The Weekend Rip: Omicron, Roll Out

In a continuation of disappointing results from U.S-listed Chinese stocks, Pinduoduo posted paltry earnings on Friday. In response, shares of $PDD dropped over 16%.

Pinduoduo, an agtech and e-commerce giant in China, helps connect farmers and distributors. The company reported revenue grew 51% YoY to $3.37 billion, but that missed revenue expectations of $4.04 billion. That’s partially because the company reported lower total sales than in Q1 and Q2.

$PDD is the latest Chinese company to report paltry earnings, a trend we’ve been following in The Daily Rip. Some weeks back, we reported that Chinese stocks looked ready to test investors’ resolve and reboot after a rough last six months — now, that recovery is looking unlikely.

You can read their whole report here.

On Friday, we reported that the World Health Organization classified a new Covid-19 variant of concern. It’s called Omicron.

It prompted a sell-off in markets for one critical reason: we know very little about Covid’s new glo-up. In fact, we only know that it is spreading around Africa and Europe. We think it might already be in the U.S.

We don’t know if it is a so-called “escape variant”, a term used to describe variants which are impervious to the Covid-19 vaccine or its boosters. But even if it is, vaccine developers claim that they could optimize their existing vaccines — perhaps they can even create a “super-vaccine” (which would be effective against many strains of the virus.)

We also don’t know if Omicron leads to more severe disease, according to the WHO. That’s one reason why the FUD might be preemptive. At least at this present moment, it does not feel as though Omicron will result in lockdowns. However, no investor wants to get tripped up.

It might result in more aggressive mask mandates, which might harm recovering industries such as travel. However, given changing attitudes about the virus in the U.S., and the fact that lockdowns were not imposed during the Delta Days of Covid, it feels (at this moment) like Omicron is just a sequel nobody asked for.

Turkey’s currency is collapsing against the dollar. Turkish President Recep Tayyip Erdogan is disaffected. Erdogan and his party claim that the country is waging an “economic war of independence.” It looks like Erdogan & company are losing that war, as inflation surpassed 20% and citizens took to the street in protest. Read more.

John Deere posted earnings and ended a weeks-long labor strike on Wednesday. The company beat on top and bottom lines… and scored back employees from the picket line. The company ratified a 6-year agreement with UAW to get over 10,000 of employees back to work. The cost? A 20% raise for employees over the life of the new contract. Read more.

Crude got killed. President Biden announced that his administration would release 50 million barrels of crude oil. The announcement came amid some of the highest oil prices in years, which has been partially exasperated by woes in the Gulf, OPEC+’s unwillingness to produce more, and other inflationary pressure. Since then, oil has tanked given concerns about the Omicron variant. It fell 10% on Friday.