Happy Holidays!! 🎁

The fifth wave of COVID is here, but you’d hardly guess that if you look at the markets. Stocks marched to a record close today before the markets close for the Christmas holiday tomorrow. 🏆

Over the last week, as the S&P 500 marched 73.29 points (or 1.58% to 4,725.79), the Coronavirus looked like it would continue its own march. The 7-day average number of worldwide cases on Dec. 20, the most recent day for reported data, was 667,197. However, case numbers for the last few days have been on the higher end of 700,000.

By and large, the U.S. is the leader in new cases (243,676). Those figures helped push America’s total cases to over 50 million in the last week, which has been accompanied by another grim milestone: over 800,000 deaths. That’s so bad that it actually prompted a sharp reduction in U.S. life expectancy, and it also means that 1 in ~412 Americans have died of COVID-19 since the start of the pandemic. That might seem high, but that figure will probably crawl higher — only 61.7% of the country is “fully vaccinated.“

This week, the FDA approved two antiviral pills which hope to keep COVID at bay, one by Pfizer and another by Merck. The market reacted well to both drugs’ approval just in time to arrest Omicron’s impact. It’s a good thing, too, because hospital capacity is starting to rise again in most states. As of today, 77.4% of inpatient beds are in use (at least from the hospitals tracked by the HHS.)

The real question on everyone’s mind is: when does this end?? Will we have to go back to lockdowns? How does this impact the economy? Ultimately, the Coronavirus was very lucrative for the stock market (because of the monetary policy it created.) We have a labor shortage almost entirely because of the large number of seniors and folks over the age of 50 who retired early thanks to their 401(K) and IRA gains. You can assume most of the lucrative growth is behind us, especially as we roll into 2022.

In that sense, Covid is more of an inconvenience than a meaningful disruption.

One thing is certain, though. The current administration has no desire to go back to the early days of the pandemic. 🙅 We won’t attempt another unsuccessful lockdown campaign, nor will politicians offer more stimulus checks/SBA relief. While COVID is still here, over a fifth of people have already gone back to their pre-pandemic lives. It’s unlikely the virus will ever fully go away, but people’s tolerance to continue living restrained lives absolutely will. 🚨 🚨

The housing market has been a hot topic of discussion throughout the pandemic, and that’s definitely not about to change — last month, sales of newly-built homes were down 14% YoY as first-time homebuyers struggled to navigate market prices. 👎

New home prices are high right now for two main reasons. ✌️ First, the supply of existing homes has hit historic lows. Secondly, construction materials are expensive right now, so higher construction costs mean more expensive homes. In November, the median newly-built home price soared 19% YoY. As the supply of existing homes continues to dwindle and push up the prices of new properties, Chief Pantheon Economist Ian Shepherdson shared:

“A hefty correction appears to be due, but the rapid increases in existing home prices — inventory in that market is only one-third the level in the new home market, relative to sales — is putting extra upward pressure on new home prices.”

According to CNBC, “Mortgage applications to purchase a newly built home were down just 2% in November from a year ago.”  That implies that there are a lot of people interested in buying new homes, but they can’t make a deal work. 🤷 That might be why existing home sales are the ones rising instead of new home sales.

Builders are feeling confident, maybe even bullish, that new monetary policy (rising interest rates) will put the spotlight back on building. However, general housing prices have been on the rise for 117 months (a/k/a nine straight years), so these prices can’t rise much higher. 

Crocs shares crashed 11.63% to five-month lows today after the company bought Heydude, an Italian casual footwear company.

$CROX dropped as investors worry about how the shoe company will fund the $2.5 billion acquisition. Crocs will take out a $2 billion loan and a $50 million credit under an existing revolving facility with its bankers to cover the $2.05 billion cash portion of the deal. 😬 Crocs will also issue the Heydude founder and CEO, Alessandro Rosano, $450 million in $CROX shares.

The deal is anticipated to close in Q1 of 2022. Once the acquisition is completed, Heydude will function as a separate entity with Rosano continuing to head the firm.

Crocs CEO Andrew Rees stated: “With the acquisition of Heydude, we are thrilled to add another high-growth, highly profitable brand to our portfolio. We believe Heydude’s casual, comfortable, and lightweight products are aligned to long-term consumer trends and are a perfect fit for Crocs.”

$CROX is still up 97.6% YTD.