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Blain: What If We’re Looking At All The Wrong Things?

Blain: What If We’re Looking At All The Wrong Things?

Authored by Bill Blain via MorningPorridge.com,

“Look not to the Sword waving around…

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Blain: What If We're Looking At All The Wrong Things?

Authored by Bill Blain via MorningPorridge.com,

“Look not to the Sword waving around to your front, but the Stiletto threatening your kidneys..… “

Everyone is balancing inflation, economic numbers and this week’s Jackson Hole Central Bank schmooze-a-thon to guess markets. What if we are looking at the wrong things – and economic divergence, income and wealth inequality and unravelling domestic politics are the critical factors?

This week will apparently be all about inflation and deciphering new economic data to predict the path of the Global Economy and Stagflation risks. The big event will be the Jackson Hole central bank gabfest – anticipating what Jay Powell will say about the US Economy and the Fed’s perception of the required pace of rate hikes to counter inflation. His comments will have massive implications in terms of perceptions of bond markets, currencies, and company outlooks.

The ongoing battle vs Inflation has more than a few market watchers warning the July/August rally feels premature! Among the points that worry them is the reality of inflation numbers – even though the number (in the US) is apparently declining, it means prices are still rising and inflationary tension are still being stoked! It’s still unclear just how solid the short-recession rally is, or is it just a bear-trap?

More and more investors believe its policy mistakes – from the ultra-cheap interest rate policy of the 2010s, QE and government pandemic policies, to government failures to address critical responsibilities like energy security, that have created the best market opportunities in recent years. And they are absolutely right! The right way to have read markets is to game what central banks and governments are doing, and place your chips accordingly!

From 2010-2021 the simple trade was to buy everything and anything because money was mispriced by central banks, making even the most schizoid stock sound look relative value. Level 2 was to buy coal, oil and gas because ill-thought out polices and ESG wokery was creating chronic energy insecurity. What is Level 3? Work out what the next big series of policy mistakes are going to be… and I suspect it will mean playing central bank recovery policies – ie when real economic and wage inflation, global recession and economic unrest require them to press both monetary and fiscal easing.

When? Sooner than we think…

And to make it even more confusing… What if we are watching all the wrong things?

  • Perhaps it’s the not the US economy we should worry about this week?

  • While everyone is focused on inflation as the prime economic danger driving instability – what if it’s something else?

  • What if the major risks remain political miscalculations?

Economic Divergence

The UK, Europe and the US – the Occidental West, and China are all headed on different economic trajectories. While we can probably be relatively confident the US economy will bounce out of recession pretty quickly, allowing the Fed to normalise interest rates and look to stabilise its growing economy in what will be recessionary global economy (Buy Dollars), the outlook for Europe is dire. The UK? Let’s not even go there.

And China? Its easing rates. Change is coming. A rising economic crisis is brewing:

  1. The jobs compact appears to be unravelling; the party quelled dissent and held power by providing everyone with well paid jobs – now the rising standard of living has plateaued, and young adult unemployment is rising.

  2. The economy is overly grounded on the thin foundations of the unbalanced property market – over 30% of the economy is vulnerable to wealth-effect reversal, and

  3. The Demographics are moving swiftly against the Middle Kingdom. We can discount China exporting deflation around the globe (as it did from 2000-2020).

As for Europe… As Gas prices threaten outages and crisis, Germany is still going to shutter its Nuclear plants this winter. That makes a ton of sense. Not.

Wages and Inequality

Meanwhile, back in Blighty…  UK dockers have just started a potentially crippling container port strike that could exacerbate supply chain, logistics, and inevitably trigger empty shelves and a run on bog-roll. Damn these 1900 striking dock workers! How very dare they complain… Revolting just because they will see their post-tax disposable income cut by £2000 (say 10% of income) this year by rising energy bills… How dare they ask for more….! Ungrateful tykes, having being offered an exceptionally generous £500 one-off bung and an effective pay cut?

I don’t hear many folk outraged by news the average take-home pay of FTSE100 bosses has hit £3.4mm, up nearly 40%, according to the High-Pay think tank reported in the Times of London this morning. The top 224 FTSE executives earned £720 million in 2021. The Chief Exec of a mining firm trousered £23 million for CEO-ing its mining operations in havens of wealth like Burkina Faso – where I hear the local miners’ private health care packages are exceptional. (US readers – Sarcasm alert.)

