Markets in positive mood
Asian markets have opened with a positive tone today, after a relatively quiet news weekend. That is a broad continuation of the positive tone with which Wall Street closed out the week on Friday. Asia itself appears to content to climb out and enter the holding pattern, circling there for an extended period today, waiting for landing slots to open in London and New York.
Earnings season for Q2 in the US kicks off this week, with the largest banks reporting across the week. I expect that trading revenues will outperform once again as market volatility continues. More attention is likely to be given, however, to the big banks’ forward guidance on the global economy and the level of bad debt provisioning. Depending on whom you talk to, S&P 500 earnings are forecast to broadly fall by 30% to 40% YoY, although within that, there will be apparent winners and losers.
Geopolitics had a most welcome, relatively quiet weekend. US President Trump stated that he hadn’t even considered a Phase 2 trade agreement with China. That should be of a surprise to precisely nobody on planet Earth, given the trade and political conflicts with China since its signing, and will not impact markets.
Chinese GDP expected to recover
Alongside earnings data, this week will see a slew of Q2 GDP prints. Concentrating on Asia, China releases its Q2 GDP on Thursday. GDP YoY is expected to recover from its 6.8% fall in Q1, with the consensus being an increase of 2.1%. That, in my mind, is far too optimistic a number. China’s balance of trade on Tuesday may force a reassessment of those bullish forecasts. Either way, a number still in negative territory on Thursday could introduce some long-overdue two-way volatility into mainland and regional equity markets, as well as halting the relentless rise of the yuan in the short-term.
Singapore releases Advance Q2 GDP on Tuesday, with the figure expected to show a lockdown induced collapse of around 35% YoY. The fallout should be limited in local markets, as it is a known known. Singapore’s domestic consumption was weak before the pandemic, and the national lockdown has exacerbated this trend. Singapore’s data is unlikely to improve materially until Q4, and that assumes that world trade continues rebounding, and the pandemic is controlled.
India posts June CPI today at 2000 SGT, with the headline expected to remain elevated at 5.30% YoY. Although an improvement of May, India continues to be in a world of pain. Rising food prices and a weakening currency have created a stagflationary environment in India. There are a number of reasons for this – pandemic flatlining growth, deteriorating credit quality weighing down the banking sector, government finances in a box canyon, and a relentless fall by the Indian rupee.
I am surprised India is not flashing louder danger signals to investors. USD/IDR has bottomed twice in the past three months at 74.00 and has climbed back to 74.95, just below its 100-day moving average. Given the fiscal and monetary constraints in India, the stagflationary environment and the ruption of growth from the pandemic, more weakness in the currency almost certainly lies ahead. India looks set to spend the rest of 2020 in the economic naughty corner.
We have three major central bank rate decisions in Asia this week. The Bank of Japan on Wednesday and South Korea and Indonesia on Thursday. Of the three, Indonesia will be the most interesting. Both Japan and South Korea will remain unchanged, but there is a genuine possibility that the Bank of Indonesia may choose to trim rates by 25bp to 4.0%. Although the currency has weakened slightly, it remains one of Asia’s best performers in Q2.
Similarly, the finance ministry and the Bank of Indonesia (BI) have got away with directly monetising newly issues sovereign bonds without a penalty. A poor showing on Wednesday from the Indonesia trade balance could be enough to tip the BI’s hand. However, in that context, the 14,000-level seen in early June could make the nadir for any rupiah strength for the foreseeable future.
Thursday is likely to be Asia’s highlight also, because, in addition to China GDP, China also releases retail sales, unemployment and industrial production. The data should give a comprehensive snapshot of the progress of the mainland’s recovery. With Covid-19 still rampaging its way through the United States, a positive set of data will be imperative to keep fuelling the global market’s equity rally in the near-term.
