Wednesday morning reads

Wednesday Morning Reads








A fourth dose?

Israel is set to become the first country in the world to administer a fourth COVID-19 vaccine, which would give "greater protection in the face of Omicron." The first eligible group to receive the vaccine will be people aged 60 and older, as well as the immunocompromised and medical personnel. As for the time frame, the fourth shot will be recommended after waiting at least four months from the third dose, with the formal green light from the Health Ministry director general expected within days.

Backdrop: Israel was one of the first nations to vaccinate its population early this year and then carried out the world's first booster campaign over the summer when Delta raged across the country. To date, about 63% of the population of 9.3M has had two doses (a similar percentage seen in the U.S.), while more than 4.1M Israelis have received three doses of a coronavirus vaccine. Note that about a third of Israel's population is under the age of 14 (compared to 18% in the U.S.), with most of the group not eligible for a vaccine until it was approved for 5-11 year-olds last month. "The world will follow in our footsteps," Prime Minister Naftali Bennett tweeted about the fourth booster campaign.

The government's ministerial committee tasked with driving policy on the pandemic also decided on a number of new measures in the wake of the new wave of Omicron infections. The rules will mostly target crowd sizes in shopping centers, as well as proof of full vaccination for entry to stores that are more than 100 square meters (1,076 square feet). Israel is also quickly expanding its list of "red countries," or high-risk travel destinations, to vast swaths of Africa, Europe and North America, with the latest government data showing 341 confirmed cases of Omicron in the country.

Over in the U.S.: In late October, the CDC issued guidance that said immunocompromised people may receive a fourth COVID vaccine dose starting next year, but that could be a harbinger for the rest of the population. While the fourth jab for the immunocompromised should come at least six months after the third dose, the demographic is encouraged to talk to their doctors to determine if it is necessary. According to the CDC, about 9M Americans (2% of the population), fall into the category of "moderately and severely immunocompromised," like those who are in active cancer treatment, certain organ transplant and stem cell recipients, people with advanced or untreated HIV, and those who take high-dose corticosteroids or drugs suppress their immune systems. Keep in mind that the CDC's definition of fully vaccinated is still two doses, though it highly recommends a booster for anyone over the age of 18.

News roundup

Covid address: Overnight, President Biden outlined the U.S. plan to combat Omicron, while stressing that getting fully vaccinated is a "patriotic duty" and "an obligation to your country." The administration will deploy 1,000 military doctors and nurses to overburdened hospitals this winter, open more free testing sites, while purchasing 500M at-home COVID tests that Americans can order for free through a website starting in January. While the government is still finalizing details, coronavirus testing stocks include Quidel (NASDAQ:QDEL), Abbott (NYSE:ABT), Becton, Dickinson (NYSE:BDX) and Quest Diagnostics (NYSE:DGX).

More mandates: Biden also pointed to a federal court ruling from last week that reinstated his workplace mandate, which will require businesses with 100 or more employees to ensure their workers are fully vaccinated by Jan. 4 or submit a negative COVID test weekly to enter the workplace. Some cities are going a step further. Chicago just announced it will require proof of coronavirus vaccination at restaurants, bars, gyms and other indoor venues from Jan. 3, while Boston unveiled similar measures.

Quarantine guidelines: Delta Air Lines (NYSE:DAL) has asked the CDC to halve its current 10-day recommended quarantine for vaccinated people who contract COVID-19, noting that about 90% of its staff are fully vaccinated and all airline personnel are required to wear masks on planes. "Our employees represent an essential workforce to enable Americans who need to travel domestically and internationally. With the rapid spread of the Omicron variant, the 10-day isolation for those who are fully vaccinated may significantly impact our workforce and operations."

Therapy milestone: The FDA could authorize a pair of pills from Pfizer (NYSE:PFE) and Merck (NYSE:MRK) to treat COVID-19 as soon as today. The treatments, called Paxlovid and molnupiravir, are taken over several days and could ease the burden on the stretched hospital system this winter. "It's the biggest thing to happen in the pandemic after vaccines," said Eric Topol, director of the Scripps Research Translational Institute.

