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Covid-19 And Other Stock Market Fallacies

Covid-19 And Other Stock Market Fallacies

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The trembling’s of the world’s stock markets turned into a rout overnight, with the major Wall Street indices all tumbling by between five and seven per cent. It is essential to understand why this happened to gain clarity about what the future may hold.

One of the worst habits that the collective hive wisdom of the financial markets has, in this day and age, is fitting news headlines to the chosen short-term narrative. That habit was in full cry overnight, with global hand-wringing that secondary outbreaks of COVID-19 in the United States would send the world into an economic tailspin. That premise is entirely incorrect for one simple reason. The United States, through a combination of complacency and incompetence, had never got the initial outbreak under control, they were still in wave one.

Admittedly in places such as the State of New York, aggressive lockdowns had seen progress made at the cost of huge body counts. Much of the rest of the country though, engaged in measures half-heartedly and continued in a state of blissful denial. I cannot remove the recent picture of thousands of Americans crowded on a bridge to watch the Space-X launch from my mind.

Treasury Secretary Steve Mnuchin state overnight that closing the economy again was a non-starter, as the economic price was too high. That means that the United States is taking a similar position to other developing countries around the world, growth over graves. On that basis, investors who have loaded up on airline shares should think again, and quickly.

The real reason we are now in the midst of what could become, a quite aggressive bull market correction in global asset markets, is simply the weight of bullish positioning in the market. The price action on Wall Street overnight highlights, in my opinion, the amount of Johnny come lately fast-money positioning that has piled into stock markets looking for a quick buck. As I mentioned previously, bullish option positioning on the S&P 500 had hit record highs, another leading reverse indicator warning sign. Herd mentality, fear of missing out and shallow pockets, not economic downgrades, dovish central banks and secondary outbreaks of COVID-19 are the simple underlying causes of the falls seen in the past two days. That is merely fitting headlines to the chosen narrative of a crowded trade.

COVID-19 and Jay Powell’s “jobless recovery” are known unknowns. What is a known known, is that the world’s central banks will keep the zero per cent monetary spigot fully opened for at least the next two years. The Federal Reserve will keep backstopping otherwise idiotic investment decisions for the foreseeable future, meaning an ocean of money will continue looking for a home in a zero per cent world. That is the main reason that asset markets have risen Phoenix-like after the mid-March capitulation. That is the reason that once the aggressive social distancing being imposed on financial markets has passed, it will do so again.

The only way this thesis will be negated in the author’s opinion, is if secondary COVID-19 outbreaks force new national lockdowns across developed market economies. A point I have made repeatedly.

The data calendar is light in Asia today, but mostly meaningless as the exit of the herd from the global FOMO trade in equities continues.

US stock futures limit the fall-out amongst Asian equities.

Wall Street equities cratered overnight as the fast-money get-rich-quick crowd were given a harsh dose of reality. The S&P 500 fell 5.90%, the NASDAQ dropped 5.20%, and the Dow Jones fell 6.90% in an ugly day for world stock markets. To give some perspective though, on a monthly basis, the S&P 500 is still up 7.40%, the NASDAQ by 7.10% and the Dow Jones by 9.0%. Wall Street has substantial room to ease further and still only be in a bull-market correction.

The S&P 500 is in danger of closing below its 200-day moving average (DMA) at 3034 this evening, which likely signals a deeper correction. That said, the NASDAQ remains around 1000 points above its 100 and 200 DMA’s, emphasising that a bear market is both distant and unlikely.

Aftermarket US index futures have rallied this morning though. The S&P500 e-mini trading well over 1.0% higher in Asia thus far, as are the NASDAQ and Dow futures. The rally in US index futures is almost certainly driven by profit-taking from short-term traders. Nevertheless, it has served to limit the fall-out from the Wall Street rout overnight, spilling aggressively into Asian stock markets.

But fall-out, there has been, with Asia a sea of red today. The Nikkei 225 is down just 0.65% as the Japan Government clarifies its stimulus measures. Export-centric South Korea is 2.65% lower though, with the Shanghai Composite and CSI 300 down 1.10%.

Regional Asia has seen manageable falls. Singapore, Hong Kong, Jakarta and Kuala Lumpur all down around 1.50%. Australia has not fared as well, the lucky country being one of the epicentres of the global recovery FOMO-trade. The ASX 200 has fallen 2.90%, with the All Ordinaries down 3.40%.

