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Eight Things to Know about Global Capital Markets on Good Friday

Eight Things to Know about Global Capital Markets on Good Friday

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Most of the financial centers in Europe and North America are closed today for the Good Friday holiday.  Many markets in Europe will also be closed on Monday. Here is a summary of key developments.

1. Many markets in the Asia Pacific regions were also closed.  Most that were open advanced, including Japan, Taiwan, South Korea, and Thailand.  China's Shanghai Composite fell 1% and Malaysia, which saw its credit outlook cut to negative by Fitch, where equities fell a little less than 1%.  

2.  The US dollar slightly lower against all the major currencies, led by roughly a 0.25% gain in the Scandis.  The New Zealand dollar was the weakest in the G10, barely able to stay in positive territory.  For the week as a whole, all the G10 currencies, but the yen gained at least 1% against the greenback.  The Australian dollar was the leader, gaining 5.8%.  The Norwegian krone and New Zealand dollar both appreciated by more than 3%.  Around $1.0940, the euro rose about 1.3% this week, and near $1.2475, sterling gained almost 1.7%.    At CAD1.3950, the US dollar fell roughly 1.8% against the Canadian dollar this week.  

3.  OPEC+ struck an agreement that reduces output by 10-12 mln barrels a day in May and June.  In H2 20, the reduction is eased to 8 mln barrels and then 6 mln bpd in 2021.  There are a few reasons why oil did not rally when the announcement was made.  First, the cuts are seen to be too small to address what is projected to be 25-35 mln bpd in excess.  Second, as much as 5 mln bpd are expected from the G20 later today.  OPEC+ wants the US to go beyond the reduction that lower prices and higher storage costs are already forcing.  That said, Baker Hughes estimates that the US oil rig count fell by more than 10% last week, meaning that around a quarter of US oil rigs have been decommissioned.  Third, Mexico refuses to cut its oil output, and in fact, AMLO wants Pemex to boost production this year.  It is one of the cornerstones of AMLO's domestic agenda.  Pemex's production has been falling for several years.  

4.  The Eurogroup of EMU finance ministers struck a deal yesterday that will need the approval of the heads of state, which could be given next week.  The agreement is for around 540 bln euros.  The centerpiece (~240 bln euros) is a line of credit worth up to 2% of a member's GDP at the European Stabilization Mechanism (ESM), with the only condition that the funds are used to Covid-19 related expenses.  Another 200 bln euros is designated for the European Investment Bank for business loans. An employment guarantee fund is seeded with 100 bln euros and appears to offer some scope for mutualization.  Like the OPEC+ outcome, the Eurogroup results disappoint those that wanted a more significant effort, given the magnitude of the disruption.  Although some argued (as they did a decade ago) that the absence of a new collective debt instrument would mark the end of the European project, the push and pull and fits and starts that characterize Europe's evolution look set to continue.  

 5.  The UK Treasury and the Federal Reserve announced bold actions yesterday.  The UK Treasury indicated it would accept significant excess spending by departments in the near-term.  Its over-draft facility is usually around GBP350 mln but swelled to GBP20 bln in the 2008-2009 crisis.  It will be funded by the Bank of England.  This is partly a cash-flow issue, but many see it as monetization of the debt.  The Fed's actions also blur fiscal and monetary policy.  The Fed announced launched a new facility to buy local government debt and provided details about the purchases debt of small and medium-sized businesses.  It also expanded the funding for two existing facilities.  There are nine in all now, and each is funded by the US Treasury.  The recent fiscal bill (CARES) included roughly $455 bln that Treasury will use to see these special purpose vehicles that will buy the various assets, which going forward will include bonds that have recently lost their investment-grade status. The Treasury's funds are not needed to make the purchases but to protect the central bank from losses that these purchases may generate.  

6.  Separately, the Federal Reserve announced it would further reduce the amount of Treasuries and mortgage-back-securities it is buying.  Unlike asset purchases in the Great Finacial Crisis, the current purchases were aimed at stabilizing the markets.  The Fed had reduced the daily amount of Treasury gradually from the $70 bln a day at the outset to $50 bln last week and $30 bln going forward.  It is reducing its MBS purchases to $15 bln a day, down from $25.   

7.  Usage of the Fed swap lines with foreign central banks was drawn to the tune of about $105.5 bln last week, down slightly from the previous week.  The total outstanding was little changed just below $400 bln.  The Bank of Japan, followed by the European Central Bank and the Bank of England, were the largest users, but ten central banks in all used the swap facility, including Mexico, South Korea, and Singapore.   India and Indonesia are reportedly are in talks for swap lines with the Fed as well.  The Fed's repo facility for central banks is open, and although there is some interest, it was not used.  The Federal Reserve's custody holdings of US Treasuries for foreign central banks fell by $21.6 bln for the sixth consecutive weekly decline.  Over these six weeks, the average weekly liquidation was about $25.8 bln.

