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Euro Extends Decline After ECB Holds Rates At Highs, Hints At Cuts To Come

Euro Extends Decline After ECB Holds Rates At Highs, Hints At Cuts To Come

After yesterday’s US CPI print – and the dramatic adjustment to…

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Euro Extends Decline After ECB Holds Rates At Highs, Hints At Cuts To Come

After yesterday's US CPI print - and the dramatic adjustment to market expectations of Fed policy action (timing and extent) - this morning's ECB was expected to be a nothing-burger with all eyes out for any confirmation that June is 'go-time' for Lagarde to cut (albeit a rare occurrence without a concomitant Fed cut) - which she will likely push her to stress the ECB's independence from The Fed.

Indeed, as expected, The ECB held rates at record highs for a fifth straight meeting.

The ECB added a new opening line to the statement:

“The Governing Council’s future decisions will ensure that its policy rates will stay sufficiently restrictive for as long as necessary..."

And it appears The ECB is laying the groundwork for a rate-cut sooner than later...

If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction.”

One notable change in the statement, from this...

“The Governing Council’s future decisions will ensure that policy rates will be set at sufficiently restrictive levels for as long as necessary.”

...to this...

“The Governing Council’s future decisions will ensure that its policy rates will stay sufficiently restrictive for as long as necessary.”

Suggesting something is about to change.

Finally, The ECB reports that most measures of underlying inflation are easing.

Wage growth is moderating and firms are absorbing parts of these costs in their profits.

But, it says, domestic price pressures continue to be strong.

In short, the ECB remains data-dependent and isn’t committing to anything but if the progress of inflation and other factors has progressed sufficiently by June’s forecasts than reducing the level of policy restriction “would be appropriate”.

Not much movement in the bond space but the euro extended losses modestly on the ECB news...

Source: Bloomberg

As The FT notes, some eurozone policymakers, as in the UK, may want to avoid cutting rates much more aggressively than their counterparts in the US, partly out of fear of weakening their currencies and so further stoking inflation. But Peter Schaffrik, a strategist at RBC Capital Markets, said:

“The ECB has nailed its colours to the mast and shifting the guidance at this stage when actual inflation numbers are currently not far away from their own forecasts seems difficult to imagine.”

Now, we wait to see what Christine Lagarde says in the presser. You can bet someone a warm beer that she raises the fact that the ECB is independent of The Fed (when everyone knows, she is ultimately beholden to what Powell says and does)...

Read the full statement below:

The Governing Council today decided to keep the three key ECB interest rates unchanged. The incoming information has broadly confirmed the Governing Council’s previous assessment of the medium-term inflation outlook. Inflation has continued to fall, led by lower food and goods price inflation. Most measures of underlying inflation are easing, wage growth is gradually moderating, and firms are absorbing part of the rise in labour costs in their profits. Financing conditions remain restrictive and the past interest rate increases continue to weigh on demand, which is helping to push down inflation. But domestic price pressures are strong and are keeping services price inflation high.

The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. It considers that the key ECB interest rates are at levels that are making a substantial contribution to the ongoing disinflation process. The Governing Council’s future decisions will ensure that its policy rates will stay sufficiently restrictive for as long as necessary. If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction. In any event, the Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction, and it is not pre-committing to a particular rate path.

Key ECB interest rates
The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 4.50%, 4.75% and 4.00% respectively.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)
The APP portfolio is declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

The Governing Council intends to continue to reinvest, in full, the principal payments from maturing securities purchased under the PEPP during the first half of 2024. Over the second half of the year, it intends to reduce the PEPP portfolio by €7.5 billion per month on average. The Governing Council intends to discontinue reinvestments under the PEPP at the end of 2024.

The Governing Council will continue applying flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to countering risks to the monetary policy transmission mechanism related to the pandemic.

Refinancing operations
As banks are repaying the amounts borrowed under the targeted longer-term refinancing operations, the Governing Council will regularly assess how targeted lending operations and their ongoing repayment are contributing to its monetary policy stance.

***

The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission. Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:45 CET today.

