to the group, which pointed to severe consequences like labor shortages and increased costs for employers.
Nation divided: More than half of employees who work in workplaces with 100 employees or more (the size of companies covered by the federal requirement) either say their employer already requires vaccination (36%) or say they want their employer to require it (17%), according to the Kaiser Family Foundation, while four in ten (41%) say they don't want their employer to demand a jab. Meanwhile, 37% of unvaccinated workers say they would rather leave their jobs than comply with a jab or testing mandate, while another 46% would get tested weekly and 11% say they would get the shot (6% don't know or refused to answer the poll). (60 comments)
U.S. Indices
Dow -0.3% to 36,232. S&P 500 -1.9% to 4,677. Nasdaq -4.5% to 14,936. Russell 2000 -2.8% to 2,182. CBOE Volatility Index +8.9% to 18.76.
S&P 500 Sectors
Consumer Staples +0.2%. Utilities -2.4%. Financials +4.2%. Telecom -2.4%. Healthcare -4.2%. Industrials +0.7%. Information Technology -3.7%. Materials -1.4%. Energy +9.%. Consumer Discretionary -1.%.
World Indices
London +1.4% to 7,485. France +0.9% to 7,219. Germany +0.4% to 15,948. Japan -1.1% to 28,479. China -1.7% to 3,580. Hong Kong +0.4% to 23,493. India +2.6% to 59,745.
Commodities and Bonds
Crude Oil WTI +4.9% to $78.89/bbl. Gold -1.8% to $1,796.3/oz. Natural Gas +5.5% to 3.936. Ten-Year Treasury Yield -1.6% to 128.38.
Forex and Cryptos
EUR/USD -0.06%. USD/JPY +0.4%. GBP/USD +0.4%. Bitcoin -9.6%. Litecoin -10.%. Ethereum -13.%. Ripple -8.%.
Top Stock Gainers
Ata Creativity Global ADR (NASDAQ:AACG) +147%. Lixte Biotech Hlds (NASDAQ:LIXT) +80%. China Hgs Real Est (NASDAQ:HGSH) +76%. Genprex Inc (NASDAQ:GNPX) +69%. Merchants Bancorp (NASDAQ:MBIN) +56%.
Top Stock Losers
Jowell Global Ltd (NASDAQ:JWEL) -77%. Aligos Therapeutics Inc (NASDAQ:ALGS) -67%. Ucloudlink Group Inc ADR (NASDAQ:UCL) -66%. Dogness Corp Cl A (NASDAQ:DOGZ) -59%. Applied Therapeutics Inc (NASDAQ:APLT) -53%.
Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.
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