Connect with us

Spread & Containment

Covid-19 And Other Stock Market Fallacies

Covid-19 And Other Stock Market Fallacies



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.

Read More

Continue Reading

Spread & Containment

Many CDC Blunders Exaggerated Severity Of COVID-19: Study

Many CDC Blunders Exaggerated Severity Of COVID-19: Study

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Centers…



Many CDC Blunders Exaggerated Severity Of COVID-19: Study

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Centers for Disease Control and Prevention (CDC) made at least 25 statistical or numerical errors during the COVID-19 pandemic, and the overwhelming majority exaggerated the severity of the pandemic, according to a new study.

Researchers who have been tracking CDC errors compiled 25 instances where the agency offered demonstrably false information. For each instance, they analyzed whether the error exaggerated or downplayed the severity of COVID-19.

Of the 25 instances, 20 exaggerated the severity, the researchers reported in the study, which was published ahead of peer review on March 23.

The CDC has expressed significant concern about COVID-19 misinformation. In order for the CDC to be a credible source of information, they must improve the accuracy of the data they provide,” the authors wrote.

The CDC did not respond to a request for comment.

Most Errors Involved Children

Most of the errors were about COVID-19’s impact on children.

In mid-2021, for instance, the CDC claimed that 4 percent of the deaths attributed to COVID-19 were kids. The actual percentage was 0.04 percent. The CDC eventually corrected the misinformation, months after being alerted to the issue.

CDC Director Dr. Rochelle Walensky falsely told a White House press briefing in October 2021 that there had been 745 COVID-19 deaths in children, but the actual number, based on CDC death certificate analysis, was 558.

Walensky and other CDC officials also falsely said in 2022 that COVID-19 was a top five cause of death for children, citing a study that gathered CDC data instead of looking at the data directly. The officials have not corrected the false claims.

Other errors include the CDC claiming in 2022 that pediatric COVID-19 hospitalizations were “increasing again” when they’d actually peaked two weeks earlier; CDC officials in 2023 including deaths among infants younger than 6 months old when reporting COVID-19 deaths among children; and Walensky on Feb. 9, 2023, exaggerating the pediatric death toll before Congress.

“These errors suggest the CDC consistently exaggerates the impact of COVID-19 on children,” the authors of the study said.

Read more here...

Tyler Durden Fri, 03/24/2023 - 20:20

Read More

Continue Reading


NIH awards researchers $7.5 million to create data support center for opioid use disorder and pain management research

WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant…



WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant from the National Institutes of Health (NIH) Helping End Addiction Long-term (HEAL) initiative.

Credit: Wake Forest University School of Medicine

WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant from the National Institutes of Health (NIH) Helping End Addiction Long-term (HEAL) initiative.

The NIH HEAL initiative, which launched in 2018, was created to find scientific solutions to stem the national opioid and pain public health crises. The funding is part of the HEAL Data 2 Action (HD2A) program, designed to use real-time data to guide actions and change processes toward reducing overdoses and improving opioid use disorder treatment and pain management.

With the support of the grant, researchers will create a data infrastructure support center to assist HD2A innovation projects at other institutions across the country. These innovation projects are designed to address gaps in four areas—prevention, harm reduction, treatment of opioid use disorder and recovery support.

“Our center’s goal is to remove barriers so that solutions can be more streamlined and rapidly distributed,” said Meredith C.B. Adams, M.D., associate professor of anesthesiology, biomedical informatics, physiology and pharmacology, and public health sciences at Wake Forest University School of Medicine.

By monitoring opioid overdoses in real time, researchers will be able to identify trends and gaps in resources in local communities where services are most needed.

“We will collect and analyze data that will inform prevention and treatment services,” Adams said. “We’re shifting chronic pain and opioid care in communities to quickly offer solutions.”

The center will also develop data related resources, education and training related to substance use, pain management and the reduction of opioid overdoses.

According to the CDC, there was a 29% increase in drug overdose deaths in the U.S.  in 2020, and nearly 75% of those deaths involved an opioid.

“Given the scope of the opioid crises, which was only exacerbated by the COVID-19 pandemic, it’s imperative that we improve and create new prevention strategies,” Adams said. “The funding will create the infrastructure for rapid intervention.”