Tyler Durden Thu, 04/11/2024 - 08:27

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Silver and Gold: The Winning Bet

Source: Michael Ballanger 04/08/2024
Michael Ballanger of GGM Advisory Inc. shares his thoughts on the current state of the gold and silver market, as…

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Source: Michael Ballanger 04/08/2024

Michael Ballanger of GGM Advisory Inc. shares his thoughts on the current state of the gold and silver market, as well as a few junior stocks he believes are worth looking into.

Before I begin with my weekly assessment of market conditions, I have a story that needs to be told because as I glided around the blogosphere and Twitterverse and saturated world of ever-repeating podcasts, there was a distinct mixture of elation, excitement, and greed inundating the precious metals space with a particular pungency for silver and the PM miners.

A few decades ago, I had a brilliant, highly successful client who luxuriated in the practice of correcting me whenever I would offer him investment ideas. Be they my grammatical errors or factual oversights, no conversation went uncritiqued by this self-anointed wonderchild of intellectual superiority as interruption upon interruption became the order of the day whenever I dared make the call.

One particular conversation in February of 2020 involved gold and how I believed that it was a suitable place for investment capital given the ludicrous extremes to which the leaders of the Free World would devolve in order to protect their citizens from certain ruin and "death by microbe" after news of a strange new strain of virus was emerging from central China.

After multiple stops and starts, my esteemed client punctuated the conversation by embarking upon a lecture in which he dismissed the notion of gold being the "asset of choice" and opined that if I was worth the fees he paid me, I would know that the better place to be was silver.

No bull market in gold can ever survive without the company of its little sister, silver.

Now, it wasn't that I didn't know about silver. I played silver early in my career when it made the first Hunt brothers-driven assault on a $50 an ounce, only to be soundly and violently repelled by a massive collusion by the government, Wall Street, the CFTC, SEC, and DOJ.

After barely escaping that margin-calling hurricane that befell commodity traders the world over, I decided that despite the fact that nothing is more fun for me than "playing the ponies" at Woodbine on a sunny summer afternoon, silver would be far too "risky" for clients. However, given that this client had an IQ somewhat larger than his considerably inflated ego, it became apparent that by the end of my pitch, he had already mapped out his own strategy for taming the inflationary beast being conjured up by the central-planning pandemic battlers.

A few days later, I was instructed to deposit $100,000 into his futures account and initiate a position in July silver while taking on an equally notional short position in June gold. The idea was that if gold was to move higher, silver would obviously outperform it as it had done in every major bull market in precious metals since the Dawn of Margin Calls. In effect, he was shorting the Gold-to-Silver ratio (the "GSR") at around 90 because, as he so forcefully insisted, "the historic ratio for gold to silver is 15, and if you had done your homework, you would know that."

As you can guess, the rest, as they say, is history.

I cautioned my gifted client with the super-enlarged forehead that there was an inherent risk in assuming that silver would immediately scream ahead of gold because even in the 1970s, there was a "lag effect" where silver played catch-up to gold before it actually took the lead.

As I had suggested in February, the central banks and governments around the world hit the panic button when cases of COVID-19 arrived in Europe and North America, delivered handily by busloads of curious tourists from all over China all collectively spewing out infected microbes as they snapped photos of the Louvre, the Washington Monument, and Niagara Falls.

Gold responded with vigor and leaped to the fore, rising sharply of its own volition and, unfortunately for my client, without the merry accompaniment of silver. The first margin call came four days later, to which more funds were transferred, with the second a week later, after which the client demanded a "meeting" to discuss why he was losing his shirt on "my" recommendation.

Well, I turned to the notes I had written in my journal as he was instructing me like a constipated school marm to enter his orders and reminded him that it gold that was "my recommendation" and that being short, the GSR was a brilliant idea, but a very risky one, despite his obvious intellectual advantage over a plebe like me. By the middle of March, after one of the briefest ownership periods in futures trading history, the trade was liquidated with a sizable loss of both equity and self-esteem, once again proving the time-tested truism that says that when one is trading the silver market, expect the unexpected and never let a loss get out of control because silver, it is said, is a very cruel and unforgiving mistress.

