If there was any question about where the Federal Reserve stands on the key issue of the day — inflation — two important officials brought even more clarity on Tuesday.



Fed Governor Lael Brainard and San Francisco Fed President Mary Daly both issued comments that showed they both envision higher rates and, in the former’s case, an aggressive drawdown of the assets the central bank is holding on its balance sheet.



Investors didn’t particularly like what they heard, sending major averages considerably lower on the day and the 10-year Treasury yield to a new 2022 high.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107000703-1642089190411-gettyimages-1237699477-SENATE_BRAINARD_THOMPSON-820x461.jpeg" alt="" class="wp-image-416294" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107000703-1642089190411-gettyimages-1237699477-SENATE_BRAINARD_THOMPSON-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107000703-1642089190411-gettyimages-1237699477-SENATE_BRAINARD_THOMPSON-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107000703-1642089190411-gettyimages-1237699477-SENATE_BRAINARD_THOMPSON-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107000703-1642089190411-gettyimages-1237699477-SENATE_BRAINARD_THOMPSON-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107000703-1642089190411-gettyimages-1237699477-SENATE_BRAINARD_THOMPSON-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107000703-1642089190411-gettyimages-1237699477-SENATE_BRAINARD_THOMPSON.jpeg 1600w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption>Lael Brainard, governor of the U.S. Federal Reserve, speaks during a Senate Banking, Housing, and Urban Affairs Committee confirmation hearing in Washington, D.C., U.S., on Thursday, Jan. 13, 2022. Al Drago | Bloomberg | Getty Images</figcaption></figure>



“It is of paramount importance to get inflation down,” Brainard said during a Minneapolis Fed webinar. The Federal Open Market Committee, which sets interest rates, “will continue tightening monetary policy methodically through a series of interest rate increases and by starting to reduce the balance sheet at a rapid pace as soon as our May meeting.”



The comments helped knock down a positive opening on Wall Street that ultimately turned into a nearly 1% loss for the Dow Jones Industrial Average. The more aggressive Fed chatter also comes as the 30-year fixed mortgage rate topped 5%, a key threshold which could slow the housing market.



<h2 class="wp-block-heading" id="h-we-re-not-going-to-let-this-go-forever"><a></a>‘We’re not going to let this go forever’</h2>



Later in the day, Daly said inflation running at a 40-year high “is as harmful as not having a job.” Speaking to the the Native American Finance Officers Association, she assured the group that the Fed is on the case.



“Most Americans, most people, most businesses, hopefully people in tribal nations, you all have confidence that we’re not going to let this go forever,” Daly said. “But if you don’t have that confidence, let me give it to you.”



<h3 class="wp-block-heading">Read more: <a href="https://www.cnbcafrica.com/2022/markets-will-be-looking-for-clues-from-the-fed-ahead-as-historically-strong-month-gets-underway/">Markets will be looking for clues from the Fed ahead, as historically strong month gets underway</a></h3>



She assured those in attendance several times that interest rates are heading higher, though she added that she doesn’t think it will cause a recession.



Raising rates “is what is necessary to ensure that again, [you] go to bed at night, you’re not worrying about whether prices will be higher, considerably higher tomorrow,” Daly added.



The Fed already has enacted its first rate hike of the year, a 0.25 percentage point move in March. Markets expect increases at each of the six remaining meetings this year, possibly totaling 2.5 percentage points.



<h2 class="wp-block-heading" id="h-two-policy-doves"><a></a>Two policy ‘doves’</h2>



What made the two officials’ comments more striking is that they are considered to be in the camp of Fed “doves” — meaning that they usually favor low rates and less restrictive policies. That they both see a rather urgent need to tighten underscores how seriously the Fed is taking the threat.



Brainard’s voice carries a little extra heft in that she has been nominated to be vice chair of the FOMC, a position that makes her the top lieutenant for Chairman Jerome Powell.



Brainard said she expects the Fed’s $9 trillion balance sheet to “shrink considerably more rapidly” than was the case during the last rundown in 2017-19. In that episode, the Fed allowed $50 billion a month in proceeds from maturing bonds to roll off while reinvesting the rest. Her comments opened the door to what many economists expect to be a monthly roll-off around $80 billion to $100 billion.



Reducing the balance sheet “will contribute to monetary policy tightening over and above the expected increases in the policy rate,” Brainard added.



“Currently, inflation is much too high and is subject to upside risks. The Committee is prepared to take stronger action if indicators of inflation and inflation expectations indicate that such action is warranted,” she added.