Read More

Continue Reading


How They Convinced Trump To Lock Down

How They Convinced Trump To Lock Down

Authored by Jeffrey A. Tucker via Brownstone Institute,

An enduring mystery for three years is how…



How They Convinced Trump To Lock Down

Authored by Jeffrey A. Tucker via Brownstone Institute,

An enduring mystery for three years is how Donald Trump came to be the president who shut down American society for what turned out to be a manageable respiratory virus, setting off an unspeakable crisis with waves of destructive fallout that continue to this day. 

Let’s review the timeline and offer some well-founded speculations about what happened. 

On March 9, 2020, Trump was still of the opinion that the virus could be handled by normal means. 

Two days later, he changed his tune. He was ready to use the full power of the federal government in a war on the virus. 

What changed? Deborah Birx reports in her book that Trump had a friend die in a New York hospital and this is what shifted his opinion. Jared Kushner reports that he simply listened to reason. Mike Pence says he was persuaded that his staff would respect him more. No question (and based on all existing reports) that he found himself surrounded by “trusted advisors” amounting to about 5 or so people (including Mike Pence and Pfizer board member Scott Gottlieb)

It was only a week later when Trump issued the edict to close all “indoor and outdoor venues where people congregate,” initiating the biggest regime change in US history that flew in the face of all rights and liberties Americans had previously taken for granted. It was the ultimate in political triangulation: as John F. Kennedy cut taxes, Nixon opened China, and Clinton reformed welfare, Trump shut down the economy he promised to revive. This action confounded critics on all sides. 

A month later, Trump said his decision to have “turned off” the economy saved millions of lives, later even claiming to have saved billions. He has yet to admit error. 

Even as late as June 23rd of that year, Trump was demanding credit for having followed all of Fauci’s recommendations. Why do they love him and hate me, he wanted to know. 

Something about this story has never really added up. How could one person have been so persuaded by a handful of others such as Fauci, Birx, Pence, and Kushner and his friends? He surely had other sources of information – some other scenario or intelligence – that fed into his disastrous decision. 

In one version of events, his advisors simply pointed to the supposed success of Xi Jinping in enacting lockdowns in Wuhan, which the World Health Organization claimed had stopped infections and brought the virus under control. Perhaps his advisors flattered Trump with the observation that he is at least as great as the president of China so he should be bold and enact the same policies here. 

One problem with this scenario is timing. The Oval Office meetings that preceded his March 16, 2020, edict took place the weekend of the 14th and 15th, Friday and Saturday. It was already clear by the 11th that Trump was ready for lockdowns. This was the same day as Fauci’s deliberately misleading testimony to the House Oversight Committee in which he rattled the room with predictions of Hollywood-style carnage. 

On the 12th, Trump shut all travel from Europe, the UK, and Australia, causing huge human pile-ups at international airports. On the 13th, the Department of Health and Human Services issued a classified document that transferred control of pandemic policy from the CDC to the National Security Council and eventually the Department of Homeland Security. By the time that Trump met with Fauci and Birx in that legendary weekend, the country was already under quasi-martial law. 

Isolating the date in the trajectory here, it is apparent that whatever happened to change Trump occurred on March 10, 2020, the day after his Tweet saying there should be no shutdowns and one day before Fauci’s testimony. 

That something very likely revolves around the most substantial discovery we’ve made in three years of investigations. It was Debbie Lerman who first cracked the code: Covid policy was forged not by the public-health bureaucracies but by the national-security sector of the administrative state. She has further explained that this occurred because of two critical features of the response: 1) the belief that this virus came from a lab leak, and 2) the vaccine was the biosecurity countermeasure pushed by the same people as the fix. 

Knowing this, we gain greater insight into 1) why Trump changed his mind, 2) why he has never explained this momentous decision and otherwise completely avoids the topic, and 3) why it has been so unbearably difficult to find out any information about these mysterious few days other than the pablum served up in books designed to earn royalties for authors like Birx, Pence, and Kushner. 

