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Futures, Global Stocks Rise As Yields, Dollar Drop Ahead Of Core PCE Print

Futures, Global Stocks Rise As Yields, Dollar Drop Ahead Of Core PCE Print

US equity futures and global stocks rose on the last trading day…

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Futures, Global Stocks Rise As Yields, Dollar Drop Ahead Of Core PCE Print

US equity futures and global stocks rose on the last trading day of the week, month and quarter and global bonds rebounded after dovish comments from Fed officials and signs that European inflation is finally slowing when EU consumer prices rose just 4.3%, down from 5.2% in August, and the lowest since Oct 2021. Ahead of today's closely watched "Fed's favorite inflation gauge", the core PCE due out at 8:30am ET, S&P and Nasdaq 100 futures were up 0.4% as longer-dated bond yields were 2-3bps lower while supportive inflation data in Europe drove European bond yields lower this morning. 30-year TSY yields are down 3bps at 4.68% but still on course for their largest quarterly gain since 2009. The US Dollar dropped and crude oil rebounded. Commodities are mostly higher led by base metals (Aluminum +1.8%; Copper +1.3%), with Brent back over $96 and approaching the 2023 high of $97. Today’s macro focus is on PCE, Personal Income/Spending, Chicago PMI, and U of Mich. survey data. For PCE, consensus sees the PCE deflator printing at 0.5% vs. 0.2% prior and Core PCE deflator rising 0.2%, unchanged from 0.2% prior.

In premarket trading, mega cap tech stocks were broadly higher; Nike rose 8% after the sportswear giant reported earnings per share for the first quarter that beat the average analyst estimate and kept its outlook unchanged for the year. The report was a positive surprise, with the outlook “better than buyside fears,” said Morgan Stanley. OPKO Health rose 8% after its ModeX Therapeutics won a contract from the US to develop antibodies to battle viral infectious disease threats.

Wall Street closed higher on Thursday after comments from Fed rate-setters including Richmond Fed chief Thomas Barkin, who said the US would likely skirt a severe downturn. Meanwhile, his Chicago Fed counterpart Austan Goolsbee said policymakers were at risk of overshooting on interest rates. Adding to positive sentiment, the WSJ reported China’s Vice Premier He Lifeng and Foreign Minister Wang Yi are discussing possible visits to the US to prepare for a potential summit between Xi Jinping and Joe Biden.

Today's stock rebound signals relief after a quarter that’s put 30-year borrowing costs on track for their steepest increase since 2009. Here are some of the superlatives we've seen this quarter:

  • US 2s10s inversion dropped to May’s lows
  • 5y US yield highest since 2007
  • 10y US yield highest since 2007
  • 30y US yield highest since 2010
  • 10y German yield highest since 2011
  • Japan 10y highest since 2013
  • Japan 20y highest since 2014
  • Japan 30y highest since 2013

Not surprisingly, amid soaring rates, the July-September quarter has been the worst for MSCI’s all-country index since September 2022, as surging oil prices fanned fears over inflation and economic growth.

“We have had a lot of smallish pieces of better news all coming together at the same time,” said Stuart Cole, head macro economist at brokerage Equity Capital, forgotten to add that we have also had a lot of pieces of bad news alongside, which however markets have generally ignored. While the Fed officials’ comments soothed fears of further US rate rises, sentiment received a further boost from Friday’s softer inflation prints, he said. “Taken in conjunction with the softer German numbers yesterday, that has raised hopes that the ECB is done with tightening,” said Cole.  

Investors are now awaiting the core personal consumption expenditures price index, which economists expect will have slowed in August on an annualized basis to 3.9% from 4.2%.

Europe’s Stoxx 600 equity index rose more than 1%, as data showing euro-area inflation at a two-year low boosted expectations that the ECB's hiking cycle was over and that rates in the EU could stay on hold if not drop. Rate-sensitive sectors, such as real estate and luxury led the gains, with the latter also boosted by a bullish strategy note from Bank of America. The data “increases our conviction that the ECB hiking cycle is done,” said Samuel Zief, head of global FX strategy at JPMorgan Private Bank. Here are the top European movers:

  • Luxury stocks including LVMH, Hermes and Richemont all rise at least 2.5% after Bank of America strategists raised their view on the luxury sector to overweight, saying recent underperformance now fully reflects an expected slowdown in global business activity.
  • Among other luxury names, Brunello Cucinelli shares rise as much as 8.7% after Goldman double-upgrades the Italian firm to buy from sell, saying it offers underappreciated defensive qualities.
  • Commerzbank shares gain as much as 12% after the German lender pre-announced planned capital returns that analysts say suggest significant upside to current consensus numbers.
  • Adidas, Puma, JD Sports shares rise after Nike reported a drop in its stockpile of inventory, a sign it’s making progress in moving out older merchandise for newer, more-profitable items.
  • Aston Martin shares surge as much as 13% after the carmaker said Executive Chairman Lawrence Stroll’s Yew Tree Consortium agreed to boost its stake in the firm to 26.2%.
  • OCI shares rise as much as 8.6% after Jefferies says it offers a “rare corner” of positive earnings momentum within the European chemicals sector and upgrades to buy.
  • Future shares rise as much as 21% after a full-year trading update that led Shore Capital to reiterate that the media company is well placed to deliver “attractive growth.” Analysts highlighted the stock’s low valuation.
  • Ascential shares rise as much as 7.6% in London after Sky News reports that Apax Partners has entered advanced discussions to buy the company’s consumer trend-spotting unit, WGSN.
  • Cellnex shares gain as much as 4.5% after Stonepeak buys 49% stake in Cellnex’s Swedish, Danish units for €730 million, according to a Spanish regulatory filing.
  • Fevertree shares rise 4.7% after Nordflint Capital Partners disclosed a 5% stake in the maker of tonics and mixers.
  • Alpha Group shares fall as much as 4.6%, to the lowest since March, after holder Morgan Tillbrook sold about 1.8% of its stake in the institutional broker at a price of £19.00 per share.

Earlier in the session, Asian equities also advanced, bolstered by a rally in Hong Kong stocks amid optimism over Golden Week holiday spending. The MSCI Asia Pacific Index climbed as much as 0.4% on Friday, helping trim losses for the quarter to less than 4%. Chinese tech stocks trading in Hong Kong including Tencent and Alibaba offered the largest support.