Daly echoed the idea that the balance sheet reduction could start in May, adding that the Fed’s commitment to fighting inflation “will mean interest rates go up.”



“But inflation, what people are paying day in and day out is on the minds of everyone, they go to bed at night thinking about it wake up in the morning thinking about rent, transportation, gas prices, food prices, so we as a Federal Reserve are on a path to raise the interest rates,” she said.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107032202-2022-03-17T164942Z_1471390645_RC2D4T99QL6E_RTRMADP_3_USA-STOCKS-820x461.jpg" alt="" class="wp-image-416257" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107032202-2022-03-17T164942Z_1471390645_RC2D4T99QL6E_RTRMADP_3_USA-STOCKS-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107032202-2022-03-17T164942Z_1471390645_RC2D4T99QL6E_RTRMADP_3_USA-STOCKS-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107032202-2022-03-17T164942Z_1471390645_RC2D4T99QL6E_RTRMADP_3_USA-STOCKS-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107032202-2022-03-17T164942Z_1471390645_RC2D4T99QL6E_RTRMADP_3_USA-STOCKS-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107032202-2022-03-17T164942Z_1471390645_RC2D4T99QL6E_RTRMADP_3_USA-STOCKS-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/04/107032202-2022-03-17T164942Z_1471390645_RC2D4T99QL6E_RTRMADP_3_USA-STOCKS.jpg 1600w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption>Photo: via CNBC</figcaption></figure>



The stock market is heading into what promises to be a volatile second quarter, but April is traditionally the best month of the year for stocks.



The major indices were higher in March, but they turned in a weak performance for the first quarter, the worst since the pandemic. Investors have been worried about rising interest rates, the war in Ukraine and inflation, which was made even worse by disruptions in commodities exports from both Russia and Ukraine.



Stocks are typically higher in April, and it is historically the best month of the year for the S&amp;P 500. The S&amp;P has been higher 70% of the time and has gained an average 1.7% in all Aprils since World War II, according to Sam Stovall, chief investment strategist at CFRA. For all months, the S&amp;P averaged a gain of 0.7%.



The S&amp;P 500 was up 3.6% in March, and Stovall said the rally could continue. “I think we get back to breakeven, but then I wouldn’t be surprised if we go through another pullback or correction before we have an end of year rally,” he said.



Market focus in the week ahead will remain squarely on developments around the Ukraine war and on the Federal Reserve. The Fed on Wednesday is scheduled to release minutes from its March meeting, where it raised interest rates for the first time since 2018.



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There are also a handful of Fed speakers, including Fed Governor Lael Brainard, who speaks Tuesday.



Greg Faranello, AmeriVet Securities head of U.S. rates, said the Fed minutes could be the highlight of the week since the central bank is likely to provide more detail on its plans to shrink its balance sheet. The Fed has nearly $9 trillion in securities on its balance sheet, and a reduction of those holdings would be another step to tighten policy.



“The market is curious. They’re going to be looking for some clues in terms of how quickly, how big, what the caps look like,” said Faranello.



The economic data calendar is light, with factory orders Monday, international trade and ISM services Tuesday and wholesale trade Friday.



Traders will also be watching for any comments from companies ahead of the first-quarter earnings reporting season, which starts in mid-April.



“The first-quarter earnings have actually been improving in the last month, so that’s encouraging,” said Stovall.



<h3 class="wp-block-heading" id="h-farewell-to-first-quarter">Farewell to first quarter</h3>



The Dow was off 4.6% for the first quarter, while the S&amp;P 500 was down 5%. The worst performer by far was the Nasdaq, down 9.1%. In the past week, stocks were barely changed. The Dow was down 0.1%, while the S&amp;P was up 0.1%. The Nasdaq was up 0.7%.



Interest rates also moved dramatically during the quarter, with the benchmark 10-year Treasury yield temporarily touching a high of 2.55% in the past week, after starting the quarter at 1.51%.



On Friday, the 10-year was yielding 2.37%, while the two-year yield, which most reflects Fed policy, was at 2.45%. The two-year was yielding 0.73% at the beginning of the year.



Faranello said bond yields can keep going higher on inflation concerns, but they could consolidate before another big move.



“I think the market is looking for a new catalyst here,” he said. “I just think the first quarter has been about repricing the market, and we’ve done that&#8230;The Fed came out very hawkish. We made made a dramatic repricing. Now, we need to see more data to see how this is going to evolve in the second quarter.”



