Skip to content Skip to footer

Europe and UK Start Making Plans to Live With Covid, U.S. Markets React Favorably to Powell Testifying & Airline Stocks Fligh High Despite Omicron and Staff Shortages

Europe and UK move closer to being “Done” with the pandemic

Infectious disease experts and historians alike say that pandemics end not with the end of disease, but rather when societies move on.  In other words when people are no longer afraid of the disease and return to normal behaviour or a new normal that isn’t driven by fear.

Earlier today the World Health Organization predicted that a tidal wave of Omicron infections would sweep through Europe from “West to East” with 50% of the population being infected within 6 to 8 weeks’ time.

With this in the background Spain called for a debate within Europe to consider treating Covid-19 as an endemic illness similar to flu.

💡 Spain’s PM Pedro Sanchez said:
“It’s a necessary debate; Science has given us the answer to protect ourselves,” Prime Minister Pedro Sanchez said in interview yesterday with radio station Cadena Ser, adding that the virus’ lethality has been dropping since the beginning of the pandemic. “We have to evaluate the evolution of COVID from pandemic to an endemic illness,”

Meanwhile in the United Kingdom, Prime Minister Boris Johnson is set to release plans for “living with Covid”.  The plan will reportedly outline changes coming in March that will reduce long-term restrictions to the point where the U.K. will be closer to some form of normal life than at any point since the first lockdown in March of 2020.

In European trading the FTSE increased by 0.62%, the DAX by 1.10% and Spain’s IBEX 35 rose by 0.56%.  European stock markets are up across the board to start the year, with Spain leading the way with a gain of 4.73% on the IBEX 35.

U.S. markets rally as Powell testifies

After a rough start to the year markets in the Unites States regained their footing on Tuesday as Federal Reserve Chairman, Jerome “Jay” Powell, went before a Senate Committee during his re-confirmation process.

Powell indicated that the Fed expects a normalization of global supply chains to help ease inflationary pressures but that the Fed stood ready to battle inflation while keeping employment high, saying:

 “If we have to raise interest rates more over time, we will. We will use our tools to get inflation back,”

Equities and fixed income reacted favorably to the Chairman’s testimony as no changes to the Fed’s previously signaled plans were announced.

At the end of U.S. trading the Dow was up 0.51%, while the S&P 500 rose 0.92% and the tech-laden NASDAQ regained some of its mojo with an increase of 1.41%.

Airline stocks ignore Omicron and staff shortages to fly high

Airline stocks have somewhat unexpectedly been some of the better performers to start 2022.  This is despite a fall off in demand amid increased travel restrictions and sickness as well as an acute shortage of labour.

Flight cancellations continued as airlines announced they have to rationalize operations to adjust for thousands of missing employees that need to stay home due to Omicron. 

💡 The only thing ‘non-stop’ are the flight cancellations
United Airlines made headlines as it announced 3,000 workers had called in sick today, and it would need to make further changes to its flight schedule.  This follows on from mass cancellation across the industry starting around Christmas and rolling into the New Year.

Ryanair has cancelled over a third of its flights in January and will be waiting to assess whether these will be reinstated in February or March.  Air Canada recently announced it would be ending service to the Cayman Islands and a number of other Caribbean destinations until “at least the end of April”.  Similar stories are unfolding across the industry.

Despite this string of bad news carriers are some of the best performers with healthy year to date gains.  United is the best performing U.S. airline stock with a gain of 7.13% so far in 2022.  However, Air Canada is up 8.47% and Ryanair has increased by a massive 15.4% to start the year.

“Inflation is taxation without legislation.”

– Milton Friedman

Richard Ellison, CFA CAIA

Consultant

 

Tradeview Ltd. is not a portfolio manager or an investment advisor. This Market Report is for informational purposes only. Any statements made or opinions voiced in this Market Report do not constitute investment advice. The Tradeview Ltd. Market Report does not constitute a solicitation to buy or sell in the financial markets. Although the information contained in the Market Report comes from trusted sources, Tradeview Ltd. is not responsible for guaranteeing the accuracy, timeliness, completeness, or fitness of such sources. Tradeview Ltd. shall not be responsible for and disclaims all liability for any losses which may be suffered from access and use of the contents of the Tradeview Ltd. Market Report. Trading any financial instrument on margin, using leverage or otherwise involves considerable risk. Therefore, before deciding to participate in any style of trading, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. Consulting with your investment counselor, attorney, accountant or other professional upon whom you rely for guidance as to the appropriateness of an investment in any style of trading is recommended.

Tradeview Ltd.

Is licensed to carry on securities investment business and is regulated by the Cayman Islands Monetary Authority (CIMA) as a full securities broker-dealer. Tradeview conducts business pursuant to the Cayman Islands Securities Investment Business Law (SIBL) and its activities fall under the direct supervision of the Investments and Securities Division of CIMA.
Headquarters: 5th Floor Anderson Square, 64 Shedden Road, Georgetown, Grand Cayman, Cayman Islands KY1-1002, BWI.
Website: www.tradeviewforex.com

TVM Global Ltd.

Is licensed and regulated by the Labuan Financial Services Authority (FSA) as a Money Broker, registration number LL15870 licensed to facilitate transactions in foreign exchange pursuant to Labuan Financial Services and Securities Act 2010, the Labuan Companies Act 1990 and the Labuan Business Activity Tax Act 1990.
Headquarters: International Business Financial Centre at Office 5, Jamie Business Center I, Unit F10, First Floor, Paragon Labuan, Jalan Mustapha, 87000 Labuan F.T.
Website: www.tvmgloballtd.com

Tradeview Europe Ltd.

Is licensed as a Category 2 Investment Service Company and is regulated by the Malta Financial Services Authority (MFSA). The Malta Financial Services Authority (MFSA) is the single regulator for financial services in Malta. MFSA is a fully autonomous public institution and reports to Parliament on an annual basis. The MFSA is a member of the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the International Organization of Securities Commissions (IOSCO) and is a signatory of the Multilateral Memorandum of Understanding with other European regulatory Institutions. Tradeview is authorized to provide financial services across multiple asset classes and is passported in the EU/EEA under MiFID II (EU Markets in Financial Instruments Directive).
Headquarters: 157 Archbishops Street, Valletta VLT Malta 1440.
Website: www.tradeview.eu

Tradeview Financial Markets S.A.C.

Is authorized to conduct business pursuant to and in compliance with the General Law of Companies (LGS) promulgated by the government of Peru. Tradeview Financial Markets S.A.C is registered with the National Superintendence of Public Registries (SUNARP), company number 13089531. Tradeview Financial Markets S.A.C provides financial services in selected OTC derivative markets in compliance with all applicable government regulations.
Headquarters: Los Mirtos 239 Urb. San Eugenio, Lince, Lima, Perú.
Website: www.tradeviewlatam.com