Weekly Digest – December 16, 2022
Friday, December 16, 2022Volume 3, Issue 59 Quote of the Week “Remember that you must behave as at a banquet. Is anything brought round to you? Put…
Friday, December 16, 2022
Volume 3, Issue 59
Quote of the Week
“Remember that you must behave as at a banquet. Is anything brought round to you? Put out your hand and take a moderate share. Does it pass by you? Do not stop it. Is it not yet come? Do not yearn in desire toward it, but wait till it reaches you. So with regard to children, wife, office, riches; and you will some time or other be worthy to feast with the gods. And if you do not so much as take the things which are set before you, but are able even to forego them, then you will not only be worthy to feast with the gods, but to rule with them also. For, by thus doing, Diogenes and Heraclitus, and others like them, deservedly became divine, and were so recognized.”
— Epictetus, The Enchiridion, 15
Fortune cookies are entertaining because they come with a vague statement that can often be interpreted positively. But they are usually not to be taken seriously. This is why I find myself annoyed when I read “fortune cookies” on Twitter that provide vapid advice claiming to make inherently difficult things easy to accomplish.
Since we are approaching the end of the year when many people start thinking about New Year’s resolutions, I thought that I would provide eight (hopefully) higher quality “fortune cookies” of my own that took many years to figure out.
- Almost nothing worthwhile can be achieved without considerable effort. If you want something, be prepared to work very hard to get it.
- If you hate your job, find a different one or switch to a different career. If you are still young, “retirement” is almost certainly a mistake. Find something that you are good at and enjoy doing and then commit to it wholeheartedly.
- Commit to reading 25 pages per day. That is over 9,000 pages per year and will put you at the very top in terms of attainment of wisdom, provided that you read with purpose. While difficult at first, it will get easier in time. Eventually, it will be very difficult to not read on a daily basis. Such days will feel incomplete.
- Start a journal. Writing for fifteen minutes every morning can make a big difference in setting the tone for the day and keeping your goals on track.
- Avoid hatred at all costs. Hatred leads to disaster and harms the person doing the hating more than the target of hatred. Instead of falling into hatred, disassociate from toxic people, especially in cases of lies and deception.
- Be kind to others, especially those who through no fault of their own have been dealt a bad hand. But never allow someone to take advantage of your kindness. Provide a helping hand, not a handout, and never facilitate dysfunctional behavior. Cut people out of your life who are only interested in money.
- Avoid envy. The people you see on social media who appear to have “perfect lives” almost certainly do not. Many are secretly miserable and hide behind beautiful fictions posted on social media to fool themselves as well as others.
- Do not confuse frugality with cheapness. Default to generosity when it makes sense. Being cheap when it comes to health and well-being is stupid, and the same is true for intellectual pursuits. Books distill thousands of hours of the author’s time for the cost of a restaurant meal or less. Never budget for books.
These might be “fortune cookies”, but they could actually make a positive impact even though none are necessarily easy to implement. I can say that all of these concepts have helped me despite taking years or, in some cases decades, to really figure out.
Consoles and Competition by Ben Thompson, December 12, 2022. This article provides over forty years of history of the video game industry before analyzing the FTC’s attempt to block Microsoft’s acquisition of Activision. As someone who is not familiar with the intricacies of this case, I found the lengthy discussion of the industry’s history very valuable since it provides necessary context. “For the record, I do believe this acquisition demands careful overview, and it’s completely appropriate to insist that Microsoft continue to deliver Activision titles to other platforms, even if it wouldn’t make economic sense to do anything but. It’s increasingly difficult, though, to grasp any sort of coherent theory to the FTC’s antitrust decisions beyond ‘big tech bad’.” (Stratechery)
Sea Change by Howard Marks, December 13, 2022. In this memo, Howard Marks points out that forty years of declining interest rates represented a major tailwind for investors. He likens falling interest rates to a moving walkway in an airport. Just as moving walkways make life easier for weary travelers, falling interest rates act as an assist for investors. However, this secular decline in interest rates appears to be at an end which represents a sea change in the investment landscape. Investors need to be aware that the strategies that worked well over the past forty years may not lead to outperformance in the future. (Oaktree Capital)
The California Effect by Mr. Money Mustache, December 10, 2022. The cost of living is famously high in the San Francisco Bay Area where Mr. Money Mustache recently spent a few days observing the attitudes of people with very different approaches to spending money. The reality is that even in the most expensive regions, spending excessively is always a choice, not an inevitable mandate. “San Francisco professionals live in a place where 25-year-old tech workers enjoy $200,000 starting salaries, yet still have credit card debt and car loans, and they think that is normal.” (Mr. Money Mustache)