Stovall said the S&amp;P 500′s first-quarter performance is one of the 15 worst first quarters, going back to 1945. After those weak quarters, down 3.8% or more, the second quarter was better on average. This year’s first-quarter decline was tied with 1994, which had the 12th&nbsp;worst first quarter.



After those 15 weak first quarters, “we actually climbed 4.8% in the second quarter and rose in price two out of every three times,” he said. But for the full year, the S&amp;P 500 gained just 40% of the time, and was down an average 2% in those years.



But this year is a midterm election year, and in those years the second and third quarters are typically the weakest. “Of those 15 worst quarters, five of them were midterm election years, and of those five, the second quarter was up an average 1%, and it rose in price only 40% of the time,” Stovall said.



Stovall said the market could be higher in the second quarter, but it will face headwinds. “Oil prices are likely to remain up. Interest rates are certainly not coming down,” he said, adding geopolitical pressures are likely to remain. “I see the possibility of a 1% gain. We could probably eke out something good.”



Stocks were held hostage by rising and volatile oil prices in the first quarter, as the world scrambled to make up for Russia’s export barrels. Many customers refused to buy Russian oil for fear of running afoul of financial sanctions on Russia’s financial system.



After wild swings both higher and lower, West Texas Intermediate oil futures gained 39% in the first quarter, the eighth positive quarter in a row and its best first quarter since 1999. WTI was just under $100 per barrel Friday afternoon.



<h3 class="wp-block-heading">Choppy, volatile market</h3>



Joe Quinlan, head of CIO Market Strategy for Merrill and Bank of America Private Bank, said he is constructive on the market heading into the second quarter, but he sees some rough spots ahead.



“We’ve got to work through the inflation problem, and the Fed catching up to the expectations of the market,” Quinlan said. “We’ve got to re-anchor inflation. It’s going to be a choppy, volatile year. We’re tilting more toward hard assets, whether it’s commodities, energy and natural gas.”



Quinlan said he leans towards equities over fixed income, which has also been unusually volatile. “We’re using equities as a hedge against inflation,” he said. “Within that framework is more hard assets, fuels, agriculture complex in general and metals and minerals.”



In the second quarter, the stock market will continue to adjust to an aggressive Federal Reserve against the backdrop of what should have been a solid economy. With 431,000 payrolls added in March, jobs data continues to be strong, but there is a fear the Fed will raise interest rates too quickly, derailing the economy and spinning it into recession.



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Traders in the futures market expect the Fed will increase its fire power at its next meeting in early May, hiking interest rates by 50 basis points, or a half-percent. The Fed’s first rate increase was a quarter-point at its March meeting.



The market is pricing in the equivalent of eight quarter-point hikes, and Treasury yields have moved higher with stunning speed as market expectations for interest rates shifted. The two-year Treasury yield rose above the 10-year yield, or inverted this past week, for the first time since 2019. That is viewed by the market as a warning sign for a recession.



Fed officials have signaled they want to move to trim the balance sheet soon. Kansas City Fed President Esther George this past week said the Fed’s balance sheet will need to decline significantly. She said the Fed’s holdings of Treasurys may have depressed the 10-year yield, causing the yield curve to invert.



Faranello said interest rates could still head higher on inflation worries, but rates could consolidate after their recent run higher. The yield curve could also remain inverted.



“We can stay like this for a year-and-a-half. Everyone’s screaming a recession is coming&#8230;I don’t think the yield curve is telling us a recession is just about to happen,” Faranello said.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107038803-1648636321753-GettyImages-51887083-820x461.jpg" alt="" class="wp-image-416185" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107038803-1648636321753-GettyImages-51887083-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107038803-1648636321753-GettyImages-51887083-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107038803-1648636321753-GettyImages-51887083-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107038803-1648636321753-GettyImages-51887083-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107038803-1648636321753-GettyImages-51887083-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107038803-1648636321753-GettyImages-51887083.jpg 1920w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption>BONNY ISLAND, NIGER DELTA, Nigeria: A ship loads liquefied natural gas from the Nigerian Liquefied Natural Gas plant October 12, 2004 on Bonny Island, Nigeria. Jacob Silberberg/Getty Images</figcaption></figure>



With the U.S., EU and U.K. looking to phase out Russian gas imports, Western leaders could look to liquified natural gas projects in sub-Saharan Africa to soften the landing.



Russia and the West remain at odds over payment for natural gas exports, on which Europe, in particular, is heavily dependent, with Moscow insisting “unfriendly” countries pay for gas deliveries in Russian rubles, a demand G-7 nations have rebuffed.



The divergence comes in the wake of an unprecedented and coordinated barrage of international sanctions leveled against Russia for its invasion of Ukraine.