  • Benchmarks in Hong Kong jumped more than 2%, outperforming in the region following further supportive measures by Chinese authorities, while the index was unfazed by the absence of mainland participants and Stock Connect flows due to the Mid-Autumn Festival and next week’s National Day holidays.  Traders cited positive outlook for Chinese consumption during the peak travel season and dip buying as reasons for the rebound. The oil rally taking a breather also supported sentiment. “The bounce in China follows the US tech overnight and may be driven by some easing in the dollar and oil, both of which have been leaving markets anxious,” Marvin Chen, a strategist at Bloomberg Intelligence said. “It looks like a broad relief rally across the region after a week of declines,” Chen said.
  • Japan's Nikkei 225 failed to sustain early gains and pulled back from resistance around the 32,000 level despite several encouraging data releases.
  • Hang Seng outperformed as property and tech surged after the recent easing of yields and
  • Shares in Australia and New Zealand also gained; the ASX 200 was kept afloat by outperformance in the mining and materials sectors but with trade constricted amid quasi-holiday conditions with Victoria state on a public holiday.
  • Indian stocks advanced Friday along with most Asian peers as expectations of higher spending during the upcoming Golden Week holiday in China boosted sentiment. The S&P BSE Sensex ended 0.5% higher at 65,828.41 as of 3:45 p.m. in Mumbai, while the NSE Nifty 50 Index advanced 0.6% to 19,638.30. India’s main benchmarks were up by a percent for the day before a late session selloff saw them come off their highs, as investors lightened positions due to the upcoming long weekend. Stocks closed lower on the week. Sentiment was also boosted by a slide in the dollar and some softness in Brent crude prices that are showing a struggle just under the psychological $100 a barrel mark.

In FX, the kiwi and Norwegian krone are the best performers among the G-10 currencies while the dollar fell for a second day and underperformed all G-10 peers amid quarter-end flows, with the Bloomberg Dollar Spot Index about 0.4% lower; still, the gauge is up about 2.3% this quarter, the most in a year.  “The dollar is trading lower as a much-needed correction takes hold,” said Win Thin, global head of currency strategy at Brown Brothers Harriman. “The fundamental story remains in favor of the greenback as the US economy is in a much stronger position.” EURUSD rose 0.4% to 1.0604 and held its advance after euro area inflation came in below expectations. The yen briefly dipped after the central bank announced an unscheduled bond-buying operation, but later reversed losses to trade as much as 0.5% higher on the day. Meanwhile, Japan’s government bonds are poised for the worst quarterly selloff since 1998

In rates, global bond yields eased after the previous day’s selloff, with 10-year US Treasuries down about 3 basis points and Japanese 10-year yields sliding from decade-highs after an unscheduled bond-buying operation by the central bank. British and euro-area borrowing costs slid more than 5 basis points. French bonds were among the biggest gainers after data showed price growth unexpectedly slowing, a day after Germany reported inflation at the lowest in two years.  Treasuries pushed higher following wider gains seen across core European rates, with yields down by 3bp to 4bp across the curve. US 10-year yields were around 4.55%, down by by 3bp on the day, with bunds and gilts outperforming by 4.5bp and 1bp in the sector, respectively; front-end lags rest of the curve slightly, flattening 2s10s spread by around 1bp on the day, sitting back around 50bp inverted. That said, the session could still see some quarter-end rebalancing flow, while highlights also include packed data slate headed by PCE deflator. Quarter and month-end re-balancing flows may still be in play for the session; Bloomberg indicies project a 0.07y October extension.

In commodities, crude prices reversed much of yesterday's losses, trading higher in lockstep with broader risk sentiment on month and quarter end, but the range of price action this morning is narrow. Spot gold is modestly firmer amid the pullback in the Dollar after tumbling to a low of USD 1,857.79/oz this week – the lowest since early March – largely due to this week's rise of the Greenback.

Bitcoin prices trade flat intraday around the USD 27,000 mark following yesterday's risk-induced rally.

US economic data slate includes August wholesale inventories, personal income/spending, PCE deflator (8:30am), September MNI Chicago PMI (9:45am), University of Michigan sentiment (10am) and Kansas City Fed services activity (11am). Scheduled Fed speakers include Williams at 12:45pm

Market Snapshot

  • S&P 500 futures up 0.5% to 4,357.50
  • STOXX Europe 600 up 1.0% to 452.79
  • MXAP up 0.6% to 157.66
  • MXAPJ up 1.3% to 493.22
  • Nikkei little changed at 31,857.62
  • Topix down 0.9% to 2,323.39
  • Hang Seng Index up 2.5% to 17,809.66
  • Shanghai Composite up 0.1% to 3,110.48
  • Sensex up 0.9% to 66,087.90
  • Australia S&P/ASX 200 up 0.3% to 7,048.64
  • Kospi little changed at 2,465.07
  • German 10Y yield little changed at 2.86%
  • Euro up 0.4% to $1.0606
  • Brent Futures down 0.3% to $95.10/bbl
  • Gold spot up 0.4% to $1,872.18
  • U.S. Dollar Index down 0.43% to 105.77

Top Overnight News

  • The BOJ announced an unscheduled bond-purchase operation after yields on long and super-long debt climbed to decade highs. The operation is small and probably not strong enough to bring a big reduction in yields, according to Sumitomo Mitsui, but a larger one may weaken the yen toward 150 versus the dollar. BBG
  • Japan’s Tokyo CPI ex-food/energy for Sept comes in at +3.8%, down from +4% in Aug and below the Street’s +3.9% forecast (headline was +2.8%, down from +2.9% in Aug but ahead of the Street’s +2.7% forecast). BBG
  • A senior executive at American risk advisory firm Kroll has been barred from leaving mainland China, the latest example of Chinese authorities imposing exit bans on the employees of foreign firms. Michael Chan, a Hong Kong-based managing director who specializes in corporate restructuring, is assisting an investigation into a case that dates back a few years, according to people familiar with the matter. Neither Chan nor Kroll is the target of the investigation, the people said. WSJ
  • China has proposed relaxing its strict rules on data flows abroad, in its latest move to allay foreign business concerns and revive faltering growth in the world’s second-largest economy. The Cyberspace Administration of China has drafted a set of exemptions to its requirement for approval to send personal data overseas, which applied to cross-border purchases, money transfers and air and hotel reservations. BBG
  • Saudi Arabia is determined to secure a military pact requiring the United States to defend the kingdom in return for opening ties with Israel and will not hold up a deal even if Israel does not offer major concessions to Palestinians in their bid for statehood, three regional sources familiar with the talks said. RTRS
  • Europe’s CPI sinks to +4.3% on the headline (down from +5.2% in Aug and below the Street’s +4.5% forecast) while core falls to +4.5% (down from +5.3% in Aug and below the Street’s +4.8% forecast). France’s CPI for Sept cools to +5.6%, down from +5.7% in Aug and below the Street’s +5.9% forecast. BBG
  • Credit Suisse flagged potential losses of as much as $2.2 billion in the third quarter as it exits more businesses. The losses from loan portfolios won't affect UBS results as the impact was previously taken into account, said Vontobel analyst Andreas Venditti. UBS shares ticked up. BBG
  • The world’s financial stability watchdog is launching a probe of the build-up of debt outside traditional banks, as it seeks to limit hedge funds’ borrowing and boost transparency. Klaas Knot, chair of the Financial Stability Board, told the Financial Times the review was intended to address rising risks from so-called non-banks, which include hedge funds and private capital. FT
  • US income and spending data for August may complicate the Fed's soft-landing optimism, Bloomberg Economics said. Revised data is expected to show prices running hotter than previously thought. Still, core PCE inflation and Jerome Powell's preferred "supercore" gauge probably came in soft for a third straight month, while spending and income grew at a solid pace. BBG

