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Futures Trim Losses As Focus Turns To Earnings

Futures Trim Losses As Focus Turns To Earnings

US stock futures slipped for a second day as investors braced for a busy week of parsing earnings…



Futures Trim Losses As Focus Turns To Earnings

US stock futures slipped for a second day as investors braced for a busy week of parsing earnings reports for signs of an earnings recession, falling profitability and an economic slowdown. Contracts on the S&P 500 fell 0.2% at 7:10 a.m. ET, recovering from a -0.5% drop earlier, while Nasdaq 100 futures dropped 0.3% after trading in the cash market was closed on Monday for a holiday. The dollar was flat after rebounding from an 8 month low on Monday while the US 10-year Treasury yield rises to top about 3.55%.

In premarket trading, shares of Chinese electric-vehicle makers like XPeng Inc. retreated amid worries over demand and competition after the company slashed prices on its models in China. Bank stocks were also lower as Goldman Sachs and Morgan Stanley were set to report their fourth-quarter results before the bell. In corporate news, Bank of America shares got their only sell-equivalent rating after the company flagged a slowdown in lending last week. Whirlpool fell 6% in early New York trading after reporting fourth-quarter net sales of $4.90 billion, compared with forecasts for $5.15 billion. Freeport McMoRan slid 2.6%. Bloomberg Intelligence analysts predict copper could fall to $8,000 a ton from more than $9,000 now as physical demand indicators are weakening. Here are some other notable premarket movers:

  • Pfizer (PFE US) stock slides 1.5% after it was cut to equal-weight from overweight at Wells Fargo, which sees an earnings downgrade cycle on the horizon for the pharma giant.
  • Cryptocurrency-related stocks rally, as Bitcoin extends its winning streak into a 14th day and trades above the $21,000 level. Coinbase +6%, Riot Platforms +8.3%, Bakkt +10%, Marathon Digital +9.4%
  • MGO Global rises 43% to $6.65 in premarket trading, reversing losses from a volatile initial trading session in which the stock more than tripled before closing lower, the latest in a series of wild debuts for US small-cap listings.
  • Keep an eye on Tesla after Jefferies cut its target for the stock to $180 from $350, as the brokerage slashed sales and earnings estimates for the electric-car maker. The company last week cut prices across its lineup in an effort to stoke demand after several quarters of disappointing deliveries.
  • Watch Wells Fargo stock as it was cut to hold from buy at Jefferies with the risk-reward on the US lender now looking more balanced.
  • Keep an eye on utilities as KeyBanc Capital Markets turned more negative on the outlook for the sector into 2023, downgrading CenterPoint Energy and Southern Co to sector weight.
  • Watch Global Payments stock as it was upgraded to overweight at Morgan Stanley, which says that fintech and payments sector offers “increasingly compelling” valuations from a more favorable backdrop.
  • Piper Sandler downgrades Bandwidth (BAND US), DigitalOcean (DOCN US) and RingCentral (RNG US) to neutral as it tweaks its cloud automation software ratings, with Nice (NICE US) upgraded to overweight and Nutanix (NTNX US) its top pick.
  • Morgan Stanley is guarded on hardline, broadline and food retail coverage to start 2023 as it sees more headwinds than tailwinds, with the magnitude of the headwinds outweighing the tailwinds. Wayfair (W US) and Kroger (KR US) upgraded to equal-weight from underweight; National Vision (EYE US) downgraded to equal-weight from overweight.

Bank stocks reversed losses to trade higher on Friday, even after JPM CEO Jamie Dimon and BofA's Brian Moynihan warned of an uncertain economic environment as four of the six biggest US lenders reported their fourth-quarter results. Lenders Goldman Sachs Group Inc. and Morgan Stanley report earnings on Tuesday. Investors will dissect results for the impact of the Federal Reserve’s interest rate hikes and signs of consumer spending slowdown.

“The spread between our earnings model and consensus forecasts is nearly as wide as it’s ever been and suggests a drawdown in stocks for which most are not prepared,” Morgan Stanley’s Michael Wilson wrote in his latest gloomy note. “The main culprit is the elevated and volatile inflationary environment which is likely to play havoc with profitability.”