Some folk clearly haven’t been listening to Bank of England Governor Andrew Bailey’s calls for pay restraint!

Much to my surprise, I was reading Young Conservatives (all six Tory party members under the age of 50), are disappointed Liz Sunak and Rishi Truss utterly failed to address the crisis in income inequality and the dearth of opportunity for young people in the Tory leadership whatever it is… coronation parade/contest?

Readers will not do doubt be surprised Dock Workers are unhappy with their pay cut offer. How can the nation possibly afford to give inflation busting wage rises to all key workers? If you pay the dockers, then the railwaymen will demand more! Even barristers are threatening strike action in pursuit of higher pay.

Unfortunately the drivers of wage inflation – be it FOMO, or relative income, or the perceived income injustices now perceived between older and younger workers – have already infected the whole economy. They are socio-economic forces that don’t give a fig for conventional political economy approaches. Solving them – will get messy.

How to solve or address out-of-control pandemic wage-inflation? I have simply no-idea – except that extraordinary times require extra-ordinary measures.. Hence I expect Governments will be forced to change tack and look at reflation in an inflationary environment.. Hang on to your hats…

I warned months ago the real danger of inflation is not just rising prices, or the difficulties it causes for both production costs and consumer affordability, but the unpredictable and potential chaotic social effects it could trigger. Rather than nations being able to grow their way out of a stagflationary crisis through job creation, an unexpected consequence will be worker scarcity: “why should I struggle into work on minimum wage, pay £1000 in monthly rent, have no savings, no holidays and no security, just so the bosses can have a great time?”

Politics

UK, German, Italian and US politics – watch them all. They all have a strong likelihood of spoiling your day in coming weeks. Bad politics have immediate and long-term consequences.

I am repeatedly told Donald Trump will not be the Republican Candidate in 2024, that too many Republicans now see through him, and the dismal showing of his candidates in US mid-term poling mean The Donald is set to cost his captured party potential majorities in the US Senate and Congress. The more I hear it, the more I fear it will happen – and the consequences for global trade, alliances, the environment, war, peace and everything will evaporate..

Yet, Trump is just another highly visible market risk. The issue is who and what is hiding in his coat-tails? Who are the US political names we don’t yet know who will emerge on the back of his philosophy in coming years to further bend and confound the US political process and its place on the world economy? Donald Trump may yet prove to have been a brilliant political figure, but only because he opened the door to legions of political wanabees much worse than himself!

My earnest hope is a return to sanity in Washington – but, as said so many times before – Hope is Not A Strategy. But Chaos is also opportunity!

Tyler Durden Mon, 08/22/2022 - 13:10

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Decrease in Japanese children’s ability to balance during movement related to COVID-19 activity restrictions

A team of researchers from Nagoya University in central Japan investigated how restrictions on children’s activities during the COVID-19 pandemic affected…

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A team of researchers from Nagoya University in central Japan investigated how restrictions on children’s activities during the COVID-19 pandemic affected their life habits and their abilities to perform physical activities. By comparing medical examination data before and after the onset of the pandemic, they found that physical functions among adolescents deteriorated, including their dynamic balance. They also found that the children had higher body fat levels and worse life habits. Rather than a lack of exercise time, this may have been because of a lack of quality exercise due to activity restrictions.  

Credit: Credit must be given when image is used

A team of researchers from Nagoya University in central Japan investigated how restrictions on children’s activities during the COVID-19 pandemic affected their life habits and their abilities to perform physical activities. By comparing medical examination data before and after the onset of the pandemic, they found that physical functions among adolescents deteriorated, including their dynamic balance. They also found that the children had higher body fat levels and worse life habits. Rather than a lack of exercise time, this may have been because of a lack of quality exercise due to activity restrictions.  

During the COVID-19 pandemic, in Japan, as in other countries, schools and sports clubs tried to prevent the spread of infection by reducing physical education and restricting outdoor physical activities, club activities, and sports. However, children who are denied opportunities for physical activity with social elements may develop bad habits. During the pandemic, children, like adults, increased the time they spent looking at television, smartphone, and computer screens, exercised less, and slept less. Such changes in lifestyle can harm adolescent bodies, leading to weight gain and health problems. 