A more detailed look at global market courtesy of newquawk

APAC stocks mostly took impetus from Wall St’s positive lead after risk appetite was spurred as yields and oil prices declined from recent peaks but with some of the gains in the region capped heading into quarter-end and amid several holiday closures. ASX 200 was kept afloat by outperformance in the mining and materials sectors but with trade constricted amid quasi-holiday conditions with Victoria state on a public holiday. Nikkei 225 failed to sustain early gains and pulled back from resistance around the 32,000 level despite several encouraging data releases. Hang Seng outperformed as property and tech surged after the recent easing of yields and following further supportive  measures by Chinese authorities, while the index was unfazed by the absence of mainland participants and Stock Connect flows due to the Mid-Autumn Festival and next week’s National Day holidays.

Top Asian News

  • Japanese Finance Minister Suzuki said don't have a defence line in dealing with FX moves and that current FX moves suggest the Yen's weakness has progressed, according to Reuters.

European bourses are trading higher across the board with the Stoxx 600 now virtually flat week-to-date after yesterday’s positive session helped erase losses earlier in the week, while EZ inflation metrics this morning printed below expectations. Sectors in Europe are mostly firmer with Consumer Products & Services top of the leaderboard as luxury names benefit from broker action. Other gainers include Tech, Real Estate and Basic Resources, whilst Insurance and Energy are the only sectors in the red. US futures are trading firmer as they continue to advance on yesterday's gains, owing to a generally more positive risk tone and as yields see some downside over the past couple of sessions.

Top European News

  • LVMH (MC FP) CEO Bernard Arnault and Russian oligarch Nikolai Sarkisov are under investigation for alleged money laundering, via Yahoo Finance.
  • ECB's Vasle said headline inflation is on a declining trend; growth is slowing but the labour market remains strong; transmission of ECB policy to the banking sector is strong, according to Bloomberg.
  • ECB's Vujcic said he is confident that inflation will slow in the coming months, according to Bloomberg.

FX

  • DXY succumbs to more intense selling pressure and retreats to 105.660 amid softer US Treasury yields and renewed risk appetite.
  • Euro bounced from around 1.0559 to 1.0616 irrespective of weaker than consensus German retail sales, French and pan-Eurozone inflation metrics that exacerbated the revival in EGBs.
  • Pound secured a firmer grip of the 1.2200 handle against the Dollar, even before better-than-expected BoE consumer credit, mortgage approvals and lending, but stalled just ahead of the 10 DMA that came in at 1.2259.
  • Antipodeans sit as the top G10 performers amid the constructive risk tone while the Yen benefits from the pullback in yields.

Fixed Income

  • EGBs were already clawing back some of their heavy losses before below-forecast German retail sales provided a bit more impetus, but weaker than expected French CPI offered more incentive and the ensuing softer-than-consensus pan-Eurozone readings further bolstered the benchmarks.
  • Bunds extended their rebound to exactly 100 ticks from Eurex low to 128.46 high, OATs probed 123.00 at 123.05 from 121.98 at worst and even BTPs got close to 110.00 from sub-109.00 irrespective of mixed Italian inflation metrics.
  • Gilts reached 94.18 compared to their early 93.62 Liffe base and the T-note is hovering close to the top of a 108-8+/107-26 range.

Commodities

  • Crude prices have been relatively flat throughout the European morning, but the contracts have been tilting higher in lockstep with broader risk sentiment on month and quarter end, but the range of price action this morning is narrow.
  • Spot gold is modestly firmer amid the pullback in the Dollar after tumbling to a low of USD 1,857.79/oz this week – the lowest since early March – largely due to this week's rise of the Greenback.
  • Base metals are also on a firmer footing amid the Dollar pull-back and the broader constructive risk profile.
  • UK treasury minister Penn said the efficacy of the Russian oil price cap must be kept under review.
  • US President Biden administration's 5-year offshore oil plan will be released on Friday but does not include any sales for 2024 and will have no more than 1 auction in each of the final four years, according to Reuters sources.
  • Russia may introduce quotas on overseas fuel exports if the complete export ban (imposed last week) does not bring down high domestic gasoline and diesel prices, according to Russian Deputy PM Novak cited by Reuters.

Geopolitics

  • Saudi Arabia is reportedly determined to secure a military pact requiring the US to defend the kingdom in return for opening ties with Israel, and will not hold up a deal even if Israel does not offer major concessions to Palestinians, via Reuters citing sources A pact might fall short of the NATO-style defence guarantees the kingdom initially sought when the issue was first discussed between MBS and US President Biden during the Biden's visit to Saudi Arabia in July 2022. Washington could also sweeten any deal by designating Saudi Arabia a Major Non-NATO Ally, a status already given to Israel, according to the source.
  • US Assistant Secretary of State Kritenbrink met with China's Vice Foreign Minister in Washington and the two sides held candid, in-depth and constructive consultations on regional issues. Furthermore, Kritenbrink reaffirmed the importance of maintaining peace and stability across the Taiwan Strait and the sides discussed regional issues including Myanmar, North Korea and maritime matters.
  • US Treasury Secretary Yellen is to use improved communications with China to discuss contentious issues and gain new insights into China's economy, via Axios.

US Event Calendar

  • 08:30: Aug. Personal Income, est. 0.4%, prior 0.2%
  • 08:30: Aug. Personal Spending, est. 0.5%, prior 0.8%
  • 08:30: Aug. Real Personal Spending, est. 0%, prior 0.6%
  • 08:30: Aug. PCE Core Deflator YoY, est. 3.9%, prior 4.2%
  • 08:30: Aug. PCE Core Deflator MoM, est. 0.2%, prior 0.2%
  • 08:30: Aug. PCE Deflator YoY, est. 3.5%, prior 3.3%
  • 08:30: Aug. PCE Deflator MoM, est. 0.5%, prior 0.2%
  • 08:30: Aug. Advance Goods Trade Balance, est. -$91.4b, prior -$91.2b, revised -$90.9b
  • 08:30: Aug. Wholesale Inventories MoM, est. -0.2%, prior -0.2%
  • 09:45: Sept. MNI Chicago PMI, est. 47.6, prior 48.7
  • 10:00: Sept. U. of Mich. Sentiment, est. 67.7, prior 67.7
  • 10:00: Sept. U. of Mich. Current Conditions, est. 69.8, prior 69.8
  • 10:00: Sept. U. of Mich. Expectations, est. 66.4, prior 66.3
  • 10:00: Sept. U. of Mich. 1 Yr Inflation, est. 3.2%, prior 3.1%
  • 10:00: Sept. U. of Mich. 5-10 Yr Inflation, est. 2.8%, prior 2.7%
  • 11:00: Sept. Kansas City Fed Services Activ, prior -1