Meanwhile, according to Bank of America’s latest global fund manager survey, investors are the most underweight on US equities since 2005 as improving market sentiment sends them flocking toward cheaper regions. Allocation to US equities “collapsed” during the first month of 2023, with investors a net 39% underweight the asset class, they said, exceeding even the UK’s 15%. At the same time, participants in the January poll were “a lot less bearish” than in the fourth quarter, sparking a rotation to emerging markets, Europe and cyclical stocks, and away from pharmaceuticals, technology and the US, strategists led by Michael Hartnett wrote in a note.

Investors had their expectations for a pause in central-bank tightening damped by ECB Chief Economist Philip Lane, who said interest rates will have to move into restrictive territory to bring inflation back to target. BlackRock Inc. Vice Chairman Philipp Hildebrand said he saw no chance of policy easing this year. Data including a record increase in UK wages signaled further rate hikes are necessary.

“We’ve just hit pause and I am sure there’s some profit taking,” said James Athey, investment director at Edinburgh-based abrdn. “We‘re into the earnings season which likely brings with it risks and volatility. If you run a risk-parity or 60/40 book, you’ve done brilliantly already this year. It seems prudent to trim some risk.”

US corporate earnings may set the tone for traders this week as the reporting season moves up a gear. Of the 30 companies on the S&P 500 that have posted earnings so far, 24 have beaten analysts’ expectations. However, UBS Wealth Management expects “quite a bit of downside here on the earnings” in the US, according to Hartmut Issel, head of Asia Pacific equities.

European stocks and bonds are both in the red as investors contemplated the prospect of ongoing monetary tightening after ECB Chief Economist Lane said rates will have to move into restrictive territory. The BOE are also facing pressure to continue hiking after UK wages rose at their fastest rate on record, excluding the pandemic. The Stoxx 600 was down 0.2% and on course to snap a four-day winning streak with technology, real estate and autos leading declines. Here are some of the most notable European movers:

  • ABB shares rise as much as 1.9% after Redburn upgrades stock to buy from sell, saying recent business exits could mean the Swiss industrial group can grow faster than earlier expected
  • Wacker Chemie, one of Europe’s largest producers of polysilicon, rose as much as 3.7% after prices of the material used in solar panels surged in China
  • Infineon shares rise as much as 2.4% after Barclays starts coverage of European semiconductor stocks with a preference for Infineon and STMicro, rating both overweight
  • Alten shares rise as much as 4.5% after Kepler Cheuvreux raised its recommendation for the French engineering company to buy from hold, citing its ability to deliver strong growth
  • Lindt shares rise as much as 1.1% after the Swiss chocolate maker delivered estimate-beating organic sales growth, Vontobel says, with FY23 guidance in line with mid-term targets
  • Wise shares fall as much as 7.1% after the UK money-transfer firm’s volume growth slowed, coming in below analyst expectations in the fiscal third quarter
  • Ocado Group shares decline as much as 11% after the online grocer reported 4Q retail sales that missed analyst estimates. Morgan Stanley said period performance was “disappointing”
  • Philips falls as much as 5.6% after UBS cut the Dutch medical technology group to sell, describing a recent month-long rally as “unjustified,” and flagging downside risks to earnings
  • Hugo Boss drops as much as 2.7% as Deustche Bank said a “mild” beat of 4Q consensus estimates failed to impress investors

Asian stocks were mixed as investors assessed data on China’s economic growth and braced for the Bank of Japan’s key policy decision due Wednesday. The MSCI Asia Pacific Index was little changed as of 4:30p.m. Hong Kong time, as losses in financial shares offset an advance in consumer discretionary stocks. Hong Kong’s Hang Seng Index fell 0.8%, ending a four-day rally. Alibaba gained 1% after news that billionaire-investor Ryan Cohen has acquired a stake worth hundreds of millions of dollars in the second half of last year. China’s CSI 300 Index ended flat after a report showed the nation’s gross domestic product grew 3% in 2022, higher than economists expected. The market took a breather after three days of gains fueled by optimism over reopening and eased tech regulations. 

“I believe that the market will welcome such numbers,” said Hao Hong, chief economist at Grow Investment Group, in a Bloomberg TV interview. Still, “if the property sector takes more time to recover, it will affect consumption as well. So this year is actually going to be more challenging than last year.”  Investors in Asia will also monitor speeches by several Federal Reserve officials this week, as well as comments by central bankers during the World Economic Forum’s annual meeting in Davos, Switzerland.