Visiting Researcher Tadashi Ito and Professor Hideshi Sugiura from the Department of Biological Functional Science at the Nagoya University Graduate School of Medicine, together with Dr. Yuji Ito from the Department of Pediatrics at Nagoya University Hospital, and  Dr. Nobuhiko Ochi and Dr. Koji Noritake from Aichi Prefectural Mikawa Aoitori Medical and Rehabilitation Center for Developmental Disabilities, conducted a study of Japanese children and students in elementary and junior high schools, aged 9-15, by analyzing data from physical examinations before and during the COVID-19 pandemic. They evaluated the children’s muscle strength, dynamic balance functions, walking speed, body fat percentage, screen time, sleep time, quality of life, and physical activity time.  

The researchers found that after the onset of the pandemic, children were more likely to have decreased balance ability when moving, larger body fat percentage, report spending more time looking at TV, computers or smartphones, and sleep less. Since there were no changes in the time spent on physical activity or the number of meals eaten, Sugiura and his colleagues suggest that the worsening of physical functions was related to the quality of exercise of the children. The researchers reported their findings in the International Journal of Environmental Research and Public Health.  

“Since the outbreak of the novel coronavirus in Japan after April 2020, children have not been able to engage in sufficient physical education, sports activities, and outdoor play at school. It became clear that balance ability during movement was easily affected, lifestyle habits were disrupted, and the percentage of body fat was likely to increase,” explained Ito. “This may have been because of shorter outdoor playtime and club activities, which impeded children’s ability to learn the motor skills necessary to balance during movement.” 

“Limitations on children’s opportunities for physical activity because of the outbreak of the novel coronavirus have had a significant impact on the development of physical function and lifestyle and may cause physical deterioration and health problems in the future,” warned Ito. “Especially, the risk of injury to children may increase because of a reduced dynamic balance function.” 

The results suggest that even after the novel coronavirus becomes endemic, it is important to consider the effects of social restrictions on the body composition of adolescents. Since physical activities with a social element may be important for health, authorities should prioritize preventing the reduction of children’s physical inactivity and actively encourage them to play outdoors and exercise. The group has some recommendations for families worried about the effects of school closings and other coronavirus measures on their children. “It is important for children to practice dynamic balance ability, maintaining balance to avoid falling over while performing movements,” Ito advised. “To improve balance function in children, it is important to incorporate enhanced content, such as short-term exercise programs specifically designed to improve balance functions.” 


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Contradictions, Lies, And “I Don’t Recalls”: The Fauci Deposition

Contradictions, Lies, And "I Don’t Recalls": The Fauci Deposition

Authored by Techno Fog via The Reactionary,

Today, Missouri Attoney General…

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Contradictions, Lies, And "I Don't Recalls": The Fauci Deposition

Authored by Techno Fog via The Reactionary,

Today, Missouri Attoney General Eric Schmitt released the transcript of the testimony of Dr. Anthony Fauci. As you might recall, Fauci was deposed as part of an ongoing federal lawsuit challenging the Biden Administration’s violations of the First Amendment in targeting and suppressing the speech of Americans who challenged the government’s narrative on COVID-19.

Here is the Fauci deposition transcript.

And here are the highlights…

EcoHealth Alliance - the Peter Daszak group - is knee-deep in the Wuhan controversy, having been funded by the Fauci’s NIH for coronavirus and gain of function research in China (and having worked with the Chinese team in Wuhan). What does Fauci say about EcoHealth Alliance? Over two years after the COVID-19 pandemic began, and after millions dead worldwide, he’s “vaguely familiar” with their work.

In early 2020, Fauci was put on notice that his group - NIAID - had funded EcoHealth alliance on bat coronavirus research for the past five years.

This coincided with early reports - directly to Fauci, from Jeremy Ferrar and Christian Anderson - “of the possibility of there being a manipulation of the virus” based on the fact that “it was an unusual virus.”

Fauci conceded that he was specifically made aware by Anderson that “the unusual features of the virus” make it look “potentially engineered.”