Strike ends

Snap, crackle, pop... One of the longest-running strikes of the year has come to an end as 1,400 union workers at Kellogg (K) approved a new tentative labor contract. The nearly three months long strike was conducted across four of the company's plants in Michigan, Tennessee, Nebraska and Pennsylvania. Employees were asking for better benefits and pay after working longer hours during the pandemic, and had taken issue with a tiered system that saw veteran employees make more money than newer hires (who also had to pay more for health insurance).

New contract: The collective bargaining agreement provides staff with cost of living adjustments and a $1.10 per hour raise. Additionally, it allows all workers with four years of experience to move up to a higher legacy pay level. New employees will also get a new dental benefit, while all employees will get a new vision benefit offering.

"This agreement makes gains and does not include any concessions,” said Anthony Shelton, international president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union. In many ways, power has shifted to workers during the pandemic, due to a nationwide labor shortage that has left businesses scrambling to find employees. High-profile strikes have also hit other areas of Corporate America, including Deere & Co. (DE) and Mondelez International (MDLZ).

Market movement: Shares of Kellogg are down roughly 2% since the strike began on October 5.

Shipping deals

Chaotic conditions along the global supply chain may be opening up some M&A opportunities as ocean freight rates rise to record levels amid backlogs at U.S. ports. In the latest deal in the sector, A.P. Moeller-Maersk (OTCPK:AMKBY) is buying Asian warehouse specialist LF Logistics, an arm of Hong Kong supply chain manager Li & Fung Ltd. (OTCPK:LFUGY), in a transaction worth $3.6B (with up to another $160M linked to future financial performance). Earlier this year, Copenhagen-based Maersk announced plans to buy air freight company Senator International as it seeks a presence in all parts of the transport netwoek.

Snapshot: Companies have been willing to pay a premium for more reliable and integrated freight solutions as supply chains continue to get rattled. Maersk, which transports about a fifth of the globe's containers at sea, sees that as an opening to expand into land-based logistics, where there's more potential for growth and profit margins are higher than its traditional sea-container business. With a network of more than 200 warehouses and around 10K employees across 14 Asian countries, LF Logistics provides land-based logistic services such as warehousing and trucking to over 250 global customers.

Digging deeper into the numbers, Maersk announced a profit of $5.4B for Q3, more than five times the earnings it reported a year ago. However, while Maersk has around 70K ocean customers, less than a quarter of them use the company to move their goods from ports to warehouses and distribution centers. Maersk hopes the LF deal and expansion to inland logistics will eventually bring in half the group's earnings (with around 80% of revenue currently coming from ocean operations).

Outlook: The latest deal comes six months after Maersk bought two e-commerce logistics firms in August, one located in the U.S. and one in Europe, for almost $1B. Meanwhile, Maersk's top competitor, Geneva-based Mediterranean Shipping Co. is also trying to get in on the M&A game. On Monday, the world's second-largest container ship operator made a $6.4B offer to buy the African logistics assets of French-based conglomerate Bollore SE (OTCPK:BOIVF).

Today's Markets

In Asia, Japan +0.2%. Hong Kong +0.6%. China -0.1%. India +1.1%.
In Europe, at midday, London +0.1%. Paris +0.2%. Frankfurt +0.2%.
Futures at 6:20, Dow +0.1%. S&P flat. Nasdaq -0.1%. Crude +0.3% at $71.32. Gold +0.1% at $1791.10. Bitcoin +0.5% at $49085.
Ten-year Treasury Yield -1 bps to 1.47%

Today's Economic Calendar

7:00 MBA Mortgage Applications
8:30 GDP Q3
8:30 Chicago Fed National Activity Index
8:30 Corporate profits
10:00 Consumer Confidence
10:00 Existing Home Sales
10:30 EIA Petroleum Inventories

Companies reporting earnings today »

Biden says U.S. 'not going back to March 2020' COVID-19 closures.

Walmart (NYSE:WMT) limits at-home COVID test sales amid surge in Omicron.

AstraZeneca (NASDAQ:AZN), Oxford start work on Omicron-specific COVID vaccine.

WHO issues recommendations for administering Novavax (NASDAQ:NVAXshot.

S&P 500 buybacks hit new record high in third quarter, could be higher in Q4.

Nikola (NASDAQ:NKLA) moves past Trevor Milton era with SEC settlement.

Another day, another European energy cost record shattered.

BlackBerry (NYSE:BB) edges lower following earnings beat, soft outlook.

GSK-Pfizer's (GSKPFE) Apretude approves first HIV prevention injection.

Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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