8. The highlights of the high-frequency data include another surge in US weekly initial jobless claims.  It brings the three-week surge to nearly 17 mln, and the dramatic rise is not over.  Backlogs have been reported, and some states have only recently imposed lockdowns.  Canada reported a 1.1 mln job losses last month, which was more than twice what economists had projected. Job losses were concentrated in services, and over half of the losses were part-time positions.  The number of hours worked fell sharply and is consistent with a sharp economic contraction.  Germany reported a 650k (~40%) jump in the number of people in the shortened-work program, for which the government subsidies wages. Lastly, China reported a dramatic rise in aggregate financing last month.  The CNY5.15 trillion (~$732 bln), was well above expectations and could be a record amount.    





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Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

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February Employment Situation

By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…

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By Paul Gomme and Peter Rupert

The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.

Temporary help services employment continues a steep decline after a sharp post-pandemic rise.

Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.

The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.

The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.

Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.

As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.

Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.

The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.

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Another beloved brewery files Chapter 11 bankruptcy

The beer industry has been devastated by covid, changing tastes, and maybe fallout from the Bud Light scandal.

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Before the covid pandemic, craft beer was having a moment. Most cities had multiple breweries and taprooms with some having so many that people put together the brewery version of a pub crawl.

It was a period where beer snobbery ruled the day and it was not uncommon to hear bar patrons discuss the makeup of the beer the beer they were drinking. This boom period always seemed destined for failure, or at least a retraction as many markets seemed to have more craft breweries than they could support.

Related: Fast-food chain closes more stores after Chapter 11 bankruptcy

The pandemic, however, hastened that downfall. Many of these local and regional craft breweries counted on in-person sales to drive their business. 

And while many had local and regional distribution, selling through a third party comes with much lower margins. Direct sales drove their business and the pandemic forced many breweries to shut down their taprooms during the period where social distancing rules were in effect.

During those months the breweries still had rent and employees to pay while little money was coming in. That led to a number of popular beermakers including San Francisco's nationally-known Anchor Brewing as well as many regional favorites including Chicago’s Metropolitan Brewing, New Jersey’s Flying Fish, Denver’s Joyride Brewing, Tampa’s Zydeco Brew Werks, and Cleveland’s Terrestrial Brewing filing bankruptcy.

Some of these brands hope to survive, but others, including Anchor Brewing, fell into Chapter 7 liquidation. Now, another domino has fallen as a popular regional brewery has filed for Chapter 11 bankruptcy protection.

Overall beer sales have fallen.

Image source: Shutterstock

Covid is not the only reason for brewery bankruptcies

While covid deserves some of the blame for brewery failures, it's not the only reason why so many have filed for bankruptcy protection. Overall beer sales have fallen driven by younger people embracing non-alcoholic cocktails, and the rise in popularity of non-beer alcoholic offerings,

Beer sales have fallen to their lowest levels since 1999 and some industry analysts

"Sales declined by more than 5% in the first nine months of the year, dragged down not only by the backlash and boycotts against Anheuser-Busch-owned Bud Light but the changing habits of younger drinkers," according to data from Beer Marketer’s Insights published by the New York Post.

Bud Light parent Anheuser Busch InBev (BUD) faced massive boycotts after it partnered with transgender social media influencer Dylan Mulvaney. It was a very small partnership but it led to a right-wing backlash spurred on by Kid Rock, who posted a video on social media where he chastised the company before shooting up cases of Bud Light with an automatic weapon.

Another brewery files Chapter 11 bankruptcy

Gizmo Brew Works, which does business under the name Roth Brewing Company LLC, filed for Chapter 11 bankruptcy protection on March 8. In its filing, the company checked the box that indicates that its debts are less than $7.5 million and it chooses to proceed under Subchapter V of Chapter 11. 

"Both small business and subchapter V cases are treated differently than a traditional chapter 11 case primarily due to accelerated deadlines and the speed with which the plan is confirmed," USCourts.gov explained. 

Roth Brewing/Gizmo Brew Works shared that it has 50-99 creditors and assets $100,000 and $500,000. The filing noted that the company does expect to have funds available for unsecured creditors. 

The popular brewery operates three taprooms and sells its beer to go at those locations.

"Join us at Gizmo Brew Works Craft Brewery and Taprooms located in Raleigh, Durham, and Chapel Hill, North Carolina. Find us for entertainment, live music, food trucks, beer specials, and most importantly, great-tasting craft beer by Gizmo Brew Works," the company shared on its website.

The company estimates that it has between $1 and $10 million in liabilities (a broad range as the bankruptcy form does not provide a space to be more specific).

Gizmo Brew Works/Roth Brewing did not share a reorganization or funding plan in its bankruptcy filing. An email request for comment sent through the company's contact page was not immediately returned.

 

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