The resilience of Asia will be a relief to many but is entirely reliant on the US stock futures holding onto their gains in after-market trading. Europe also fell heavily overnight, but if the present status-quo holds in Asia, the fall-out should be modest when they arrive this afternoon. All eyes will be on the US this evening and whether the correction continues or is forgotten as quickly as it began. A sensible case can be constructed for either outcome and a wait and see strategy is the best one.

Once again, I will emphasise that given the scale of the rally from the mid-March lows, global stock markets have a lot of room to correct lower without changing the underlying premise; central bank money pumping up asset valuations.

The US Dollar rebounds on haven buying.

Another, less noisy, culling of a crowded trade occurred overnight, as the US Dollar recouped some of its recent losses as stock markets tanked. The US Dollar and its fellow haven currencies, the Swiss franc and Japanese Yen, all outperformed as short-term investors rushed for safety.

The EUR/USD fell by 100 points to 1.1285 overnight, narrowly avoiding an outside reversal day with its very negative technical implications. That said, such has been the Euro’s gain in the past month, only a fall through 1.1000 would negate the overall longer-term technical picture.

Having failed at 0.7000 on multiple previous days, the Australian Dollar had a terrible day at the office. AUD/USD fell 2.0% to 0.6845 and could now correct as low as its 200-DMA at 0.6640. AUD/JPY, a popular risk proxy, fell by 2.30% to 73.50, with a test of its 200-DMA at 72.25 likely. All of the commodity currencies were singled out for tough love overnight though. The US dollar index finished 0.80% higher at 96.73.

Asia saw the US Dollar rally continue initially, with regional Asian currencies and the AUD all sinking again. The rally by US index futures and the stabilisation of Asia’s equity markets have seen those losses quickly erased though. Major and Asian regional currencies are now almost unchanged.

The short-term direction of the regions stock markets and US index futures will dictate the direction currency markets will take in the near-term. Forex traders are content to play follow-the-leader to equities. Another massive sell-off by Wall Street this evening though, will see US Dollar gains resume with renewed vigour.

Oil prices follow equity markets South.

As one of the most pumped-up recipients of the peak-virus global recovery trade, oil was never going to escape a fall-out in equity markets. The hordes of short-term bullish positions in oil were unceremoniously locked down overnight, Brent crude falling 7.50% to $38.30 a barrel, with WTI also down 7.50% to $36.20 a barrel.

While the retreat by oil looks more like a culling of an overly crowded trade, Brent crude did close below its 100-DMA at $38.65, a bearish technical development. Should the rout in equities continue, Brent crude could extend its losses to 437.00 a barrel, and possibly as far as $33.50 a barrel.

WTI, on the other hand, narrowly avoided the same fate. It was closing just above its 100-DMA at $34.00 a barrel. A failure of that level implies further losses to the $31.00 a barrel region.

Both contracts probed the downside this morning, before recovering to an unchanged level, saved by the rally on after-market US equity futures. The short-term direction of oil is intrinsically tied to them now, as are Asian equities and currency markets. Looking ahead, the long-oil trade had become a very crowded one with zero social distancing. The failure of Brent to completely close its price gap above $40.00 a barrel was a warning shot we all ignored. Further losses to cull nervous longs are a real possibility, and a certainty if Wall Street falls this evening.

Gold disappoints haven buyers overnight.

Last night should have been gold’s chance to shine, as risk aversion swept pandemic-like across other asset classes. Instead, gold found itself dragged lower by falling equity markets, with gold positions liquidated to cover losses elsewhere. Gold fell 0.70% to $1727.00 an ounce, as haven buyers were swamped by the margin call sellers from the stock market.

What seems clear now, it that gold cannot disengage from equities in a panic sell-off, but is left to its own devices in a bullish market. Panic liquidations elsewhere, will lead to panic liquidations of gold as well. It also highlights my previous warning about going long at the top, or short at the bottom of gold’s multi-month $1660.00 to $1760.00 an ounce range.

A topside break of the monthly rage is highly unlikely in these circumstances for now. Gold is unchanged in Asia as equity-related sellers balance haven buyers. Gold seems likely to continue to frustrate inflation-ista’s bullish hopes for some time to come.