The College Essay Is Dead by Stephen Marche, December 6, 2022. Will artificial intelligence kill the college essay? Anyone who has played with ChatGPT, a new AI tool that recently opened to the public, might be asking the question which this article explores. I admit to being a little baffled about the handwringing. After all, when I was in college three decades ago, we took exams using technology no more advanced than blue books and a pen or pencil. AI might help students cheat on work done outside the classroom, but you cannot fake your way through an exam where there is no technology other than paper and a writing implement. (The Atlantic)
Ideas That Changed My Life by Morgan Housel, December 7, 2022. Among other topics, Morgan Housel makes an excellent case for reading. Otherwise, your personal experiences will excessively influence your perception of how the world works. “Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works. People believe what they’ve seen happen exponentially more than what they read about has happened to other people, if they read about other people at all. We’re all biased to our own personal history.” (Collaborative Fund)
Thankfully, Life Is Full of Problems by Lawrence Yeo, December 7, 2022. I was reminded of Viktor Frankl when I read this article. Frankl held that people gain a sense of purpose not through a tensionless state but by struggling and striving toward a personally meaningful goal. Lawrence Yeo makes a similar case. What we must do is to “upgrade” from dealing with meaningless problems to a focus on addressing “heavyweight” problems. (More to That)
The Gift of Time by Nick Maggiulli, December 13, 2022. Almost everyone thinks about money in terms of goods or services it can buy. But money is really the gift of time: “Because everything I write isn’t really about money, it’s about time. Time with your loved ones. Time to enjoy yourself. Time to live the life you want. In the end, all of your money will be converted back to time anyways. If not now, then later. And if not by you, then by someone else. Possibly after you’re gone.” (Of Dollars and Data)
Be Wary of Imitating High-Status People Who Can Afford to Countersignal by Rob Henderson, December 11, 2022. This article argues that we should avoid emulating people who have achieved status far above ours, and instead look to those who are just somewhat ahead of us. People with very high status can afford to exhibit unusual behavior. For example, a famous author doesn’t need to use Twitter personally to surface his writing because his fans will do this for him. That’s not the case for most authors seeking wider distribution of their work. (Rob Henderson’s Newsletter)
How Neuroscience Confirms the Most Ancient Myths About Music by Ted Gioia, December 12, 2022. Music has a tremendous capacity to influence our lives as listeners, often putting us into flow states conducive to productivity. For example, I often listen to The Dave Brubeck Quartet’s performance at Carnegie Hall in 1963 when I want to get serious work done. For musicians, performing can induce an even deeper flow state, as Ted Gioia describes: “In the midst of an intense performance, the music seemed to be playing itself.” This article on music and neuroscience is part of a book being published in installments on Substack. (The Honest Broker)
Tom Gayner Discusses the Evolution of Markel, December 14, 2022. 56 minutes. This is a wide-ranging interview covering topics including Berkshire Hathaway’s recent investment in Markel, the growth of Markel Ventures in the context of the company’s overall capital allocation strategy, the use of leverage, and how investing during the pandemic was more challenging than the financial crisis. (Boyar Value Group)
- In the Weekly Digest published on May 17, I wrote about Berkshire’s decision to invest in Markel.
The Essays of Warren Buffett, January 20, 2022. 1 hour, 58 minutes. According to Lawrence Cunningham’s newsletter, which you can sign up for here, the sixth edition of his compilation of Warren Buffett’s shareholder letters will be released early next year. I have the first and second editions and highly recommend the book. While all of the letters are available on Berkshire’s website, the compilation is organized by topic and adds significant value. In this podcast, David Senra provides his enthusiastic commentary about what he took away from this book. (Founder’s Podcast)
Master of Precision: Henry Leland Founder of Cadillac, May 31, 2020. 1 hour, 10 minutes. I think Steve Jobs and Henry Leland had much in common in terms of insisting on high quality and viewing their role as craftsmen, paying obsessive attention to details. “There always was and there always will be conflict between Good and Good Enough. In opening up a new business one can count on meeting resistance to a high standard of workmanship. It is easy to get cooperation for mediocre work, but one must sweat blood for a chance to produce a superior product. —Henry Leland” (Founders Podcast)
DoorDash: Looking for Profitable Routes, December 14, 2022. “DoorDash was founded in 2013 by four Stanford students, who saw an opportunity to make it easier for people to get the food they love delivered to them. Today, DoorDash’s three-sided marketplace serves as one of the largest local delivery companies in the world, serving millions of customers and partnering with hundreds of thousands of restaurants across 27 countries, run rating at over $50 billion of gross merchandise value.” (Business Breakdowns)
This is a brief thread on the importance of reading. It is based on The Use of Letters, a journal entry I wrote early last year. Why would anyone voluntarily limit their understanding of the world to just their own direct experiences?