The U.S. has declared a complete ban on Russian oil, gas and coal imports, while the U.K. intends to phase out Russian oil by the end of the year and the EU aims to cut its reliance on Russian imports by two-thirds.



Russia accounts for around 40% of the EU’s natural gas exports, with Germany and Italy particularly exposed. Germany issued an “early warning” on Wednesday that natural gas rationing could be required if a full supply shortage ensues.



The EU has struck a deal with the U.S. for an additional 15 billion cubic meters of LNG, though former U.S. Energy Secretary Dan Brouillette said Monday that this would not be enough to fill the Russian shortfall.



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Italian Foreign Minister Luigi di Maio told CNBC on Tuesday that over the past month, he had traveled to countries such as Mozambique, the Republic of Congo and Angola in a bid to forge new LNG supply partnerships.



“Energy security is fundamental for countries that are global manufacturing powers like Italy and many others, and we must be able to diversify our energy sourcing,” Di Maio said.



“We are diversifying away from our dependence on Russia to avoid any eventual threats from Russia on our gas supply and to continue our green transition with new and different energy sources.”



In a research note last week, Africa analysts at political risk consultancy Verisk Maplecroft said that while the continent cannot fill the void left by Russian natural gas imports, it could help to shore up supply.



Oil majors BP, TotalEnergies and Eni have all established a presence on the African subcontinent from which to build, along with U.S. oil majors such as Exxon Mobil.



Verisk Maplecroft noted that BP is furthest along in efforts to bring online a major LNG project in sub-Saharan Africa and could double down on these, particularly at the Tortue gas fields straddling the border between Senegal and Mauritania.



Eni CEO Claudio Descalzi announced earlier this month the Italian giant is able to provide Europe with an additional 14 trillion cubic feet of gas between now and 2025 from assets situated around the world, including in Angola, Congo, Nigeria and Mozambique. Angola and Congo have already agreed to boost gas exports to Italy, with Eni serving as an intermediary.



<h3 class="wp-block-heading" id="h-huge-potential-significant-obstacles">Huge potential, significant obstacles</h3>



Analysts Alexandre Raymakers, Maja Bovcon and Eric Humphery-Smith highlighted that Senegal, Mauritania, Nigeria and Angola are best placed to increase production, though the bulk of new supply will not arrive until the second half of the decade.



“The political and fiscal stability in Senegal and Mauritania mean that projects are well placed for LNG development, while the likely re-election of the MPLA in Angola in August 2022 will also enable an uptick in investment,” Verisk Maplecroft said.



Mozambique is also host to colossal natural gas reserves, with several European energy giants establishing facilities in the country, but it is beset by a violent Islamist insurgency that has forced shutdowns at some of these facilities in recent years.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="421" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/unnamed-3-820x421.jpg" alt="" class="wp-image-416186" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/unnamed-3-820x421.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/unnamed-3-300x154.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/unnamed-3-160x82.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/unnamed-3-768x395.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/unnamed-3.jpg 1024w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption>People wait for friends and relatives as a ship carrying more than 1,000 people fleeing an attack claimed by Islamic State-linked insurgents on the town of Palma, docks in Pemba, Mozambique, April 1, 2021. REUTERS/Emidio Jozine NO RESALES. NO ARCHIVES</figcaption></figure>



There is also room for expansion among other major LNG players in the Gulf of Guinea, Verisk Maplecroft suggested, such as Nigeria, Cameroon and Equatorial Guinea.



“An improved gas price environment could swing the balance of profitability for a number of projects in Nigeria, allowing for additional supply for existing and planned LNG projects,” the report said.



“For instance, the Ukraine crisis will likely increase the attractiveness of the long-planned Nigeria LNG Train 7 that is expected to come online in 2026 and will require an additional 1,200mmcfd of gas supply from Nigerian gas projects.”



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The analysts also noted the beginnings of a revival of interest in the dormant Fortuna FLNG project in Equatorial Guinea.



However, a rise in piracy in the region, including opportunistic attacks on LNG tankers in recent years, may prove a deterrent.



Ultimately, Verisk Maplecroft estimates that even if all known greenfield LNG projects in sub-Saharan Africa were active and operating at maximum capacity, they would still only account for approximately half of Russia’s gas supply to Europe.



“The improved gas demand and price environment means sub-Saharan Africa region can help fill some of the gap left by embargoed Russian gas supplies, but it can’t solve the problem alone,” the report concluded.