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Sex work is real work: Global COVID-19 recovery needs to include sex workers

Societally, we need to recognize that sex workers have agency and deserve the same respect, dignity and aid as any other person selling their labour.

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Globally, sex workers have been left to fend for themselves during the pandemic with little to no support from the government. (AP Photo/Bikas Das)

During the pandemic, business shifted from in person to work-from-home, which quickly became the new normal. However, it left many workers high and dry, especially those with less “socially acceptable” occupations.

The pandemic has adversely impacted sex workers globally and substantially increased the precariousness of their profession. And public health measures put in place made it almost impossible for sex workers to provide any in-person service.

Although many people depend on sex work for survival, its criminalization and policing stigmatizes sex workers.

Research shows that globally, sex workers have been left behind and in most cases excluded from government economic support initiatives and social policies. There needs to be an intersectional approach to global COVID-19 recovery that considers everyone’s lived realities. We propose policy recommendations that treat sex work as decent work and that centre around the lived experiences and rights of those in the profession.

Sex work and the pandemic

The United Nations Population Fund (UNFPA) recently reported that apart from income-loss, the pandemic has increased pre-existing inequalities for sex workers.

In a survey conducted in Eastern and Southern Africa, the UNFPA found that during the pandemic, 49 per cent of sex workers experienced police violence (including sexual violence) while 36 per cent reported arbitrary arrests. The same survey reported that more than 50 per cent of respondents experienced food and housing crises.

Lockdowns and border closures adversely impacted Thailand’s tourism industry which relies partially on the labour of sex workers.


Read more: Sex workers are criminalized and left without government support during the coronavirus pandemic


In the Asia Pacific, sex workers reported having limited access to contraceptives and lubricants along with reduced access to harm reduction resources. Lockdowns also disrupted STI or HIV testing services, limiting sex workers’ access to necessary healthcare.

In North America, sex workers have been excluded from the government’s recovery response. And many began offering online services to sustain themselves.

A woman stands backlit next to a dimly lit bus that reads 'Thailand' with green lighting.
Sex workers stand in a largely shut-down red light area in Bangkok, Thailand on March 26, 2020. (AP Photo/Gemunu Amarasinghe)

Government vs. community response

Globally, sex workers have been left to fend for themselves during the pandemic with little to no support from the government. But communities themselves have been rallying.

Elene Lam, founder of Butterfly, an Asian migrant sex organization in Canada, talks about the resilience of sex wokers during the pandemic.

She says organizations like the Canadian Alliance for Sex Work Law Reform are working in collaboration with Amnesty International to mobilize income support and resources to help sex workers in Canada.

Organizations in the United Kingdom, Germany, India and Spain have also set up emergency support funds. And some sex worker organizations have developed community-specific resources for providing services both in person and online during the pandemic.

Global recovery needs to include sex workers

The International Labour Organization’s “Decent Work Agenda” emphasizes productive employment and decent working conditions as being the driving force behind poverty reduction.

Sociologist Cecilia Benoit explains that sex work often becomes a “livelihood strategy” in the face of income and employment instability. She says that like other personal service workers, sex workers also should be able to practice without any interference or violence.

In order to have an inclusive COVID-19 recovery for all, governments need to work to extend social guarantees to sex workers — so far they haven’t.

As pandemic restrictions disappear, it is crucial to ensure that everyone involved in sex work is protected under the law and has access to accountability measures.

A woman stands wearing a mask with a safety vest on in front of a collage of scantily clad women and a sign that reads 'nude women non stop'
A volunteer helps out at Zanzibar strip club during a low-barrier vaccination clinic for sex workers in Toronto in June 2021. THE CANADIAN PRESS/Frank Gunn

Recommendations

As feminist researchers, we propose that sex work be brought under the broader agenda of decent work so that the people offering services are protected.

  1. Governments need to have a legal mandate for preventing sexual exploitation.

  2. Law enforcement staff need to be trained in better responding to the needs of sex workers. To intervene in and address situations of abuse or violence is critical to ensure workplace safety and harm reduction.

  3. Awareness and educational campaigns need to focus on destigmatizing sex work.

  4. Policy-makers need to incorporate intersectionality as a working principle in identifying and responding to the different axes of oppression and marginalization impacting LGBTQ+ and racialized sex workers.

  5. Engagement with sex workers and human rights organizations need to happen when designing aid support to ensure that an inclusive pathway for recovery is created.