DB's Jim Reid concludes the overnight wrap

As we arrive at the last business day of the month, it’s fair to say that September has lived up to its reputation as the worst month of the year for markets. The sour mood dominated the early part of yesterday, with yields hitting new highs for the cycle on both sides of the Atlantic. For instance, 10yr bund yields rose +9.1bps to a post-2011 high of 2.93%, whilst 10yr Treasury yields hit an intraday high of 4.69%, before a sharp turn that took them down over 10bps intraday to 4.57% by the close. We’ve pointed out recently that a 10yr Treasury yield at 4.5% is actually in line with the long-term historical average, but as markets got increasingly used to a decade-and-a-half of historically low rates since the GFC, this is coming as a big adjustment to lots of investors. Indeed, it was only three-and-a-half years ago that the 10yr Treasury yield hit an all-time intraday low of 0.31%. But since then we’ve seen an astonishing turnaround, and it’s worth remembering that the annual rise in the 10yr yield of 236bps over 2022 was already the biggest annual increase since 1788. So even though yesterday saw a breather by the end of the session, it’s no exaggeration to say we’re in the midst of a historic sell-off.

That rates sell-off dominated in Europe, with the UK seeing the biggest declines. At one point intraday, the 1 0yr gilt yield was even on track to close more than +20bps higher, which would have been the biggest daily increase since the aftermath of the mini-budget last year. But it then pared back those moves to “only” close up by +12.9bps. It was the same story elsewhere in Europe, with yields on 10yr bunds (+9.1bps), OATs (+8.8bps) and BTPs (+7.7bps) all rising significantly. What was also striking was that higher real yields drove those moves, and the German 10yr real yield closed at a post-2011 high of 0.50%.

Those bond losses occurred despite some downside surprises in the latest inflation data. For instance, the September flash CPI release for Germany fell to a two-year low of +4.3% on the EU-harmonised measure (vs. +4.5% expected). Meanwhile in Spain, we did see CPI move up by eight-tenths to +3.2%, but that was still beneath the +3.3% reading expected by the consensus. So both were less than expected. All eyes will now be on the CPI release for the entire Euro Area today, which is out at 10am London time.

We also got several data releases from the US yesterday, but for now the biggest question surrounds the potential government shutdown, which could happen over the weekend. As it stands, there’s still no sign that the House and Senate will be able to agree on a new funding package, with current funding set to expire this Sunday, October 1. For the economy, the main issue is that federal employees would be furloughed, which would act as a drag on growth. And for markets, there’s the added point that we could miss out on some upcoming data releases, including the jobs report next Friday. So if a shutdown does happen, markets may well have to rely more on alternative survey indicators that will still come out like the ISM manufacturing and service prints. See Brett Ryan’s piece here on how previous shutdowns have impacted the economy and data releases.

Another ongoing issue for the US economy is the autoworkers strike, and several outlets including CNN have reported that the United Auto Workers union could announce an expansion of strikes today if progress isn’t made. On that topic, Olga Cotaga and Luke Templeman on our team have published a report which argues that, regardless of inflation, this is just the beginning of greater labour demands. Large corporates stand to have their margins squeezed as a result. Their report can be found here.

As we await developments on a potential shutdown and the strikes, the US labour market still appeared resilient, with the weekly jobless claims coming in at 204k (vs. 215k expected) over the week ending September 23. That takes the 4-week moving average down to 211k, which is the lowest it’s been since February. Separately, we got the latest benchmark GDP revisions from the US, which showed the economy growing a bit faster than previously thought. For example, over 2017-22, it showed GDP grew by 2.2% on average, a tenth higher than before. For Q1 2023, growth was revi sed up to 2.2% on an annualised basis (vs. 2.0% before), and Q2 2023 was left unchanged at an annualised +2.1%. There was some less encouraging news on the housing front, however, with monthly pending home sales for August showing their sharpest fall in 11 months, down -7.1% .

The claims and GDP revisions data initially gave more steam to the Treasuries sell-off, with 10yr Treasury yields reaching a high 4.69% shortly after. But yields saw a steady turn lower during the rest of the session, with 10yr closing -3.3bps lower at 4.57% and the 2yr down -7.8bps to 5.06%. So once again, there was a big steepening in the yield curve, with the 2s10s curve up +4.6bps to -48.5bps, which is the least inverted it’s been since May. And despite yesterday’s reversal, 10yr yields have since moved up +1.9bps overnight to 4.59%, are still up +16.0bps since last Friday – which means they’re on course for the biggest rise in yields since early July.

Despite a volatile rates backdrop, equities rebounded yesterday and the S&P 500 (+0.59%) posted its strongest day in two weeks. The advance was fairly broad-based, and tech stocks were an outperformer with the NASDAQ (+0.83%) and the FANG+ index (+1.18%) both seeing even bigger gains. Nevertheless, even with yesterday’s recovery, the S&P 500 remains on track for its worst monthly performance of 2023 so far, having shed -4.61% since the start of the month. Furthermore, it’s on course for a 4th consecutive weekly loss for the first time since December. Over in Europe, both the STOXX 600 (+0.36%) and the DAX (+0.70%) ended a run of 5 consecutive declines .

Overnight in Asia, there’s been a pretty mixed performance from the major indices. On the one hand, the Hang Seng (+2.71%) is currently on course for its best day since July, whereas the Nikkei (-0.12%) has posted a modest decline this morning. Otherwise, markets in mainland China are closed today and into next week, and they’re also closed in South Korea. Looking forward, European and US equity futures are trading modestly higher, with those on the DAX (+0.30%) and the S&P 500 (+0.06%) in positive territory.

Otherwise overnight, the Bank of Japan announced an unscheduled bond-purchase operation, which came as the 10yr yield has hit its highest level in a decade overnight, at 0.77%. They’ve since fallen back to 0.76%, although that would still be their highest closing level in the last decade. At the same time, we’ve had several data releases from Japan overnight. That included the unemployment rate for August, which held at 2.7% (vs. 2.6% expected), as well as the Tokyo CPI reading for September, where core-core inflation slowed to +3.8% (vs. +3.9% expected) .

To the day ahead, and the main data highlight will be the Euro Area flash CPI release for September. Alongside that we’ll get German unemployment for September, UK mortgage approvals for August. Over in the US, we’ll get PCE inflation for August, along with personal income and spending data, as well as the University of Michigan’s final consumer sentiment index for September, and the MNI Chicago PMI for September. Central bank speakers include ECB President Lagarde, the ECB’s Kazaks and Visco, and the Fed’s Williams.

