Omicron Fears Ignite Market Selloff Just as Traders Clear Books [Bloomberg]
Lockdown risks are rising, with the U.K. Health Secretary Sajid Javid refusing to rule out stronger measures before Christmas and the Netherlands said Saturday it’s going to a full lockdown until at least Jan. 14. Senator Joe Manchin’s rejection of the U.S. spending package at the heart of President Joe Biden’s economic agenda also weighed on sentiment…. Volatility surged, with the Euro Stoxx 50 Volatility VSTOXX Index and the VIX Index both jumping to the highest in two weeks.
Goldman cuts GDP forecast after Sen. Manchin says he won’t support Biden’s ‘Build Back Better’ plan [CNBC]
“BBB enactment had already looked like a close call and in light of Manchin’s comments we are adjusting our forecast to remove the assumption that BBB will become law. While BBB in its current form looks unlikely, there is still a good chance that Congress enacts a much smaller set of fiscal proposals dealing with manufacturing incentives and supply chain issues,” the note said…. “With headline CPI reaching as high as 7% in the next few months in our forecast before it begins to fall, the inflation concerns that Sen. Manchin and others have already expressed are likely to persist, making passage more difficult,” the firm also noted.
London banking job exodus to EU slows despite Brexit [Reuters]
"However, over the last year, a number of the largest investment banks located in the UK have revised down the number of staff that will be relocated to the EU, taking the current number of Brexit-related job move announcements to just under 7,400, down from 7,600 in December 2020," EY said in its latest Brexit tracker./This is a fraction of the 1.1 million people working in finance.
Climate Risks for Big Banks Could Hurt Financial System, OCC Says [WSJ]
“Weaknesses in how banks identify, measure, monitor and control the potential physical and transition risks associated with a changing climate could adversely affect a bank’s safety and soundness, as well as the overall financial system,” the Office of the Comptroller of the Currency said in a draft guidance statement.
The guidance is aimed at U.S. banks with more than $100 billion in total consolidated assets, but also will likely influence many small and regional banks in the U.S. as they weigh looming hazards linked to a changing climate.
Senators Own Cryptocurrency Assets as They Shape Rules for Industry [WSJ]
Sens. Pat Toomey (R., Pa.) and Cynthia Lummis (R., Wyo.) sit on the powerful Senate Banking Committee and have been advocates for a light government touch toward the growing—and largely unchecked—cryptocurrency market.
They also own cryptocurrency assets. Ms. Lummis’s roughly $250,000 of bitcoin makes her the most heavily invested U.S. lawmaker in the digital asset. Mr. Toomey has smaller holdings in crypto-related investment vehicles. Together they are the only two senators with such investments, according to a Wall Street Journal review of public financial disclosures.
Hedge Funds Slash Yen Short Positions as Year-End Risks Pile Up [Bloomberg]
“The yen has got some pretty cheap valuations and when you think about the risk of outbreaks getting worse with the omicron, a stronger yen makes sense,” said Kerry Craig, a global market strategist at JPMorgan Asset Management in Melbourne. “If we continue to see more risk-off action, it’d make sense to see the yen benefiting even more into the year-end…. “Currency markets become highly volatile around this time of year, as seen particularly in 2018 when hedge funds had accumulated quite a large yen net short positions but then got squeezed when the yen surged toward year-end,” said Kei Yamazaki, a senior fund manager at Sumitomo Mitsui DS Asset in Tokyo. “After the year-end holidays, net yen short positions are likely to resume.”