  6. Globally, there needs to be a steady commitment towards destigmatizing sex workers and their services.

Despite the gradual waning of pandemic restrictions, sex workers continue to face the dual insecurity of social discrimination and loss of income support. Many are still finding it difficult to stay afloat and sustain themselves.

Societally, we need to recognize that sex workers have agency and deserve the same respect, dignity and aid as any other person selling their labour.

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

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OU researchers award two NSF pandemic prediction and prevention projects

Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its…

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Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its Predictive Intelligence for Pandemic Prevention initiative, which focuses on fundamental research and capabilities needed to tackle grand challenges in infectious disease pandemics through prediction and prevention.

Credit: Photo provided by the University of Oklahoma.

Two groups of researchers at the University of Oklahoma have each received nearly $1 million grants from the National Science Foundation as part of its Predictive Intelligence for Pandemic Prevention initiative, which focuses on fundamental research and capabilities needed to tackle grand challenges in infectious disease pandemics through prediction and prevention.

To date, researchers from 20 institutions nationwide were selected to receive an NSF PIPP Award. OU is the only university to receive two grants to the same institution.

“The next pandemic isn’t a question of ‘if,’ but ‘when,’” said OU Vice President for Research and Partnerships Tomás Díaz de la Rubia. “Research at the University of Oklahoma is going to help society be better prepared and responsive to future health challenges.”

Next-Generation Surveillance

David Ebert, Ph.D., professor of computer science and electrical and computer engineering in the Gallogly College of Engineering, is the principal investigator on one of the projects, which explores new ways of sharing, integrating and analyzing data using new and traditional data sources. Ebert is also the director of the Data Institute for Societal Challenges at OU, which applies OU expertise in data science, artificial intelligence, machine learning and data-enabled research to solving societal challenges.

While emerging pathogens can circulate among wild or domestic animals before crossing over to humans, the delayed response to the COVID-19 pandemic has highlighted the need for new early detection methods, more effective data management, and integration and information sharing between officials in both public and animal health.

Ebert’s team, composed of experts in data science, computer engineering, public health, veterinary sciences, microbiology and other areas, will look to examine data from multiple sources, such as veterinarians, agriculture, wastewater, health departments, and outpatient and inpatient clinics, to potentially build algorithms to detect the spread of signals from one source to another. The team will develop a comprehensive animal and public health surveillance, planning and response roadmap that can be tailored to the unique needs of communities.

“Integrating and developing new sources of data with existing data sources combined with new tools for detection, localization and response planning using a One Health approach could enable local and state public health partners to respond more quickly and effectively to reduce illness and death,” Ebert said. “This planning grant will develop proof-of-concept techniques and systems in partnership with local, state and regional public health officials and create a multistate partner network and design for a center to prevent the next pandemic.”

The Centers for Disease Control and Prevention describes One Health as an approach that bridges the interconnections between people, animals, plants and their shared environment to achieve optimal health outcomes.

Co-principal investigators on the project include Michael Wimberly, Ph.D., professor in the College of Atmospheric and Geographic Sciences; Jason Vogel, Ph.D., director of the Oklahoma Water Survey and professor in the Gallogly College of Engineering School of Civil Engineering and Environmental Science; Thirumalai Venkatesan, director of the Center for Quantum Research and Technology in the Dodge Family College of Arts and Sciences; and Aaron Wendelboe, Ph.D., professor in the Hudson College of Public Health at the OU Health Sciences Center.

Predicting and Preventing the Next Avian Influenza Pandemic

Several countries have experienced deadly outbreaks of avian influenza, commonly known as bird flu, that have resulted in the loss of billions of poultry, thousands of wild waterfowl and hundreds of humans. Researchers at the University of Oklahoma are taking a unique approach to predicting and preventing the next avian influenza pandemic.

Xiangming Xiao, Ph.D., professor in the Department of Microbiology and Plant Biology and director of the Center for Earth Observation and Modeling in the Dodge Family College of Arts and Sciences, is leading a project to assemble a multi-institutional team that will explore pathways for establishing an International Center for Avian Influenza Pandemic Prediction and Prevention.

The goal of the project is to incorporate and understand the status and major challenges of data, models and decision support tools for preventing pandemics. Researchers hope to identify future possible research and pathways that will help to strengthen and improve the capability and capacity to predict and prevent avian influenza pandemics.