Based on a number of second-hand reports, all available clues we have assembled, and the context of the times, the following scenario seems most likely. On March 10, and in response to Trump’s dismissive tweet the day before, some trusted sources within and around the National Security Council (Matthew Pottinger and Michael Callahan, for example), and probably involving some from military command and others, came to Trump to let him know a highly classified secret. 

Imagine a scene from Get Smart with the Cone of Silence, for example. These are the events in the life of statecraft that infuse powerful people with a sense of their personal awesomeness. The fate of all of society rests on their shoulders and the decisions they make at this point. Of course they are sworn to intense secrecy following the great reveal. 

The revelation was that the virus was not a textbook virus but something far more threatening and terrible. It came from a research lab in Wuhan. It might in fact be a bioweapon. This is why Xi had to do extreme things to protect his people. The US should do the same, they said, and there is a fix available too and it is being carefully guarded by the military. 

It seems that the virus had already been mapped in order to make a vaccine to protect the population. Thanks to 20 years of research on mRNA platforms, they told him,  this vaccine can be rolled out in months, not years. That means that Trump can lock down and distribute vaccines to save everyone from the China virus, all in time for the election. Doing this would not only assure his reelection but guarantee that he would go down in history as one of the greatest US presidents of all time. 

This meeting might only have lasted an hour or two – and might have included a parade of people with the highest-level security clearances – but it was enough to convince Trump. After all, he had battled China for two previous years, imposing tariffs and making all sorts of threats. It was easy to believe at that point that China might have initiated biological warfare as retaliation. That’s why he made the decision to use all the power of the presidency to push a lockdown under emergency rule. 

To be sure, the Constitution does not allow him to override the discretion of the states but with the weight of the office complete with enough funding and persuasion, he could make it happen. And thus did he make the fateful decision that not only wrecked his presidency but the country too, imposing harms that will last a generation. 

It only took a few weeks for Trump to become suspicious about what happened. For weeks and months, he toggled between believing that he was tricked and believing that he did the right thing. He had already approved another 30 days of lockdowns and even inveighed against Georgia and later Florida for opening. He went so far as to claim that no state could open without his approval. 

He did not fully change his mind until August, when Scott Atlas revealed the whole con to him. 

There is another fascinating feature to this entirely plausible scenario. Even as Trump’s advisors were telling him that this could be a bioweapon leaked from the lab in China, we had Anthony Fauci and his cronies going to great lengths to deny it was a lab leak (even if they believed that it was). This created an interesting situation. The NIH and those surrounding Fauci were publicly insisting that the virus was of zoonotic origin, even as Trump’s circle was telling the president that it should be regarded as a bioweapon. 

Fauci belonged to both camps, which suggests that Trump very likely knew of Fauci’s deception all along: the “noble lie” to protect the public from knowing the truth. Trump had to be fine with that. 

Gradually following the lockdown edicts and the takeover by the Department of Homeland Security, in cooperation with a very hostile CDC, Trump lost power and influence over his own government, which is why his later Tweets urging a reopening fell on deaf ears. To top it off, the vaccine failed to arrive in time for the election. This is because Fauci himself delayed the rollout until after the election, claiming that the trials were not racially diverse enough. Thus Trump’s gambit completely failed, despite all the promises of those around him that it was a guaranteed way to win reelection.

To be sure, this scenario cannot be proven because the entire event – certainly the most dramatic political move in at least a generation and one with unspeakable costs for the country – remains cloaked in secrecy. Not even Senator Rand Paul can get the information he needs because it remains classified. If anyone thinks the Biden approval of releasing documents will show what we need, that person is naive. Still, the above scenario fits all available facts and it is confirmed by second-hand reports from inside the White House. 

It’s enough for a great movie or a play of Shakespearean levels of tragedy. And to this day, none of the main players are speaking openly about it. 

Jeffrey A. Tucker is Founder and President of the Brownstone Institute. He is also Senior Economics Columnist for Epoch Times, author of 10 books, including Liberty or Lockdown, and thousands of articles in the scholarly and popular press. He speaks widely on topics of economics, technology, social philosophy, and culture.

Tyler Durden Fri, 03/24/2023 - 17:40

Read More

Continue Reading