The client survived, and after a few months of therapy and extensive rehab, he returned to the markets, preferring to invest in bonds and utility stocks. He called me to report his jubilation every time a coupon or dividend was paid. Pax tibi! ("Peace be with you.")

Since the very early months of 2023, I have been of the opinion that there would be only two metals that had any chance of dodging the ...

Full story available on Benzinga.com

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CDC Hid Finding Of Possible Link Between COVID Vaccines and Tinnitus

CDC Hid Finding Of Possible Link Between COVID Vaccines and Tinnitus

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

The…

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CDC Hid Finding Of Possible Link Between COVID Vaccines and Tinnitus

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

The U.S. Centers for Disease Control and Prevention (CDC) and its partners uncovered signs that the Pfizer-BioNTech and Moderna COVID-19 vaccines might cause the persistent condition called tinnitus but never disclosed the findings to the public, The Epoch Times can report.

COVID-19 vaccine doses in a file photo. (Jacquelyn Martin/Pool/AFP via Getty Images)

The signs were found while analyzing data from the CDC’s Vaccine Safety Datalink (VSD), which has been described as one of the stronger CDC surveillance systems because it utilizes health care records.

The detection of the signs came just after the CDC told a reporter that there were no signs of large numbers of cases of tinnitus, which commonly manifests as a constant ringing in the head, following COVID-19 vaccination, documents obtained by The Epoch Times show.

The CDC never updated the reporter, whose story reported that the CDC had not found a clustering of cases.

The CDC declined to comment.

The documents “prove that they were aware of a safety signal of tinnitus after the COVID-19 shots as early as 2022,” Dr. Joel Wallskog, co-chair of the advocacy group React19, told The Epoch Times via email. “However, to my knowledge, this safety signal was never communicated to the public and no further epidemiological study on tinnitus in VSD was ever completed.”

The Epoch Times obtained the documents through a Freedom of Information Act (FOIA) request.

Previous requests have yielded other evidence the CDC knew about possible safety problems with the COVID-19 vaccines but did not alert the public. That includes the detection in May 2022 of a safety signal for tinnitus and the Pfizer and Moderna vaccines, in an analysis of data from another CDC system, which is based on reports filed by doctors and others.

As time passes and more FOIA requests are executed, how many more safety signals will we learn about that the CDC knew about years ago? When does this nightmare end? When will the American public know the whole truth and nothing but the truth? Is the CDC evil or incompetent? Or maybe both,” Dr. Wallskog added.

Detection

A CDC spokeswoman, according to one of the emails obtained by The Epoch Times, told a reporter on Sept. 21, 2022, that the CDC was aware of reports of tinnitus after COVID-19 vaccination lodged with the Vaccine Adverse Event Reporting System (VAERS). That CDC-run system accepts reports from anybody, although most are filed by health care workers.

“Because so many people have been vaccinated, and because tinnitus is so common in the population, temporally-associated cases are expected, with some expected to occur shortly after vaccination,” Martha Sharan, the spokeswoman, said.

The CDC opted to explore potential links in VSD.

“Unlike VAERS, which relies primarily on voluntary reports ... the VSD uses data from electronic health records,” Ms. Sharan said. “Consequently, the VSD data are less likely to be affected by the reporting biases and other biases that impact spontaneous reporting patterns to VAERS and data quality.”

The analysis of VSD data showed that “to date, no clustering of tinnitus diagnoses have been observed post-vaccination,” she added.

Katherine Yih, PhD, leads analyses of VSD data to monitor vaccine safety. She’s an assistant professor at the Harvard Pilgrim Health Care Institute’s Department of Population Medicine and receives funding from the CDC.

Ms. Yih informed CDC officials on Sept. 29, 2022, that analyses of VSD data turned up “statistically significant temporal clusters” for tinnitus following receipt of the Pfizer and Moderna vaccines, another email obtained by The Epoch Times shows. Both vaccines utilize messenger RNA (mRNA) technology.