Checking quotes frequently is counterproductive. There is too much noise in quotes when checked on a daily basis and doing so is likely to make most investors miserable.
The origin story of the Eiffel Tower:
A Shepherd and His Flock in Winter
Frederick Ferdinand Schafer (August 16, 1839 – July 18, 1927) was a German-born American painter. He was born in Braunschweig, Germany and he emigrated to the United States in 1876, at age 37.
Schafer’s paintings, which mostly depict landscape scenes in California and other western states, are dated between 1873 and 1911. There are many scenes of Yosemite National Park included in a catalog of his paintings. As the weather turns colder, I thought that this scene of an unknown location captures the season quite well.
Here is a description of this painting by Jerome H. Saltzer, Professor of Computer Science Emeritus at the Massachusetts Institute of Technology:
“This painting might be described as luminist in style. Paintings such as this one may be the basis for the suggestion that Schafer’s later work was lighter, but the shortage of dated paintings makes it difficult to confirm that suggestion.”
Copyright and Disclaimer
Nothing in this newsletter constitutes investment advice and all content is subject to the copyright and disclaimer policy of The Rational Walk LLC.
Your privacy is taken very seriously. No email addresses or any other subscriber information is ever sold or provided to third parties. If you choose to unsubscribe at any time, you will no longer receive any further communications of any kind.
The Rational Walk is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.default pandemic interest rates germany
FDA advisory committee votes unanimously in favor of a one-shot COVID-19 vaccine approach – 5 questions answered
Many questions remain about next steps for US vaccine policy. But the FDA advisory panel’s hearty endorsement of a single-composition COVID-19 vaccine…
The U.S. Food and Drug Administration’s key science advisory panel, the Vaccines and Related Biological Products Advisory Committee, met on Jan. 26, 2023, to chart a path forward for COVID-19 vaccine policy. During the all-day meeting, the 21-member committee discussed an array of weighty issues including the efficacy of existing vaccines, the composition of future vaccine strains and the need to match them to the circulating variants of SARS-CoV-2, the possibility of moving to an annual-shot model, the potential seasonality of the virus and much more.
But the key question at hand, and the only formal question that was voted on, following a proposal from the FDA earlier in the week, had to do with how to simplify the path to getting people vaccinated.
The Conversation asked immunologist Matthew Woodruff, who has been on the front lines of studying immune responses to COVID-19 since the early days of the pandemic, to walk us through the big questions of the day and what they mean for future COVID-19 vaccine strategies.
What exactly did the advisory committee vote on?
The question put before the committee for a vote was whether to move to one COVID-19 vaccine consisting of a single composition for all people – whether currently vaccinated or not – and away from the current model that includes one formulation given as a primary series and a separate formulation administered as a booster. Importantly, approved formulations could come from any number of vaccine manufacturers, not just those that have currently authorized vaccines.
The U.S. Centers for Disease Control and Prevention currently requires that the primary series of shots, or the first two doses of the vaccine that a patient receives, consist of the first generation of vaccine against the original strain of SARS-CoV-2, known as the “Wuhan” strain of the virus. These shots are given weeks apart, followed months later by a booster shot that was updated in August 2022 to contain a bivalent formulation of vaccine that targets both the original viral strain and newer subvariants of omicron.
The committee’s endorsement simplifies those recommendations. In a 21-to-0 vote, the advisory board recommended fully replacing, or “harmonizing,” the original formulation of the vaccine with a single shot that would consist of – at least for now – the current bivalent vaccine.