Japanese stocks rose, ending a two-day loss, as investors adjusted positions before the Bank of Japan’s policy decision tomorrow. Although almost all economists polled by Bloomberg expect no change at the BOJ on Wednesday, some investors are bracing for more action as the central bank struggles to keep bond yields below its target.  The Topix Index rose 0.9% to 1,902.89 as of the market close in Tokyo, while the Nikkei 225 advanced 1.2% to 26,138.68. Toyota Motor contributed the most to the Topix’s gain, increasing 2.5%. Out of 2,161 stocks in the index, 1,570 rose and 474 fell, while 117 were unchanged

Australian stocks dipped: the S&P/ASX 200 index closed slightly lower at 7,386.30, snapping four days of gains, as losses in mining and technology stocks weighed on the gauge.  Most markets across Asia fell as traders digested data that showed China’s economy growing at the second slowest pace since the 1970s.  In New Zealand, the S&P/NZX 50 index rose 0.6% to 11,881.00

India’s benchmark stock gauge posted its biggest advance in more than a week as Reliance Industries led gains among energy firms amid improving outlook for the sector. The S&P BSE Sensex rose 0.9% to 60,655.72 in Mumbai, its largest single-day jump since Jan. 9. The NSE Nifty 50 Index rallied by a similar measure. All but three of the 20 sector sub-gauges compiled by BSE Ltd. gained, led by capital goods makers. Reliance Industries gained 1.4%, after five-straight declines, to push the oil-and-gas sector gauge to an all-time high after the government lowered windfall tax on locally-produced crude and export of diesel.  Outlook for oil and gas companies has been improving as moderating crude prices allow state-run refiners to lower marketing losses while Reliance Industries benefits from higher margins. 

The Bloomberg Dollar Index inched up 0.1% as the greenback traded higher against most of its Group-of-10 peers. Scandinavian currencies were the worst performers while the Swiss franc led G-10 gains.

  • The pound gained and gilts slumped in the wake of UK labor data that showed wages rose at a near-record pace for the three months through November. Yields rose 5-7bps across the curve and traders also bolstered bets on the BOE’s peak rate
  • The euro inched lower, but held above $1.08. Bunds eased across the curve and Italian bonds underperformed. Germany January ZEW investor expectations rose to 16.9 versus estimate -15.0
  • Japan’s benchmark yield briefly rose above the central bank’s ceiling for a third day as the Bank of Japan starts a two-day policy meeting. The yen fell for a second day. Most economists expect the BOJ to stand pat although market watchers don’t rule out an adjustment including another widening of the yield band to 0.75 or higher, or a scrapping of the yield curve control
  • The Australian and New Zealand dollars reversed an Asia session gain amid broad-based dollar strengthening. Australia’s consumer confidence jumped 5%, the largest monthly gain since April 2021, aided by a temporary respite from interest-rate increase as the Reserve Bank’s board doesn’t meet this month

In rates, the Treasury curve extended bear-steepening move after 30-year yields gap higher from the reopen after Monday’s US holiday. Treasury yields were cheaper by up to 7bp across long-end of the curve with 10-year note futures trading toward bottom of Monday’s range; 10-year yields around 3.56% and cheaper by ~5bp vs Friday’s close. Gilts weaker over London session after UK wages rise faster than forecast while European supply pressures also weigh on core rates.  Long-end-led losses in US curve steepen 2s10s, 5s30s cash spreads by 5bp and 4bp vs Friday’s close. UK and German government bonds fall with 10-year borrowing costs rising 6bps and 2bps respectively.

In commodities, rose to session highs after earlier dropping  WTI rose 0.65% to trade above $80. Spot gold falls roughly $10 to trade near 1,906/oz.

Bitcoin is essentially unchanged on the session and resides in particularly narrow sub-USD 400 parameters after last week's marked upside.

To the day ahead now, and data releases include UK unemployment for November, the German ZEW survey for January, Canadian CPI for December, and the US Empire State manufacturing survey for January. Central bank speakers include the ECB’s Centeno and the Fed’s Williams. Finally, earnings releases include Goldman Sachs, Morgan Stanley and United Airlines.