“Both strongest clusters for the mRNA vaccines start around 12-13 days after when dose 2 would likely have been received,” she said. “The relative risks are quite low and certainly it’s hard to see anything on visual inspection of the graphs, especially for Moderna, so this seems to be a subtle effect if it is truly a VAE, unless you’re one of the unlucky ones who got tinnitus.”

VAE stands for vaccine adverse event.

Ms. Yih told the officials they could discuss the matter during an upcoming call.

See the emails here...

No Disclosure

Tara Haelle, the reporter who contacted the CDC about VSD and tinnitus, asked for an interview with one of the officials, Dr. Tom Shimabukuro, in August 2022, after a study found “overwhelming statistical support in VAERS” for tinnitus being a possible side effect of the mRNA shots.

Ms. Sharan informed Ms. Haelle that the VSD analysis did not show any clustering of tinnitus after COVID-19 vaccination. In a follow-up email on Sept. 29, 2022, attributed to Dr. Shimabukuro, he repeated the statement.

Hours later, Ms. Yih alerted Dr. Shimabukuro and others to the clustering that was found.

The CDC appears to have never alerted Ms. Haelle, or the general public, to the discovery.

Dr. Shimabukuro wanted to delay the interview, Ms. Sharan added soon after, because the CDC was going to conduct additional analyses of VSD data. The analyses would be done “relatively soon,” according to Dr. Shimabukuro.

On Nov. 10, 2022, Ms. Sharan told Ms. Haelle that “vaccine safety monitoring efforts in CDC have identified no evidence of a causal association between COVID-19 vaccination and tinnitus or other hearing loss,” conveying a statement from Dr. John Su, another CDC official, and that the VSD analysis was “in progress.”

On Dec. 19, 2022, Ms. Yih sent an “outline of tinnitus exploration” to Dr. Shimabukuro and other officials. The “outline for a possible report on COVID vaccination and tinnitus” was created at the request of one of the other officials, she said. Large portions of that and other emails were redacted.

On Dec. 16, 2022, results from analyses of the VSD data were published. The study, co-authored by Ms. Yih and others, did not mention tinnitus. Ms. Yih did not respond to a request for comment.

On Jan. 8, 2023, Ms. Sharan told Ms. Haelle that the CDC “doesn’t have enough evidence to justify an epidemiologic study on tinnitus in VSD.”

Despite Ms. Haelle’s efforts, the CDC refused to provide the results of its analyses.

Ms. Haelle’s article was published on Feb. 21, 2023. Ms. Haelle, who did not respond to an inquiry, wrote that the CDC said it “found no evidence that tinnitus diagnoses were clustered together following vaccination but hasn’t published that analysis and declined to share the preliminary report.”

“If the CDC had found a statistically significant link to tinnitus, it could have taken steps to add an official warning to the vaccine labels,” she added later.

Other Countries Find Link

Other researchers and countries have identified a link between tinnitus and COVID-19 vaccines.

U.S. researchers, for example, said in early 2022 that VAERS data “suggest an association” between the vaccines and tinnitus.

Australian and South Korean researchers later reported finding that vaccinated people faced an increased risk of tinnitus, including people who received a Moderna or Pfizer vaccine.

Some other papers, on the other hand, such as one from the United States, have not found an increase in tinnitus after COVID-19 vaccination.

Due to increasing evidence of a link, the European Medicines Agency added tinnitus to the labels for the AstraZeneca and Johnson & Johnson COVID-19 vaccines. Tinnitus may affect up to one in 1,000 people after the shots, according to the agency.

Australian regulators have also placed tinnitus on the labels for the AstraZeneca and Novavax COVID-19 vaccines. The AstraZeneca shot has never been authorized in the United States.

The method by which the vaccines may cause the condition remains unconfirmed.

Drs. Christian Rausch and Qun-Ying Yue of the Uppsala Monitoring Centre have proposed that the vestibulocochlear nerve may be involved. Others have postulated inflammation being the culprit. Treatments include ivermectin and ganglion blocks.