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106999424-1641903525497-gettyimages-1237650594-CALIFORNIA_VIRUS-820x547.jpeg" alt="" class="wp-image-416161" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106999424-1641903525497-gettyimages-1237650594-CALIFORNIA_VIRUS-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106999424-1641903525497-gettyimages-1237650594-CALIFORNIA_VIRUS-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106999424-1641903525497-gettyimages-1237650594-CALIFORNIA_VIRUS-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106999424-1641903525497-gettyimages-1237650594-CALIFORNIA_VIRUS-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106999424-1641903525497-gettyimages-1237650594-CALIFORNIA_VIRUS-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/106999424-1641903525497-gettyimages-1237650594-CALIFORNIA_VIRUS-scaled.jpeg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption>Photo: via CNBC</figcaption></figure>



The top U.S. health regulators on Tuesday cleared fourth Covid vaccine doses for older adults, amid uncertainty over whether an even more contagious version of omicron will cause another wave of infections in the U.S. as it has in Europe and China.



The FDA authorized Pfizer and Moderna fourth doses for everyone age 50 and older, as well as a fifth dose for certain younger people with compromised immune systems. People age 12 and older with weakened immune systems are eligible for a Pfizer fifth dose, and those 18 and older with the same condition are eligible for Moderna.



The Centers for Disease Control and Prevention quickly signed off on the decision, paving the way for those eligible to get a new round of boosters. The CDC also recommended that all adults who received two doses of Johnson &amp; Johnson’s vaccine get third shots using Pfizer or Moderna. Adults who received the J&amp;J vaccine and a second shot of Pfizer or Moderna are not yet eligible for a third dose, unless they are age 50 and older or have compromised immune systems.



All of the new boosters are to be administered at least four months after the last shot.



The FDA and CDC made the decision without calling meetings of their vaccine advisory committees, a rare move the agencies have made more frequently over the course of the pandemic to expand uses of already-approved Covid vaccines. The drug regulator’s authorization comes just two weeks after Pfizer and Moderna asked the FDA to permit a second booster shot based on data from Israel.



The FDA’s advisory committee on vaccines is scheduled to meet on April 6 to discuss the future of booster shots in the U.S. The vaccine experts are expected to hold a broad discussion about boosters and will not vote on a specific recommendation.



Dr. Peter Marks, head of the FDA office responsible for vaccine safety and efficacy, said the drug regulator did not call an advisory meeting because the decision was “relatively straightforward.”



“This fourth booster dose is something that evidence that we have now from Israel suggests that by getting this, one can reduce the risk of hospitalization and death in this population of older individuals,” Marks said during a call with reporters after the decision.



Dr. Paul Offit, a committee member, criticized the drug regulator for moving forward without holding an open meeting where the American public can hear experts weigh the data and make a recommendation to the FDA about the best path forward. The vaccine advisory committee’s recommendations are nonbinding, but they help provide transparency for the public.



“It’s just sort of fait accompli,” Offit said of the FDA authorization. “So is this the way it works? We talk endlessly about how we follow the science — it doesn’t seem to work out that way.”



The FDA has not called on the committee members to make a recommendation on booster shots since last fall when they voted in favor of a third Pfizer or Moderna dose for people age 65 and older and younger people at risk of severe Covid.



Health experts disagree on whether a fourth vaccine dose is needed right now, though the debate is nuanced. There is broader agreement that the elderly or people with compromised immune systems may benefit from additional protection. Another booster shot for young, healthy adults is more controversial, as they are less susceptible to severe illness from Covid.



Dr. Peter Hotez, a vaccine expert at the Baylor College of Medicine in Houston, said some scientists believe the only purpose of the shots is to keep people out of the hospital. However, Hotez said vaccine policy should also seek to prevent infection and long Covid. The effectiveness of the third dose against hospitalization from omicron has also declined over time, he said.



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The CDC published a study in February that showed the effectiveness of the third dose against emergency room visits declined from 87% to 66% against emergency room visits, and from 91% to 78% against hospitalization at four months after receiving the shot.



“That gives me pause for concern that the boosters are not necessarily holding up as well as we’d like,” said Hotez, who strongly supports a fourth dose based on Israeli data showing another booster increases protection for people older than 60.



Israeli scientists, in a study published last week, found the death rate from omicron was 78% lower in senior citizens 60- to 100-years-old who received a fourth Pfizer dose compared with those who received just three shots. The study, which has not undergone peer review, examined the medical records of more than 500,000 people from January through February at Clalit Health Services, Israel’s largest health-care provider.