In doing so, it has signaled its belief that these new second-generation vaccines are an upgrade over their predecessors in protecting from infection and severe illness at this point in the pandemic.
Will the single shot remain a mixed-strain, or bivalent, vaccine?
For now, the single shot will be bivalent. But this may not always be the case.
There was a general agreement that the current bivalent shot is preferable to the original vaccine targeted at the Wuhan strain of the virus by itself. But committee members debated whether that original Wuhan vaccine strain should continue to be a part of updated vaccine formulations.
There is no current data comparing a monovalent, or single-strain, vaccine that targets omicron and its subvariants against the current bivalent shot. As a result, it’s unclear how a monovalent shot against recent omicron subvariants would perform in comparison to the bivalent version.
What is immune imprinting, and how does it apply here?
A main reason for the debate over monovalent versus bivalent – or, for that matter, trivalent or tetravalent – vaccines is a lack of understanding around how best to sharpen an immune response to a slightly altered threat. This has long been a debate surrounding annual influenza vaccination strategies, where studies have shown that the immune “memory” that forms in response to a prior vaccine can actively repress a robust immune response to the next.
This phenomenon of immune imprinting, originally coined in 1960 as “original antigenic sin,” has been a topic of debate both within the advisory committee and within the broader immunological community.
Although innovative strategies are being developed to overcome potential problems with routinely updated vaccines, they are not yet ready to be tested in humans. In the meantime, it is unclear how bivalent versus monovalent vaccine choices might alter this phenomenon, and it is very clear that more study is needed.
Is the committee considering only mRNA vaccines?
While a significant portion of the discussion focused on the mRNA vaccine platform used by both Pfizer and Moderna, several committee members emphasized the need for new technologies that could provide broader immunological protection. Dr. Pamela McInnes, a now-retired longtime deputy director of the National Center for Advancing Translational Sciences, highlighted this point, saying, “I would make a plea for ongoing research on broader protection, maybe different platforms, maybe a different approach.”
A good deal of attention was also directed toward Novavax, a protein-based formulation that relies on a more traditional approach to vaccination than the mRNA-based vaccines. Although the Novavax vaccine has been authorized by the FDA for use since July 2022, it has received much less national attention – largely because of its latecomer status. Nonetheless, Novavax has boasted efficacy rates on par with its mRNA cousins, with good safety profiles and less demanding long-term storage requirements than the mRNA shots.
By simplifying the vaccine schedule to include only a single vaccine formulation, the committee reasoned, it might be easier for competing vaccination platforms to break into the market. In other words, newer vaccine contenders would not have to rely on patients’ having already received their primary series before using their products. Companies seemed ready to take advantage of that future flexibility, with researchers from Pfizer, Moderna and Novavax all revealing their companies’ exploration of a hybrid COVID-19 and flu shot at various stages of clinical trials and testing.
Would the single shot resemble flu vaccine development?
Not necessarily. Currently, the influenza vaccine is decided by committee through the World Health Organization. Because of its seasonal nature, the strains to be included in each season’s flu vaccine strain for the Southern and Northern hemispheres, with their opposing winters, are selected independently. The Northern Hemisphere’s selection is made in February for the following winter based on a vast network of flu monitoring stations around the globe.
Although there was broad consensus among panelists that the shots against SARS-CoV-2 should be updated regularly to more closely match the most current circulating viral strain, there was less agreement on how frequent that would be.
For instance, rapidly mutating strains of the virus in both summer and winter surges might necessitate two updated shots a year instead of just one. As Dr. Eric Rubin, an infectious disease expert from the Harvard T.H. Chan School of Public Health, noted, “It’s hard to say that it’s going to be annual at this point.”
Matthew Woodruff receives funding from the National Institute of Health and the US Department of Defense to support his academic research.cdc disease control pandemic covid-19 vaccine testing fda clinical trials wuhan world health organization
Novavax gets ready to take another shot at Covid vaccine market with next season plans
While mRNA took center stage at yesterday’s FDA vaccine advisory committee meeting, Novavax announced its plans to deliver an updated protein-based vaccine…
While mRNA took center stage at yesterday’s FDA vaccine advisory committee meeting, Novavax announced its plans to deliver an updated protein-based vaccine based on new guidance.