Market Snapshot

  • S&P 500 futures down 0.3% to 4,007.75
  • MXAP little changed at 165.62
  • MXAPJ down 0.4% to 544.25
  • Nikkei up 1.2% to 26,138.68
  • Topix up 0.9% to 1,902.89
  • Hang Seng Index down 0.8% to 21,577.64
  • Shanghai Composite down 0.1% to 3,224.25
  • Sensex up 0.9% to 60,629.94
  • Australia S&P/ASX 200 little changed at 7,386.29
  • Kospi down 0.9% to 2,379.39
  • STOXX Europe 600 down 0.1% to 454.10
  • German 10Y yield little changed at 2.19%
  • Euro little changed at $1.0822
  • Brent Futures up 0.4% to $84.78/bbl
  • Gold spot down 0.4% to $1,908.36
  • U.S. Dollar Index up 0.17% to 102.38

Top Overnight News from Bloomberg

  • ECB Governing Council member Mario Centeno said the euro-area economy is performing better than many anticipated in the face of record inflation and the energy crisis that erupted after Russia attacked Ukraine
  • ECB Chief Economist Philip Lane said interest rates will have to move into “restrictive territory” to bring inflation back to target
  • Investors are looking to bet against Italy’s peer-beating bond rally, saying the gains have gone too far. They argue the ECB is expected to keep hiking interest rates and is unlikely to stand in the way of a selloff given how narrow the spread over German bunds remains
  • Investors are the most underweight on US equities since 2005 as improving market sentiment sends them flocking toward cheaper regions, according to Bank of America’s global fund manager survey
  • Some 467,000 working days in the UK were lost to strikes in November, a 10-year high, after a wave of walkouts caused by the most severe cost-of-living crisis in a generation. Days lost over a six-month period reached the highest level since 1989-90
  • The BOJ’s policy decision due Wednesday is shaping up to be the biggest risk for the dollar-yen pair since the global financial crisis. The currency pair’s overnight implied volatility jumped as high as 54.4 vol, the highest since November 2008, as traders positioned for another policy tweak following a surprise move in December
  • An arbitrage trade that rattled Japan’s bond market last year looks to be back. The spread between the prices on Japanese 10-year debt and similar-maturity futures has swelled in recent weeks, providing room for so-called basis trades that try to take advantage of the difference
  • This year is pivotal for the Japanese economy to move away from decades of deflationary thinking toward sustained real wage growth, according to the head of the country’s largest labor union
  • While China’s GDP grew 3% last year, the second-slowest pace since the 1970s, fourth- quarter and December data came in better than economists had expected
  • China’s population started shrinking in 2022 for the first time in six decades, the latest milestone in a worsening demographic crisis for the world’s second-largest economy

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed in which most bourses lacked firm direction in the absence of a lead from the US due to MLK Jr. Day and despite the better-than-expected Chinese economic growth and activity data. ASX 200 was subdued with the index contained after it hit resistance at the 7,400 level, while an improvement in Westpac Consumer Confidence and an increase in Rio Tinto’s quarterly output did little to inspire trade. Nikkei 225 outperformed with strength in the auto sector driving the advances and as the BoJ kicked off its 2-day policy meeting with markets second-guessing what the central bank will decide regarding its ultra-easy policy. Hang Seng and Shanghai Comp were lacklustre despite encouraging data in which Chinese GDP, Industrial Production and Retail Sales figures all topped estimates. Nonetheless, the 3.0% growth for 2022 was much lower than the ‘abandoned’ target of around 5.5% and President Xi’s hint of at least 4.4% growth, while China also noted its population shrunk for the first time since 1961 and the death rate was the highest since 1974.

Top Asian News

  • PBoC injected CNY 205bln via 7-day reverse repos with the rate kept at 2.00% and injected CNY 301bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 504bln net injection.
  • China's Customs said GDP grew 3.0% Y/Y in 2022 and that China was able to stabilise the economy, but added that the foundation for economic recovery is not solid yet, according to Reuters.
  • China's stats bureau stated China's population in 2022 shrunk for the first time since 1961 and the death rate was the highest since 1974, although the stats bureau chief later noted they should not worry about China's population decline and overall labour supply still exceeds demand. The stats bureau chief also said that benign inflation in China will create room for macro policies and that the property sector's drag on economic growth this year will not be larger than in 2022, according to Reuters.

European equities trade marginally lower following a mixed APAC lead, Euro Stoxx 50 -0.3%. Sectors in Europe are now mostly lower with no overall bias, but with Chemicals and Industrials outperforming and Autos and Energy towards the bottom. US equity futures are softer but off worse levels with the ES holding above 4,000 throughout the Tuesday session.