“This grant is a milestone in our long-term effort for interdisciplinary and convergent research in the areas of One Health (human-animal-environment health) and big data science,” Xiao said. “This is an international project with geographical coverage from North America, Europe and Asia; thus, it will enable OU faculty and students to develop greater ability, capability, capacity and leaderships in prediction and prevention of global avian influenza pandemic.”

Other researchers on Xiao’s project include co-principal investigators A. Townsend Peterson, Ph.D., professor at the University of Kansas; Diann Prosser, Ph.D., research wildlife ecologist for the U.S. Geological Survey; and Richard Webby, Ph.D., director of the World Health Organization Collaborating Centre for Studies on the Ecology of Influenza in Animals and Birds with St. Jude Children’s Research Hospital. Wayne Marcus Getz, professor at the University of California, Berkeley, is also assisting on the project.

The National Science Foundation grant for Ebert’s research is set to end Jan. 31, 2024, while Xiao’s grant will end Dec. 31, 2023.


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Pfizer vaults into sickle cell market as GBT deal confirmed

Pfizer’s reported interest in acquiring sickle cell disease specialist Global Blood Therapeutics (GBT)  has been confirmed, with the
The post Pfizer…

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Pfizer’s reported interest in acquiring sickle cell disease specialist Global Blood Therapeutics (GBT)  has been confirmed, with the $68.50-per-share deal valuing GBT at $5.4 billion.

As we reported this morning, the deal gives Pfizer already-approved SCD therapy Oxbryta (voxelator) – which industry watchers reckon could see a dramatic uptick in sales with Pfizer’s marketing muscle – plus a phase 3 antibody candidate, a phase 1 follow-up to Oxbryta that could offer improved dosing.

Oxbryta is the main asset in the deal, with Evaluate predicting sales could reach $1.5 billion in 2028 – a leap forward from the $195 million it made last year and $127 million in the first half of 2022.

Pfizer is expecting big things from the takeover , predicting that the company’s SCD franchise will bring in combined peak sales of more than $3 billion.

The boards of both companies have recommended the deal to shareholders, and the two companies suggested it should close before the end of the year – assuming of course it doesn’t fall foul of any antitrust issues raised by financial regulators.

The GBT deal comes at a time when the market for SCD therapies is undergoing significant change, with multiple new drugs reaching the market after years of stagnation and progress also being made with genetic therapies from the likes of bluebird bio, Vertex Pharma/CRISPR Therapeutics and Precision Bio/Novartis.

Oxbryta came to market in 2019, a few days after Novartis’ injectable anti-P-selectin antibody Adakveo (crizanlizumab), which is also tipped for blockbuster sales but like Oxbryta has suffered from a slow rollout.

CRISPR Therapeutics and Vertex are also in the running with their gene-editing candidate CTX001, in phase 1/2 trials which are due to generate final results later this year. If those results are positive the partners have said they could file for approval in the US before year-end.

Meanwhile, bluebird bio’s one-time gene therapy  lovotibeglogene autotemcel is supposed to be heading for regulatory filing in the US next year, although it has been delayed by an FDA partial clinical hold implemented after a persistent case of anaemia was seen in one adolescent patient in a clinical trial.

GBT’s inclacumab – another P-selectin antibody that could encroach on Adakveo – is in a pair of phase 3 trials due to generate results next year.

Meanwhile, there are a couple of orally-active pyruvate kinase R activators from Forma Therapeutics and Agios – etavopivat and mitapivat, respectively – in mid-stage development, and Pfizer has its own SCD candidate in PF-07209326, an E-selectin anatomist in phase 1.

It’s worth noting that this isn’t Pfizer’s first deal in SCD. In 2011 it paid $340 million for rights to rivipansel, a pan-selectin antagonist developed by GlycoMimetics, which failed a phase 3 test in 2019 and was jettisoned by Pfizer the following year.

The deal is another example of Pfizer splashing out on business development thanks to windfall cash generated by its COVID-19 vaccine Comirnaty and oral antiviral therapy Paxlovid. It comes shortly after the group closed a $6.7 billion acquisition of Arena Pharma, bringing on board etrasimod in late-stage testing for ulcerative colitis, and made an $11.6 billion takeover bid for Biohaven and its migraine therapy Nurtec ODT (rimegepant).

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