Tyler Durden Fri, 09/29/2023 - 08:18

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RFK Jr: The Wuhan Cover-Up & The Rise Of The Biowarfare-Industrial Complex

RFK Jr: The Wuhan Cover-Up & The Rise Of The Biowarfare-Industrial Complex

Authored by Debbie Lerman via The Brownstone Institute,

The…

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RFK Jr: The Wuhan Cover-Up & The Rise Of The Biowarfare-Industrial Complex

Authored by Debbie Lerman via The Brownstone Institute,

The Wuhan Cover-Up and the Terrifying Bioweapons Arms Race (Skyhorse Publishing, December 3, 2023) is a crucial book for understanding how the Covid catastrophe happened. 

I would even go so far as to argue that RFK, Jr.’s new book is the most important Covid chronicle to date, although it ends at the beginning of 2020, before most of us were even aware that a “novel coronavirus” was circulating among us. 

The book explains the CAUSES of the global disaster, which all happened before March 2020. Everything after that are the downstream EFFECTS of what The Wuhan Cover-Up exposes.

Here’s how RFK, Jr. summarizes those effects:

Everyone has now seen that pandemics are another way for the military, intelligence, and public health services to expand their budgets and their power. In 2020, public health, defense, and intelligence agencies weaponized a [Covid-19] pandemic, resulting in unprecedented profits to Big Pharma and the dramatic expansion of the security/surveillance state, including a systemic abandonment of constitutional rights—effectively a coup d’état against liberal democracy globally.

(Kindle edition, p. 385)

Putting Covid in the Biowarfare Context

Interestingly, in the publicity blurb on the book and in interviews about it, RFK, Jr. focuses on “the etiology of the gain-of-function research” and everything that led up to a virus being engineered in a US-funded lab in Wuhan by a group of Chinese and Western scientists.

At the core of this story is RFK, Jr.’s desire to warn readers about the dangers of gain-of-function research, which he shows in the book to be irrefutably a biowarfare – not a public health – endeavor.

But in the process of constructing the argument and supplying the proof for his dire warning, and for his assertion that this type of research should be stopped immediately and forever, RFK, Jr. provides what I find to be an even more compelling story.

The story in the Wuhan Cover-Up that interests me is the rise of the biowarfare-industrial-complex – the global behemoth comprising military/intelligence alliances, Big Pharma, Big Tech, academic and medical institutions, and NGOs – that both created the virus known as SARS-CoV-2 and ran the global response to it.

In this article, I will highlight key parts of The Wuhan Cover-Up that pertain to this storyline – which I believe are downplayed in its publicity materials and are one of the main reasons it has been practically banned from polite society: The book has been so heavily censored that I cannot find a single actual review on Google. Newsweek reported that independent bookstores do not want to carry it. 

A lot of the censorship has to do with mainstream animosity toward RFK, Jr’s presidential campaign. But the explosive content of the book, as reviewed in this article, is also likely a factor.

Top-Level Summary of the Rise of the Biowarfare Industrial Complex, as Told by RFK, Jr.

  • The biowarfare industry started to grow after WWII, when Western intelligence agencies imported Japanese and German scientists to help develop weapons against Communist enemies. This was, in fact, the first task of the newly formed CIA.

  • After 9/11, funding for bioweapons research exploded, and so did the power and reach of the military and intelligence agencies in charge of such research. The research, presented to the public as “pandemic preparedness and response (PPR),” encompassed mostly attempts to engineer deadly pathogens and simultaneously to create countermeasures to them, predominantly vaccines. 

  • So much money was pouring into PPR/bioweapons research that the public health agencies and academic institutions involved in government research all became dependent on it – or, perhaps more accurately, addicted to the money and power this type of research bestowed. Multinational public-private partnerships and “non-governmental organizations” (e.g., The Bill & Melinda Gates Foundation and The Wellcome Trust) were created to fund and promote the need for such research.

  • In the fall of 2019 an engineered pathogen from one of the bioweapons labs in China found its way into the population. All the military, intelligence, and public health officials from China, the US, UK, and other countries, with their pharma and academic partners, conspired to cover up the lab leak, while simultaneously preparing to unleash their countermeasures on the world.

How the Nature of Biowarfare Research Has Not Changed

As RFK, Jr. tells it, the history of today’s biowarfare industry starts after WWII, when German and Japanese scientists were secretly repatriated to assist the intelligence community and military in developing chemical and biological weapons programs. 

It is no coincidence, he argues, that many sinister features of those earlier programs carried forward to the present. These features include:

  • tight alliances with the pharmaceutical industry and the media; 

  • the complicity of academia and medical schools; 

  • the co-opting of journals; 

  • intense secrecy; 

  • pervasive experimentation on human subjects; 

  • liberal use of the word “volunteers;”

  • open-air testing on large unwilling populations; 

  • ethical elasticity; 

  • the normalization of lies; 

  • the use of microbiology to alter and weaponize bugs; 

  • the use of vaccine development as a mask for bioweapons research; 

  • the corruption of the entire medical establishment 

(p. 48)

Even just this list is enough to explain what happened with Covid: Take all these ingredients, add billions of dollars and multinational public-private partnerships involving top research institutions and thousands of scientists, and how could you not get a global disaster? 

Deep CIA-Biowarfare Ties

The Wuhan Cover-Up spends a lot of time documenting the correspondence between the rise of the CIA and the emergence of the modern biowarfare program. 

 RFK, Jr. writes:

…it’s worth reviewing the agency’s seventy-five-year preoccupation with bioweapons, pandemics, and vaccines. Bioweapons development was the CIA’s first love, and has remained its relentless passion. The CIA’s natal obsession with bioweapons pitted the agency against all the idealistic underpinnings of both American democracy and the healing arts of medicine. 

(p. 46)

An important related point emphasized in the book is that bioweapons research is not an obscure, niche industry. Rather, according to The Wuhan Cover-Up, it is a top national defense concern, driving the national security agenda:

Following the collapse of the Soviet Union, the military and intelligence apparatus erected the biosecurity agenda as the new spear tip of American foreign policy. These agencies deftly replaced the fear of the Soviet monolith and creeping communism with a fear of infectious disease, which they have successfully stoked to justify vast expansions in power…

(p. 44)

Shockingly Broad Participation by Academics and Scientists

Because the biosecurity agenda – which focuses on biochemical and medical research – is so central to foreign policy and national security, it controls large swaths of research funding. Thus, as RFK, Jr. documents, it has come to encompass many top academic institutions and thousands of doctors and scientists:

Among the most alarming side effects of the federal preoccupation with bioweapons has been the systematic diversion of vast resources and armies of academic and government scientists away from public health and healing. 

(p. 46)

Today, some thirteen thousand death scientists labor on bioweapons technology on behalf of US military, intelligence, and public health agencies in some four hundred government and university bioweapons labs. 

(p. 83)

Moral Bankruptcy

When faced with Covid “conspiracy theories” – such as those put forth in The Wuhan Cover-Up – people often argue that so many doctors and scientists could not possibly have knowingly agreed to civilization-killing ideas like lockdowns and injections of unsafe medical products into billions of people. They must have believed they were actually saving humanity, right?