The FDA decision to authorize fourth doses for those age 50 and older was broader than Pfizer’s request and narrower than Moderna’s. Pfizer had asked the FDA to clear fourth doses for those age 65 and older, while Moderna asked the drug regulator to permit them for all adults age 18 and older. Moderna CEO Stephane Bancel told CNBC last week that the biotech company filed a broader request in order to give the FDA flexibility to decide which age group needs a fourth dose right now.



John Moore, a professor of microbiology and immunology at Weill Cornell Medical College, criticized Moderna’s request for a fourth dose for all adults as an aggressive, blanket application that doesn’t distinguish between the different needs that older and younger people have.



“The old and frail person has much more need of an additional vaccine dose than a young healthy athlete,” Moore said.



The authorization of fourth shots comes as a more contagious omicron subvariant, BA.2, has caused new waves of infection in major European nations and China, which is battling its worst outbreak since 2020. BA.2 has gained ground in the U.S. since February and is expected to become the dominant variant here in the coming weeks. White House chief medical advisor Dr. Anthony Fauci has said infections might increase in the U.S. due to BA.2, though he doesn’t expect another wave.



“We’re hoping that by taking this action, we will help allow people to take steps to protect themselves should we have another wave that comes through this country,” Marks said.



BA.2 generally does not make people sicker than the earlier version of omicron, BA.1, and the vaccines have the same level of effectiveness against both types of the variant, according to studies from South Africa and Qatar among others. Neither study has undergone peer review.



It’s unclear if the FDA will also approve fourth doses for younger adults at some point, as there’s less data to support such a decision right now. Marks said the U.S. might need a more general booster campaign for people under 50 years old in the fall, when Covid will likely pick up again and immunity will have waned. He also said the U.S. might have to switch to a vaccine that targets a specific variant such as omicron. The current vaccines were developed against the Wuhan strain.



An Israeli study from February among health-care workers ages 18 and older indicated that a fourth dose does not boost immunity but restores it to the peak strength of the third dose. Many people in the study who received a fourth dose still got infected, though they were either asymptomatic or had mild symptoms.



“A fourth vaccination of healthy young health-care workers may have only marginal benefits,” Dr. Gili Regev-Yochay and a team of scientists from Sheba Medical Center and Israel’s Ministry of Health who conducted the study wrote in a letter to the New England Journal of Medicine this month.



The FDA advisory committee voted overwhelmingly against a third dose for everyone age 16 and older in September last year because the experts felt there wasn’t enough data to support such a decision. Two months later, the FDA authorized Moderna and Pfizer boosters for all adults without holding an advisory committee meeting, and then lowered eligibility in December and January to include everyone 12 and older.

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BEIJING — China’s biggest city Shanghai began a two-stage lockdown Monday as authorities attempt different strategies to maintain growth, while trying to control the country’s worst Covid-19 outbreak since the pandemic began.



Shanghai, a city of 26 million people on the southeastern coast of China, is a hub for finance and international business in the country. The city is also home to the world’s largest container-shipping port.



The lockdown measures include orders to work from home as well as the suspension of public transit and ride hailing, Shanghai city announced Sunday night. Previously, only specific neighborhoods had faced temporary lockdowns to control pockets of outbreaks.



The initial phase will run from Monday to Friday morning and apply to the eastern part of the city where the financial center is, the city said. The second phase will apply to the western part of the city, and run from Friday morning to the afternoon of the following Tuesday, April 5, municipal authorities said.



“The lockdown and mandatory testing district by district in China’s largest city, key transportation hub and financial center are highly likely to disrupt the city’s commercial activity,” said Bruce Pang, head of macro and strategy research at China Renaissance.



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“We think that in the near term, China will stick to its zero-tolerance approach, pursuing [its] zero-Covid position as one of the world’s strictest virus elimination policies,” Pang said.



Tesla, whose Shanghai factory is located in the area covered by the first stage of the lockdown, reportedly halted production for at least a day on Monday, according to Bloomberg, citing sources. The electric car company did not immediately respond to CNBC’s request for comment.



The emergence of the highly transmissible omicron variant has made controlling outbreaks harder and increased uncertainty for business operations. Local governments across China have attributed the latest wave of cases to the omicron subvariant BA.2.



China has stuck to a strategy of lockdowns and quarantines to control Covid outbreaks, while maintaining economic growth. The policy helped the country rebound from the initial shock of the pandemic in early 2020, with relatively few infections and deaths compared with other parts of the world.



This time around, economists don’t expect lockdowns that last only a week or so to have a major impact on the national economy for the full year. Travel restrictions and stay-home measures affect consumer spending and services more than factory production, since workers can often stay on-site at industrial parks.