Top European News

  • ECB's Centeno says Q4 growth within Europe is likely to be positive.
  • European Economy Commissioner Gentiloni says we have to strengthen competitiveness by streamlining state aid rules, have a good EU-US partnership; need to support competitiveness, not begin a subsidy war with the US.
  • European Commission President von der Leyen says to avoid fragmenting the EU's single market and to support clean tech across the EU, EU has to step up finding; For medium term will prepare a European sovereignty fund but it will take time.
  • Germany's BDI President says mild recessionary tendencies will predominate at the start of the year, sees upward trend; Economy expected to shrink by 0.3% in 2023; sees real 1% increase in export of goods and services this year (vs 1.5% global trade).


  • A choppy Tuesday session thus far for the Dollar as the index matched yesterday’s 102.56 peak in APAC hours before waning towards the unchanged mark ahead of the European cash open.
  • CNH is softer intraday despite supportive Chinese data overnight, which saw Q4 GDP, IP and Retail Sales top expectations across the board.
  • USD/JPY is choppy in a 128.23-129.13 parameter, but within recent ranges, whilst the technical “death cross” is more evident as the 50 DMA (135.60) falls further below the 200 DMA (136.67).
  • Mixed trade seen across both the EUR and GBP with the latter leading the way following the UK jobs data following strong wages metrics which subsequently lifted BoE market pricing for a 50bps hike (at the time) to around 72% from 63% pre-release.
  • PBoC set USD/CNY mid-point at 6.7222 vs exp. 6.7234 (prev. 6.7135)

Fixed Income

  • Core benchmarks are downbeat after UK and German data, with USTs in tandem directionally but with magnitudes more contained ahead of Fed's Williams.
  • Bunds and, post-open, Gilts printed session lows of 137.66 and 103.37 respectively post-UK jobs data, with the benchmarks nearing but not retesting these points after a particularly strong ZEW release.
  • Following the UK jobs data, we have seen an uptick in BoE pricing for 50bp in February to a 75% probability from circa. 63% pre-release.


  • WTI and Brent front-month futures diverge intraday on account of the US MLK holiday on Monday which resulted in no WTI settlement.
  • WTI Feb holds onto a USD 79/bbl status whilst Brent trades on either side of USD 85/bbl in what has been a choppy session.
  • Spot gold has been drifting lower as the Dollar remains firm, with the yellow metal trundling lower from highs of USD 1,919/oz down to around USD 1,905/oz.
  • Base metals are softer across the board (but to varying degrees) despite the supportive Chinese data overnight as a firmer Dollar exerts pressure on the complex.
  • China's state planner, NDRC is to lower retail prices of gasoline an diesel by CNY 205/tonne and CNY 195/tonne respectively as of January 18th.
  • Radio Free Europe's Jozwiak writes "Review underway on the Russian oil price cap. Currently at USD 60 but I understand there is a good chance that it might be lowered a bit in upcoming weeks".
  • OPEC Secretary General is very bullish on China, and cautiously optimistic on the global economy; Chinese demand will grow by 500k barrels this year; waiting to see what happens after China's New Year holiday (Jan 21st-29th).


  • Russian Defence Ministry discussed increasing the number of military personnel to 1.5mln (vs ~1.3mln in 2022), according to Tass; says major changes in Russian army will take place from 2023-26.
  • Ukrainian President Zelensky said the attack in Dnipro underscores the need for new and faster decisions on weapons supplies, while he added they expect key decisions from partners on arms supplies at the Ramstein meeting.
  • Russian-installed Donetsk authorities confirm that Russia has control of Soledar, via Tass.
  • Russia deployed an SU-27 fighter plane to escort a German naval aircraft over the Baltic, according to Interfax.
  • Russian Kremlin when asked about a potential meeting between the CIA's Burns and Russia spy chief says "this kind of dialogue is beneficial".
  • UK is reviewing whether to designate Iran’s Revolutionary Guards as a terrorist organisation, according to FT.
  • China's Foreign Ministry spokesperson says they are discussing the details of a visit from US Secretary of State Blinken.
  • Iran's IRGC have conducted "major drills" in the Persian Gulf, according to Tasnim; details light.