Wrong, according to RFK, Jr.:

History has shown again and again the bioweapons agenda’s awesome power to transform compassionate, brilliant, idealistic doctors into monsters. 

(p. 47)

They have, as a class, demonstrated thoroughly warped judgment and a reliable penchant for dishonesty and terrible ideas. 

(p. 87)

Bioweapons Research = Vaccine Research

Another crucial idea bearing on our understanding of the Covid response is that vaccine research is a primary concern for the biowarfare-industrial complex, although it is publicly presented as a public health endeavor.

The book quotes Professor Frances Boyle, author of the Biological Weapons Anti-Terrorism Act of 1989, with this explanation:

You can’t use a bioweapon against your enemy without having in your possession an antidote with which to shield your own team from blowback. For this reason, bioweapons and vaccines are always developed in tandem with each other.

(p. 121)

Moreover, because vaccine research funding goes to both biodefense and public health agencies, they have become inextricably linked:

The military and public health agencies work in close coordination to develop vaccines for military applications, sharing information and working side by side in labs. Vaccine research often serves as a cover or rationale for illegal bioweapons development.

(p. 129)

From an Obsession of US National Security to a Tool of Globalism

As RFK, Jr. writes, after 9/11, Islamic terrorism became the focus of US national defense. After the anthrax attacks, the focus of antiterrorist activities coalesced around the need to predict, prevent, and create countermeasures to biological terrorism. 

This more reliable and terrifying enemy would soon replace the war against Islamic terror—justifying a “forever war” against germs. “Biosecurity,” a.k.a. Pandemic Preparedness and Response (PPR), provided a rationale for US presence in every developing nation.

(p. 149)

And, as further explained by RFK, Jr., the focus on bioterrorism, which first served the American imperialist impulse, then became incorporated into the program of globalism:

The emerging medical/military-industrial complex would soon be citing biosecurity as a pretext for centralized control, coordinated response among nations, a sprawling construction project for new US bioweapons laboratories, the archiving of every germ with weapons potential under the pretext of pandemic protection, the control of the media, the imposition of censorship, the erection of an unprecedented surveillance infrastructure ostensibly needed to “track and trace” infections, universal digital IDs, digital currencies to reduce disease spread, and the ceding of power by national governments to the WHO—in short, globalism. 

(p. 149)

China Becomes a Dominant Biowarfare Research Player

Concurrently, China’s leaders were working on a mission to make China a world leader in science, research, and innovation. According to The Wuhan Cover-Up, the Chinese have been using the West’s march toward globalism to infiltrate “Western academia, businesses, media, cultural groups, and government agencies that speak the language of cooperation, globalism, and public health.” (p. 257)

As part of their infiltration process, the Chinese lavished funding on Western research institutions and scientific publishing houses. And because biomedical/biowarfare research was so central to Western governments and research institutions, the Chinese were able to eventually dominate that space as well.

Thus, the book explains, China was able to “co-opt US academic institutions and US public health agencies into performing backdoor bioweapons research for the Chinese military.” (p. 274)

Why Would the US Do Bioweapons Research in/for China?

This is, perhaps, the most oft-raised question in response to the hypothesis that SARS-CoV-2 was an engineered bioweapon from a lab funded by the Chinese military, the US, and other Western governments.

As RFK, Jr. explains, with the Chinese as major funders of Western institutions, journals and projects related to biomedical research, this strange collaboration was not just unsurprising, but in fact, inevitable:

The Chinese campaign to co-opt leading scientists and the river of Chinese funding to researchers at US and British medical research universities and to the leading scientific journals had, by then, bought China powerful friends across the Western scientific establishment. 

(p. 280)

Furthermore, the interests of China intersect with the interests of major global corporations and NGOs that comprise the biowarfare-industrial-complex – many of which enriched themselves considerably through the Covid response. As RFK, Jr. writes:

There is a natural intersection of interests between Western business titans and a former communist government [the Chinese Communist Party] that has made itself the global model for seamlessly merging corporate with government power, and promoting business growth by suppressing democracy, labor, and human rights. 

(p. 572)

For its part, the US intelligence community has all kinds of reasons – all ultimately geared toward increasing its own power and influence – to engage in sensitive scientific research projects with the Chinese:

The deliberate transfer of our superior bioweapons knowledge to the Chinese—a potential enemy—makes little sense to citizens who think in terms of conventional rivalries between nations. Espionage was clearly among the complex motivations for the US intelligence community supporting Chinese bioweapons research in China. Knowing what the Chinese are up to is the mission of the US intelligence community. But quietly sharing cutting-edge technologies may also serve institutional self-interest. After all, the intelligence community expands its power by reporting the enemy’s expanding capabilities; more frightening capabilities abroad justify increased budgets and increased power at home. 

(p. 388)

Bioweapons expert Dr. Francis Boyle is quoted stating that:

Opportunities to expand institutional power and corporate profits always seem to trump patriotism and duty within the CIA’s bioweapons teams. Patriotism is a polite fiction among the bioweapons set.

(p. 383)

RFK, Jr. adds that the public health agencies, which are heavily involved in, and funded by, biowarfare research, share the CIA’s self-interested non-patriotism:

NIH and NIAID operate under the same perverse incentives that drive destructive conduct across the whole bioweapons field.

(p. 383)

A Convergence of Personal, Political, Financial and Global Interests

In the final chapters of The Wuhan Cover-Up, RFK, Jr. focuses on several key figures in the biowarfare-industrial-complex, including Jeremy Farrar of the Wellcome Trust (now at the WHO), Anthony Fauci of the NIH, and Bill Gates. 

RFK, Jr. uses these figures to show how the Covid pandemic emerged from the toxic stew of ethically compromised biowarfare research standards; military, intelligence, public health, and academic institutions/organizations dependent on biowarfare funding; the involvement of China and global interests in the booming business of “pandemic preparedness and response;” and, of course, the endless pursuit of political power and personal enrichment.

Here’s a great summary of how they all came together, through personal and institutional greed and power-mongering, to unleash the Covid catastrophe on the world:

The evidence suggests that instead of relentlessly protecting public health, Farrar exploited the pandemic to promote the venal financial agendas of his WEF [World Economic Forum] patrons, to transform Western democracies into surveillance states, to expand his personal power and paycheck, and to pander to high-level Chinese officials. Achieving these objectives required Farrar to hide [Covid’s] laboratory origins, a project in which he enlisted a cadre of his medical cartel cronies—those who, thanks to years of funding by Fauci, Farrar, and Gates, now occupy the highest echelons of virology in academia, the regulatory agencies, and pharmaceutical companies. 

(p. 539)

If for nothing else, I would recommend adding The Wuhan Cover-Up to your library as an invaluable resource on leading figures, organizations, and power brokers involved in the biowarfare-industrial-complex.