Vaccines and Related Biological Products Advisory Committee (VRBPAC) members voted unanimously in favor of “harmonizing” Covid vaccine compositions, meaning all future vaccine recipients would receive a bivalent vaccine, regardless of whether they’ve gotten their primary series.
As Mark Sawyer, pediatrics professor at the UC San Diego School of Medicine, put it: “Bivalent is better. Simple is better.”
However, bivalent doesn’t have to mean mRNA, said Pamela McInnes, a temporary voting member and retired deputy director of the NIH’s National Center for Advancing Translational Sciences.
“I want to urge making plays for other platforms,” she said. “mRNA has been fantastic. They can produce it really, really quickly. But it may not give us the breadth of coverage, which is really what I think our problem is right now. We know we induce really good neutralizing antibody with mRNA vaccines, but it seems to be pretty short-lived.”
In July, now-retired NIAID Director Anthony Fauci called for “innovative approaches” against “coronaviruses known and unknown,” such as pan-coronavirus candidates and mucosal options that can be administered intranasally. Nuvaxovid won the FDA’s emergency use authorization back that same month, becoming the first protein-based Covid vaccine available in the US, after Novavax suffered delay after delay for its EUA filing.
However, sales have been lackluster. The vaccine earned $626 million in Q3, leading CEO Stanley Erck to drop his full-year sales guidance to the lower end of a $2 billion to $2.3 billion range previously projected in Q2.
On Thursday, Novavax CMO Filip Dubovsky said during the VRBPAC meeting that the company is prepared to deliver “either a monovalent or a bivalent vaccine for the 2023-2024 vaccination season based on guidance from the FDA.”
“Our recommendation is that the regulatory bodies and manufacturers move to an influenza-like model, where strain recommendations are made by the end of the first quarter,” he continued.
The company also presented data suggesting a homologous booster dose of their vaccine administered eight to 11 months after the primary vaccine series resulted in similar antibody levels compared to the company’s previous Phase III trials.
“Offering vaccine choices — and ensuring continuous access to those choices — must be at the center of any strategy to protect public health against COVID-19,” executive VP and chief communications officer Silvia Taylor said in an emailed statement.emergency use authorization fauci coronavirus covid-19 vaccine fda
CDC Officials Who Spread Misinformation Apologized To Source Of False Data But Not To Public: Emails
FDA pulls AZ’s Evusheld for COVID, citing lack of efficacy
Utah Plastic Surgeon Allegedly Destroyed COVID Vaccines, Gave Fake Shots To Children
Munich Airport and Lufthansa expand partnership with focus on innovation and sustainability
Busted Pfizer R&D Exec Claims He Lied About “Mutating COVID” To “Impress A Date Like Normal People”
Breaking through the forecasting fog – 3 trends that will impact critical medicine supply in 2023
COVID booster vaccines: how a third dose may help vulnerable people ‘level up’ their immunity
That’s Science? Congress Must Probe The Rationale For COVID Mask Mandates
Then call them ‘robots’
“Directed Evolution”? Pfizer R&D Exec Says Covid-19 Created In Wuhan, Is ‘Cash Cow’ For Company
International14 hours ago
FDA pulls AZ’s Evusheld for COVID, citing lack of efficacy
Government23 hours ago
Utah Plastic Surgeon Allegedly Destroyed COVID Vaccines, Gave Fake Shots To Children
Uncategorized12 hours ago
Freedom Financial Holdings Announces Earnings for Fourth Quarter and Full Year 2022
International16 hours ago
Breaking through the forecasting fog – 3 trends that will impact critical medicine supply in 2023
Uncategorized7 hours ago
Bitcoin has shot up 50% since the new year, but here’s why new lows are probably still ahead
Uncategorized8 hours ago
Six long COVID subtypes identified at The Jackson Laboratory
International8 hours ago
Watch: Rand Paul Warns ‘Over-Classification’ Being Used To Cover Up COVID Lab Leak
Spread & Containment12 hours ago
A “Soft Landing” Scenario – Possibility Or Fed Myth?