<h2 class="wp-block-heading" id="h-using-targeted-measures"><a></a>Using targeted measures</h2>



In Shanghai, officials have emphasized in the last few weeks how the city would not lock down and instead use a neighborhood-specific approach. Even in Sunday’s announcement, the city claimed the two-part lockdown was for conducting virus tests in batches.



Shanghai International Port Group, which manages the city’s ports, said in an online statement Monday that other than for extreme weather, production units maintained 24-hour operations.



And rather than a blanket ban on travel in and out of Shanghai during the two-stage lockdown, authorities said people in the city wanting to leave — by highway, train or airplane — will need a negative virus test within 48 hours of departure.



Shanghai’s two airports, including one focused on international travel, and three train stations are still operating normally, the municipal transportation authority said Monday morning.



<h2 class="wp-block-heading"><a></a>Surge in cases with no symptoms</h2>



New confirmed cases in the city have remained elevated, with even higher numbers of asymptomatic cases.



Shanghai reported 3,450 asymptomatic cases for Sunday, the most for any province-level region in mainland China. The city reported 50 new confirmed Covid cases for that same day.



All 3,500 affected individuals are in isolated treatment or isolated medical observation, the city said.



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The latest update on March 15 to the national policy for Covid prevention and control said mild and asymptomatic cases can be managed at quarantine centers, rather than needing hospital care which would add to China’s already stretched health-care system.



Nationwide, the northern province of Jilin accounts for most of the new confirmed locally transmitted cases — 1,086 of the 1,219 reported for the mainland on Sunday. Although the latest Covid wave has touched provinces across China, the number of new confirmed cases a day in most regions is below 10.



The capital city of Beijing reported no new locally transmitted confirmed cases or asymptomatic cases for Sunday.



In an indication of how authorities are trying to limit cross-country travel, China’s national railway operator announced Saturday that travelers would not be able to book tickets for April 8 or future dates. Sales for those later times are set to resume April 2, the railway operator said.

107029829-16472598662022-03-12t061542z_467857733_rc290t9vnin1_rtrmadp_0_health-coronavirus-china

China is shutting down Shanghai in two phases to control Covid

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/48605395292_2412794aa7_b-820x547.jpg" alt="" class="wp-image-402446" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/04/48605395292_2412794aa7_b-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/48605395292_2412794aa7_b-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/48605395292_2412794aa7_b-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/04/48605395292_2412794aa7_b.jpg 1024w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption>President Joe Biden
Photo: via Flickr</figcaption></figure>



President Joe Biden on Saturday said Russian leader Vladimir Putin “cannot remain in power,” ratcheting up international pressure and further uniting NATO allies against Putin over his invasion of Ukraine.



“A dictator, bent on rebuilding an empire, will never erase the people’s love for liberty,” Biden said at the end of a sweeping speech in Poland. “Ukraine will never be a victory for Russia, for free people refuse to live in a world of hopelessness and darkness.”



“For God’s sake, this man cannot remain in power,” Biden said.



Biden has hurled invective at Putin throughout the crisis in Ukraine, labeling him a “murderous dictator” and a “war criminal,” but has previously stopped short of calling for his removal from power.



Later Saturday, a White House official attempted to clarify that Biden “was not discussing Putin’s power in Russia, or regime change,” but rather was making the point that Putin “cannot be allowed to exercise power over his neighbors or the region.”



The president’s address at the Royal Castle in Warsaw marked the grand finale of a three-day trip to Europe. While in Poland, Biden met with Ukrainian refugees who had fled Russian aggression, as well as with U.S. troops stationed in Rzeszow, near Ukraine’s border.



In his speech, Biden urged democracies around the world to unify against Russia and commit to a historic battle against authoritarian aggression.



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“In this battle, we need to be clear-eyed,” he said. “We need to steel ourselves for the long fight ahead.”



Biden directly and repeatedly condemned Putin throughout the speech, accusing the Russian president of “using brute force and disinformation to satisfy a craving for absolute power and control.”



Biden slammed Putin for invoking Nazi imagery as a pretext for an invasion, calling it an “obscene” lie. And he said it is “Putin who is to blame” for the mountain of international sanctions that are crushing Russia’s economy and its currency, noting that the Russian ruble has been reduced to “rubble.”



Biden also spoke past Putin, attempting to deliver an appeal to whichever Russian citizens may be able to hear the speech.



“This is not the future you deserve for your families and children,” Biden said. “I’m telling you the truth, this war is not worthy of you, the Russian people.”



