Stock markets start the new year by posting new all-time record highs for both the S&P 500 and Dow.

Stock bulls seem ready to move beyond the lingering concerns about the latest Omicron-driven coronavirus surge with many insiders expecting little if any lasting economic damage.

Coronavirus surge

The biggest concern remains the possibility of more supply chain disruptions with companies around the world reporting major staffing shortages as a result of so many workers being out sick and or testing positive. That's in addition to the generally tight labor supply that is currently plaguing many Western countries, including the United States.

Health officials expect the current U.S. wave will start to subside in just a few short weeks. Investors are also closely monitoring the situation in China where millions of people are under lockdowns, creating shortages of workers at key factories as well as disrupting cargo movement to and from the Ningbo-Zhoushan port, the world's largest by container volume.

China is the only major country in the world that is still trying to maintain a "zero-Covid" policy, even as the resulting lockdowns and other severe restrictions have consistently been a source of major supply-chain disruptions.

The policy has been flagged as one of the biggest risks to global growth in 2022 by numerous analysts and risk consultants, particularly if future mutations continue to jump immunity protections like the Omicron variant seems to do.

A continuation of the policy likely means ongoing supply constraints for global importers and further fanning of inflation flames. Personally, I think China is trying to keep a lid on Covid until they get past the Winter Olympics which start in February.

Inflation issue

Here at home, inflation remains the key economic headline in the spotlight with the Prices Paid component of the ISM Manufacturing Index out today and expected to tick slightly lower again this month, which would mark two months of price gain slowdowns.

Several Wall Street insiders are saying inflation has peaked but may take a while to slowdown and this data might help confirm that opinion. The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) is also due out today with most expecting job openings to come in near record levels.

Keep in mind, the survey data is for November which is when many companies were trying to hire seasonal help for the holidays, so it's not the most relevant and up-to-date data.

The December Employment Report due on Friday is the labor data investors are most anxious to see this week. Investors this morning will also be digesting manufacturing data for China, which was released overnight. Also on the calendar today is the monthly OPEC meeting with the group expected to stick to its planned +400,000 barrel per month production increase.

It's worth noting that the group has failed to meet production targets with several members suffering from capacity constraints and other disruptions. OPEC oil producers fell short of their targets by -650,000 barrels per day in November and -730,000 barrels per day in October, according to International Energy Agency (IEA). Don't forget, we have the Fed's latest FOMC minutes scheduled for release tomorrow. The market seems to now be forecasting 63% odds of the Federal Reserve increasing rates at the March 16th meeting which is well above the 27% odds the market was forecasting about a month ago. It will be interesting to see how aggressive the Fed wants to be in battling inflation.

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