Fauci couldn’t recall why he sent an article discussing gain of function research in China to his deputy, Hugh Auchincloss, telling him it was essential that they speak on the phone. He couldn’t recall speaking with Auchincloss via phone that day. But remarkably, Fauci did remember assigning research tasks to Auchincloss

Fauci was evasive on conversations with Francis Collins about whether NIAID may have funded coronavirus-related research in China, eventually stating “I don’t recall.”

The phrase “I don’t recall” was prominent in Fauci’s deposition. He said it a total of 174 times:

For example, Fauci couldn’t remember what anyone said on a call discussing whether the virus originated in a lab:

During that same call, Fauci couldn’t recall whether anyone expressed concern that the lab leak “might discredit scientific funding projects.” He also couldn’t recall whether there was a discussion about a lab leak distracting from the virus response. Fauci did remember, however, that they agreed there needed to be more time to investigate the virus origins - including the lab leak theory.

What else couldn’t Fauci remember? Whether, early into the pandemic, his confidants raised concerns about social media posts about the origins of COVID-19.

Yet Fauci did admit he was concerned about social media posts blaming China for the pandemic. He even admitted the accidental lab leak “certainly is a possibility,” contradicting his prior claims to National Geographic where he said the virus “could not have been artificially or deliberately manipulated.”

Fauci also couldn’t recall whether he had any conversations with Daszak about the origins of COVID-19 in February 2020, but admitted those conversations might have happened: “I told you before that I did not remember any direct conversations with him about the origin, and I said I very well might have had conversations but I don't specifically remember conversations.” And he couldn’t recall telling the media early on during the pandemic that the virus was consistent with a jump “from an animal to a human.”

Fauci said he was in the dark on social media actions to curb speech and suspend accounts that posted COVID-19 information that didn’t fit the mainstream narrative: “I’m not aware of suppression of speech on social media.” Yet it was Fauci’s proclamations of the truth, whether about the origins of COVID-19 to the effectiveness of hydroxychloroquine, that led to social media companies banning discussions of contrary information.

Regarding those removals of content, Fauci had no personal knowledge of a US Government/Social Media effort to curb “misinformation.” But he conceded the possibility numerous times.

Then there’s the issue of masks. In February 2020, Fauci informed an acquaintance that was traveling: “I do not recommend that you wear a mask.” Fauci would later become a vocal proponent of masks only two months later.

I’m near my Substack length limit - posting the excerpts does that - but you can see from Fauci’s testimony that his public statements about COVID-19 origins and the necessity to wear a mask didn’t match his private conversations. This has been known for some time, but it’s finally nice to get him on record.

Again, read it all and subscribe here.

Tyler Durden Mon, 12/05/2022 - 21:40

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Global Wages Take A Hit As Inflation Eats Into Paychecks

Global Wages Take A Hit As Inflation Eats Into Paychecks

The global inflation crisis paired with lackluster economic growth and an outlook…

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Global Wages Take A Hit As Inflation Eats Into Paychecks

The global inflation crisis paired with lackluster economic growth and an outlook clouded by uncertainties have led to a decline in real wages around the world, a new report published by the International Labour Organization (ILO) has found.

As Statista's Felix Richter reports, according to the 2022-23 Global Wage Report, global real monthly wages fell 0.9 percent this year on average, marking the first decline in real earnings at a global scale in the 21st century.

You will find more infographics at Statista

The multiple global crises we are facing have led to a decline in real wages.

"It has placed tens of millions of workers in a dire situation as they face increasing uncertainties,” ILO Director-General Gilbert F. Houngbo said in a statement, adding that “income inequality and poverty will rise if the purchasing power of the lowest paid is not maintained.”

While inflation rose faster in high-income countries, leading to above-average real wage declines in North America (minus 3.2 percent) and the European Union (minus 2.4 percent), the ILO finds that low-income earners are disproportionately affected by rising inflation. As lower-wage earners spend a larger share of their disposable income on essential goods and services, which generally see greater price increases than non-essential items, those who can least afford it suffer the biggest cost-of-living impact of rising prices.

“We must place particular attention to workers at the middle and lower end of the pay scale,” Rosalia Vazquez-Alvarez, one of the report’s authors said.

“Fighting against the deterioration of real wages can help maintain economic growth, which in turn can help to recover the employment levels observed before the pandemic. This can be an effective way to lessen the probability or depth of recessions in all countries and regions,” she said.

Tyler Durden Mon, 12/05/2022 - 20:00

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