Biden’s message to Ukraine was more direct: “We stand with you. Period.”

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<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107035723-1648098747562-gettyimages-1387214727-vcg111374466081-820x461.jpeg" alt="" class="wp-image-416072" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107035723-1648098747562-gettyimages-1387214727-vcg111374466081-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107035723-1648098747562-gettyimages-1387214727-vcg111374466081-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107035723-1648098747562-gettyimages-1387214727-vcg111374466081-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107035723-1648098747562-gettyimages-1387214727-vcg111374466081-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107035723-1648098747562-gettyimages-1387214727-vcg111374466081-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/03/107035723-1648098747562-gettyimages-1387214727-vcg111374466081.jpeg 1920w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption>People line up for nucleic acid testing at a temporary Covid-19 testing site on March 22, 2022 in Shenzhen, Guangdong Province of China. Vcg | Visual China Group | Getty Images</figcaption></figure>



BEIJING — As mainland China battles its worst Covid-19 outbreak since early 2020, local governments increasingly say the new omicron BA.2 variant is to blame.



That’s the new Covid subvariant, which preliminary research indicates is even more transmissible than the original omicron variant — but doesn’t necessarily cause more severe illness.



Mainland China has reported well over 1,000 new confirmed Covid cases a day since March 12, with the number holding above 2,000 for the last three days. That’s not including the asymptomatic case count, which can be just as many, or far more, than the number of daily confirmed cases.



From the northern province of Jilin — which accounts for more than half of the new daily cases — to industrial centers like Tangshan and Shenzhen, local authorities have blamed omicron BA.2 for the latest wave of Covid.



“Omicron BA.2 caused this outbreak, and spreads faster and more easily than previous viruses,” the export-heavy province of Fujian said in an online statement Tuesday, according to a CNBC translation of the Chinese text.



The subvariant is also “stealthier” and harder to find, but infections are primarily mild or asymptomatic cases, the Fujian government said.



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Scientists have also described BA.2 as a “stealth” variant because it contains mutations that could make it harder to distinguish from the older delta variant using PCR tests.



Despite apparent changes in the virus’ severity, China has maintained its stringent zero-Covid policy of using swift, regional lockdowns to control outbreaks. The strategy had helped the economy quickly return to growth after the initial shock of the pandemic in early 2020.



Different provinces or cities can impose quarantines or travel restrictions on people coming from other regions, or at least require valid virus tests, adding hurdles to commercial travel.



For example, a company had to change its truck driver to a local one before the vehicle entered a city in the Guangxi region, said Klaus Zenkel, chair of the south China chapter of the EU Chamber of Commerce in China. “Otherwise he cannot enter the area where he needs to deliver the goods to.”



Zenkel is based in the southern city of Shenzhen, which ended a week-long lockdown Sunday night.



“If you compare this lockdown for the seven days last week, 14 to 21 of March, it was almost tougher than two years ago when the pandemic started,” he said, referring to the tighter government restrictions on international travel and stay-home policies.



<h2 class="wp-block-heading" id="h-smaller-businesses-hurt-more"><a></a>Smaller businesses hurt more</h2>



More than half of mainland China shut down in February 2020 for an extended Lunar New Year holiday in an effort to control the initial outbreak of Covid-19 in the country. The economy contracted that quarter, but quickly rebounded.



This time around, multinational corporations could maintain production by keeping workers in the same area as factories, but smaller businesses lost a week of output, Zenkel said Wednesday. He said district governments are asking businesses to share what their losses were, for potential compensation plans.



Shenzhen is pretty much returning to normal, but many people were still getting tested every day so they could present valid negative results as needed for in-person business meetings, he said. “Let’s hope [with] all these experiences and all the China data, the Chinese government can find a way to go from zero-Covid to ‘live with Covid.’”



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Across the country, Covid tests remain a primary way for authorities to confirm whether people are allowed into a city or whether a neighborhood can end its lockdown. These tests — which can’t yet be self-administered at home — now only cost about 8 yuan ($1.25) in Beijing, or free if arranged by community leaders.



At a Shanghai city press briefing Wednesday, Wu Fan, deputy dean of Shanghai Medical College at Fudan University, emphasized the need for the public to maintain social distancing, comply with testing and health code checks, and monitor themselves carefully.



“This time, the omicron BA.2 variant seems to be running very quickly,” Wu said, according to CNBC translation of the Chinese remarks. “Just chasing it isn’t enough. [We] also need to cut off the path ahead of it.”

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