Tyler Durden Wed, 04/10/2024 - 17:00

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Is Gold Overpriced Or Can Its Price Go Even Higher?

Is Gold Overpriced Or Can Its Price Go Even Higher?

Authored by Claudio Grass via The Mises Institute,

This question has been at the center…

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Is Gold Overpriced Or Can Its Price Go Even Higher?

Authored by Claudio Grass via The Mises Institute,

This question has been at the center of a great many conversations I’ve been recently having with clients and friends. The way I like to answer it is with another question: Expensive compared to what?

Despite its recent surge to record highs, there are compelling reasons why purchasing gold right now is a prudent decision, with strong indications that its value is poised to climb even higher. Making investment decisions solely based on the current price of any asset without considering its underlying value or future potential can be prove to be a very costly mistake.

For one thing, it is obvious that there is a reason why gold has skyrocketed to these new levels. Actually, there are many reasons, and all of them are bound to become increasingly important and clear to more and more people in the months and years to come. For example, it is (or it should be) by now blatantly clear to every thinking person that inflation is not under control. Prices in the real economy, as opposed to the cherry-picked and extremely unrepresentative CPI metrics, have been steadily climbing and pushing countless households to the brink.

This is only going to get worse, as central banks around the world have already paved the way for a policy U-turn and the return to expansive monetary policies, including quantitative easing and near-zero interest rates, in order to stimulate economic growth, or the illusion of it (a very useful ploy in a global election year like 2024). These measures invariably lead to further fiat currency devaluation and erosion of purchasing power. This in turn is also very helpful when it comes to the unsustainable debt burden that most advanced economies are saddled with - another great boost during election season. Gold, on the other hand, maintains its intrinsic value over time, making it an attractive alternative to fiat currencies.

Central banks themselves obviously understand the implications of their own policies better than the average investor and that’s why they have always increased their gold reserves in times of turmoil and in times of loose money. In the early days of the pandemic, and then again after Russia’s invasion of Ukraine, global central banks continued to add to their gold holdings while ETF investors were selling off theirs. Now, once again, we’re seeing a strong trend of ETF outflows. February marked the ninth month in a row, but the price has still been climbing.

As Simon White, Bloomberg macro strategist, highlighted: “Over the last six months, China, Germany and Turkey have increased their gold holdings by the most (these are official holdings - when it comes to China, its true holdings are likely much higher than stated). Central banks want gold as it is a hard asset, not part of the financialized system when owned outright. But the dominant reason is a desire to diversify away from the dollar. If you’re not on friendly terms with the US, then it is a way to avoid your reserve assets being seized, as happened to Russia.”

This last point gives us a glimpse of a much bigger picture that investors need to bear in mind: Geopolitics.

It’s hard to think of another time in our post-cold-war history that the world has been so bitterly and so dangerously divided. The way the West responded to the Russian invasion of its neighbor, by weaponizing the US dollar and the entire banking system, has caused a lot of countries to think twice about how to safeguard their own assets. The obvious answer is gold, and that is what is behind this monumental transfer of real wealth we’re now seeing from the West to the East. In February, China’s central bank added gold to its reserves for a 16th straight month and it shows no signs of stopping its buying spree, as it is clearly on a mission to diversify its holdings and reduce its dependence on the US dollar.

And it’s not just the Chinese central bank that’s buying. According to the Financial Times, “in recent months, the precious metal has gained a second wind from what analysts describe as “phenomenal” purchases by Chinese consumers seeking a safe place to park their cash after local property and stock markets tumbled.” As ING analysts confirmed in a note, "We expect gold prices to trade higher this year as safe-haven demand continues to be supportive amid geopolitical uncertainty with the ongoing wars and the upcoming U.S. election.”

This is clearly a long-term shift in the gold market and the dynamics behind it have the potential to support much higher prices than what we’re currently seeing. This is precisely why investors need to look at the bigger picture and consider the current levels in their proper content and time horizon.

In other words: Sure, gold might seem expensive today, but today’s price is very likely to seem like a bargain in the not so distant future.

Tyler Durden Wed, 04/10/2024 - 14:20

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