Conclusions and Comments

It was especially gratifying to me to read The Wuhan Cover-Up (all 600 pages of it), because it validated my own research, showing that the pandemic response was led by the national security/intelligence arms of government, not public health agencies. 

In fact, after reading the first few chapters – the ones that go into the history of chemical and biological warfare and the rise of the biowarfare-industrial-complex – I paradoxically felt an enormous sense of relief. 

Finally, we have a detailed account that shows – beyond what I would consider a reasonable doubt – that the entire Covid catastrophe was caused, and led, by a multinational military-intelligence-academic-pharma-tech-NGO cabal.

RFK, Jr.’s conclusion is that we should look to a future “in which the bio-elites are held responsible for their actions, people regain their rights, and the Constitution is restored to its intended preeminence.”

But how do we do that? 

I am afraid, based on the information in his own book, and the fact that RFK, Jr. himself is being censored and banned so extensively from the public square, that the solution to the problems he exposes is much more difficult and complex than just “holding the bio-elites responsible” which will somehow lead to people regaining their rights.

What we need to do is to shut down, or extract ourselves from, the global biowarfare-industrial-complex that is able to convince (or coerce?) our governments into declaring states of emergency over supposed pandemic threats, and then curtail civil rights and impose massive surveillance, censorship, and propaganda that would not be permitted in non-emergency situations. Not to mention garnering enormous wealth while forcing the world’s population to accept novel, untested, and potentially lethal medical “countermeasures.”

The Wuhan Cover-Up does a better job than any other book or article I have read at exposing the trends, forces, and institutions that brought us the Covid catastrophe – with hundreds of pages of notes and references. What’s frightening is that the enormity of the problem is beyond the scope of the book, not just to solve, but even to fully acknowledge.

Republished from the author’s Substack

Tyler Durden Fri, 02/16/2024 - 23:40

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How Progressive Policies Are Designed For Civilizational Suicide

How Progressive Policies Are Designed For Civilizational Suicide

Authored by John D. O’Connor via American Greatness,

We all understand,…

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How Progressive Policies Are Designed For Civilizational Suicide

Authored by John D. O'Connor via American Greatness,

We all understand, in the timeless words of the poet Robert Burns, that the best laid plans of mice and men often go awry.

Most Americans are accustomed to assessing the various failed initiatives of our country’s leaders as well-intended actions that turned out badly. The Vietnam, Afghan, and Iraq wars, the 2008 financial meltdown, and the COVID pandemic overreaction, all in hindsight, can be viewed as simply the unfolding of human stupidity in the contingency of time.

In accordance, it is understandable that many are inclined to believe that our country’s current serious problems are, once again, merely the failed result of well-intentioned policies.

But what if, we ask, seemingly fumbled programs were intended to be the initial throes of civilizational suicide? What if apparent missteps were actually directed at the purposeful destruction of a prosperous, free, safe, and secure society?

As we examine the policies pushed by the Biden administration progressives regarding climate, national security, crime, and the border, we can rationally conclude that they are being purposely implemented to render our society unsuccessful, not successful, in its traditional aims, causing what could be the ultimate destruction of a thriving, liberal enlightenment society.

Let us begin with escalating climate mandates, now reaching gas stoves and tires, seeking the total elimination of fossil fuels. Because our mainstream media, more out of reflexive conformity than malevolence, constantly amplify climate alarmism, most Americans believe climate programs are designed in good faith to protect us from planetary disasters. Climate subsidies are aimed, they are led to believe, at increasing prosperity through good “green” jobs in emerging “green” industries, all part of the supposedly improved “Bidenomics” economy, however counterintuitive many think them to be.

When Biden, immediately upon assuming office, stopped issuing new drilling leases, canceled the Keystone Pipeline, and issued EPA regulations effectively shutting down multiple power plants in the near future, was he, however idealistically, trying to wean our country off of fossil fuels in favor of clean, “renewable” energy? If so, what could be wrong with that?

If the administration had calculated that lost energy from stifling fossil fuel sources could actually be replaced, these initiatives, even if overly optimistic, could be viewed as well-intended.

However, within the climate camp, it has been well known that fossil fuels, which power 82% of world energy needs, cannot conceivably be replaced by renewable energy to any substantial degree. So, as these policies take effect over the coming years, our hospitals and medical centers, relying on petroleum-based plastic furniture, fixtures, and equipment, energy-dependent stainless-steel implements, and high-power physical plants, will be hit hard. Health care costs will soar, while treatment will decrease to emerging society levels. Our food costs, already rising dramatically, will skyrocket as petroleum fertilizer, now tripling yields, becomes economically impractical. Housing costs, dependent on fuel-powered equipment and concrete and steel needing massive energy inputs to manufacture, will put homeownership out of reach for all but the rich and reduce housing to cramped, third-world levels. And, of course, transportation will become an expensive luxury for both people and products.

But isn’t this all meant well? For trusting, uncritical moderates and traditional liberals, yes. For the progressives pulling the strings, no.

Maurice Strong, the Canadian socialist responsible for steering the United Nations into the bureaucratic sinecures of the climate alarmist IPCC, has stated from the outset that his intention is the diminishment of the wealth of the Western industrialized nations, making them more like less-advantaged societies.

Although they tout their certainty, climate warriors conceal that for decades, their computerized GCMs (General Circulation Models) have overpredicted global warming by 300%. Well, they respond when confronted by the knowledgeable, the increased heat was swallowed by the oceans, or perhaps tamped down by those pesky aerosols. They know better, but gullible, well-intentioned believers do not.

Documents from a key IPCC research center in East Anglia, the GRU, reveal the fear of climate activists that the public will learn of the Medieval Warm Period and that its temperatures were warmer than today without any claimed assistance from carbon dioxide. Progressive climatologists, in essence, know they are pushing a canard.

Progressive border policies need little discussion. When Biden was elected, the country was led to believe that he would aim to control the southern border, but do so in a humane, non-Trump manner, no longer putting children in cages (which in truth and in fact were Obama-inspired).

Of course, to any rational observer, it is now clear that the massive invasion at our southern border was intended by progressives. The “great replacement” theory is not needed to prove this invasion intentional, obvious to any observer. Three-star New York hotels and thousand-dollar-a-month payments to migrants? Free health care? These are among the positive incentives to illegally migrate, revealing intentionality after the maligned Trump proved that the border was substantially controllable.

The intended result of mass migration is not just new Democratic voters; the most obvious result. It is, more significantly, a deliberately overwhelming burden on our social welfare system, heretofore supported sufficiently by taxes on a powerful economy. With more unemployment and more burdens on social welfare, the progress of the aspiring poor, primarily minorities, will be crushed. Our society is headed, as intended by progressives, to socialism, which, as Winston Churchill noted, has “as its greatest virtue the equal sharing of misery.”

Moving to national security, the tinderbox of the Middle East was not caused by Trump’s irrational temperament, which, in hindsight, has proven its deterrent value. Rather, putting Obama’s progressive policies on steroids, Biden both directly sent cash to Iran and also removed oil sanctions, giving the country financial power to fund Hamas, Hezbollah, the Houthis, and, of course, Iran’s own depredations on U.S. troops. Biden’s special Iran envoy, the pro-Hamas Rob Malley, and other pro-Iran and pro-Hamas officials influence our Middle East policy to intentionally favor our enemies.

But what could be the progressive motive for Iran’s hegemony in the Middle East? Clearly, it is to cause the demise of “right-wing” leadership in Israel, Saudi Arabia, and Egypt, all American allies, so that the region will be controlled by anti-American repressive regimes. Interestingly, progressives revealed their anti-democratic, authoritarian roots by supporting Mullahs who kill members of the LGBT community and subdue women. Again, Iran’s terrorism is not an unfortunate artifact of balanced statesmanship. Rather, it is intended to exterminate a democratic Jewish society and a Saudi regime seeking to modernize itself. In a remarkable exercise in projection, progressives at the same time deem Trump to be a Hitler stand-in.

Similarly, the cause of increasing crime in our cities is no mystery. Progressives applauded, not decried, the George Floyd mayhem, largely an exercise in looting. Beautiful cities such as San Francisco, Portland, Seattle, and Los Angeles, all run by progressives, have become dystopian hellholes.

So, sincere, well-meaning liberals should, but generally do not, see that they are being led like lemmings to the sea, toward civilizational suicide, by the progressives they have long trusted as being in the liberal leadership, not the socialist vanguard.

In the nineteenth century, the brilliant French observer of American culture, Count Alexis de Tocqueville, said that democratic despotism would be effectuated, if at all, not by overt state terror but by the infantilization of a trusting population.

The evidence is now clearly established that moderate liberals should face reality and reject the policies of the progressive vanguard, leading them into civilizational suicide.

*  *  *

John D. O’Connor is a former federal prosecutor and the San Francisco attorney who represented W. Mark Felt during his revelation as Deep Throat in 2005. O’Connor is the author of the books, Postgate: How the Washington Post Betrayed Deep Throat, Covered Up Watergate and Began Today’s Partisan Advocacy Journalism and The Mysteries of Watergate: What Really Happened.

Tyler Durden Fri, 02/16/2024 - 23:00

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California Counties Could Be Forced To Pay $300 Million To Cover COVID-Era Program

California Counties Could Be Forced To Pay $300 Million To Cover COVID-Era Program

Authored by Travis Gillmore via The Epoch Times,

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California Counties Could Be Forced To Pay $300 Million To Cover COVID-Era Program

Authored by Travis Gillmore via The Epoch Times,

With the state and some local governments facing significant budget shortfalls this year, finances could become even tighter after the Federal Emergency Management Agency, better known as FEMA, informed California officials that it will deny some pandemic-related reimbursement claims.

At issue is money spent on unoccupied hotel rooms and housing homeless individuals for lengthy stays between June 11, 2021, and May 11, 2023, as part of the state’s Project Roomkey program.

The governor’s Office of Emergency Services said it is working to reverse the agency’s decision.

“California is committed to maximizing federal aid to local communities and intends to aggressively advocate for FEMA to rescind the decision to deny Public Assistance to local governments,” Brian Ferguson, deputy director for crisis communications and public affairs for the Office of Emergency Services, told The Epoch Times by email Feb. 14.

More than $300 million is at stake, according to a Jan. 31 letter sent to FEMA by Nancy Ward, director of the emergency services office.

“[We] urge FEMA to rescind the decision to deny public assistance funding ... as it changes the rules for reimbursement of … expenses after such services were provided and directly conflicts with prior FEMA guidance,” Ms. Ward wrote.

The change represents a retroactive revision that failed to meet the emergency management agency’s self-declared notification policies that require a 30-day notice to the state, according to the letter.

Such will result in some counties across California experiencing “financial burdens, budgetary shortfalls,” and a diminished ability to provide essential services, Ms. Ward wrote.

A Project Roomkey participant stands outside her door at The Stanton Inn in Stanton, Calif., on October 8, 2020. (John Fredricks/The Epoch Times)

Documents attached to the letter detail costs that some counties would incur, including $22 million for Ventura, $32 million for Sonoma, and up to $34 million for San Diego. San Francisco submitted claims for approximately $881 million, with $190 million ineligible based on the federal government’s recent decision.

Additionally, the state is alleging that FEMA is inconsistently applying its policies for other states. Officials point to the agency’s April 2023 announcement that Vermont would receive nearly $22 million to reimburse costs for hotel lodging and services to homeless populations through July 2022.

The guidelines presented to California in a letter sent by FEMA in October 2023 represent a reimbursement period of a full year less than is being provided to Vermont, according to the letter.

Disputing the state’s allegations, the agency claimed all states are held to the same standards—with guidance coming from the Centers for Disease Control, also known as the CDC.

“Every state, territory and tribal nation was provided with the same guidance and policy updates throughout the pandemic,” a spokesperson for FEMA told The Epoch Times by email Feb. 13.

“This guidance also included information on transitioning individuals from other programs that could ... keep them out of high-risk situations.”

The agency is reviewing thousands of applications from across the country and is focused on finalizing reimbursement for eligible applicants while maintaining fiscal responsibility, according to the spokesperson.

“FEMA is committed to working with each impacted jurisdiction on all requests for federal funding to maximize reimbursement for the appropriate life saving measures they implemented to protect their citizens from COVID-19, while also ensuring the appropriate oversight of federal funds,” the representative from the emergency management agency said.

“Consistent with this intent, FEMA will review the state of California’s recent letter regarding their COVID-19 sheltering operations and provide a response to the state as soon as possible.”

In the letter informing the state of the agency’s decision to deny claims, Robert J. Fenton, regional administrator for FEMA Region 9—encompassing California—noted the efforts made to reduce COVID transmission by July 1, 2021, as a reason guidance was adjusted at the time.

The agency is willing to cover costs incurred or stays of up to 20 days, the timeline recommended by the CDC said at the time. However, the bill submitted by California includes longer stays that make the claims ineligible, Mr. Fenton wrote.

Additionally, stays of any length for homeless individuals qualify for reimbursement only if they tested positive for COVID-19, had been exposed—with documentation from health officials or medical professionals—or were at high-risk, including those over 65 or with specific underlying health conditions.

With the state and federal agency at odds over the interpretation of policy guidelines, several counties are working with a disaster recovery attorney to seek compensation.

The lawyer representing the counties, Wendy Huff Ellard of the national law firm Baker Donelson headquartered in Houston, Texas, told The Epoch Times the process could be lengthy and might ultimately result in arbitration.

She said counties are hopeful that FEMA will reverse its decision once its impact on local governments is better understood.

“The counties were under the impression that these costs would be covered,” Ms. Ellard said. “They’re relying on FEMA to reimburse these funds.”

Tyler Durden Fri, 02/16/2024 - 19:00

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