US Event Calendar

  • 08:30: Jan. Empire Manufacturing, est. -8.6, prior -11.2

Central Bank Speakers

  • 15:00: Fed’s Williams Gives Welcoming Remarks

DB's Jim Reid concludes the overnight wrap

I hope you are all looking forward to the rest of the year now after Blue Monday was navigated yesterday, which flew hot on the heels of Friday 13th at the end of last week. To be fair markets of late haven't been either depressing or scary. However we took pause for breath yesterday, given the US holiday, with nothing much happening. The main news has instead been overnight, where we’ve just had the release of the Chinese GDP figures for Q4 that covers the December surge in Covid cases. The data was better than expected but still showed the scars from Covid.

Q4 GDP (+2.9%) beat expectations (+1.6%) with the FY at +3% (+2.7% expected and +8.1% in 2021) - the second lowest year since China re-emerged from the economic wilderness in the 1970s. Momentum was much stronger than expected in December though. Retail sales dropped -1.8% y/y in December, much better than -9.0% fall expected by analysts and compared to a -5.9% decline in the prior month. Meanwhile, industrial production grew +1.3% y/y, well above the +0.1% predicted by Bloomberg. At the same time, fixed asset investment for 2022 rose by +5.1%, slightly above the +5% expected by Bloomberg.

Asian markets are lower though led by the Hang Seng (-1.25%) followed by the KOSPI (-0.77%), the Shanghai Composite (-0.27%) and the CSI (-0.16%). Elsewhere, the Nikkei (+1.28%) is bucking the trend this morning, recouping some of the losses from the previous two sessions. In overnight trading, stock futures in the US are indicating a negative opening with contracts on the S&P 500 (-0.32%) and NASDAQ 100 (-0.54%) trading in the red. Meanwhile, yields on 10yr USTs (+2.95 bps) have edged higher to 3.53% after the holiday.

Looking back at yesterday now, it was an incredibly uneventful session for the most part, even adjusting for the impact of the US holiday. For instance, if you look at US futures markets (since spot markets were closed), S&P 500 futures had barely budged by the time Europe went home, with a modest decline of -0.10%. It was a similar story for bonds, where futures also saw little change, perhaps in part since expectations of the Fed’s terminal rate for June moved up by just +0.002bps on the day. That said, despite the lack of excitement, the VIX index of volatility ticked up from its one-year low on Friday, moving up +1.14pts to 19.49pts.

Back in Europe there wasn’t much happening either, but one trend to note was the continued decline in natural gas futures yesterday, which fell back to a 16-month low of €55.45 per megawatt-hour. Although these prices are still well above their historic norms, they’ve now come down by more than half in the last month, so this is a big and positive shock if it ends up being sustained. In turn, that led to a fresh decline in inflation expectations, and the 10yr German breakeven came down a further -2.9bps to a 3-month low of 2.05%.

That greater optimism on the inflation side wasn’t enough to prevent a modest decline in sovereign bonds yesterday, with yields on 10yr bunds (+0.6bps), OATs (+0.6bps) and BTPs (+0.6bps) all seeing a small increase. Gilts were an underperformer, with 10yr yields up +1.8bps rise on the day as UK assets more broadly saw a slight underperformance. That came as BoE Governor Bailey testified before the Treasury Committee of MPs, where he warned that there was a risk that inflation wouldn’t drop as fast as expected. Overall however, there was nothing revelatory on how they’re thinking about the next decision on February 2.

With the positive gas news boosting sentiment more broadly, European equities advanced for the most part. The STOXX 600 rose +0.46%, taking the index up to its highest level since April, with other advances for the FTSE 100 (+0.20%), the DAX (+0.31%) and the CAC 40 (+0.28%). That continues the very positive start to the year for European equities, and means that the YTD returns now stand at +7.00% for the STOXX 600 and +8.69% for the DAX.

Finally, the World Economic Forum’s annual meeting at Davos opened last night, which will continue for the rest of the week. Numerous political and business leaders are gathering there, and today’s speakers include European Commission President Ursula Von der Leyen, Chinese Vice Premier Liu He, Spanish PM Pedro Sánchez and German finance minister Christian Lindner. Separately, it’s not actually a Davos meeting, but we heard yesterday that US Treasury Secretary Yellen and Chinese Vice Premier Liu He would be meeting in Zurich.

To the day ahead now, and data releases include UK unemployment for November, the German ZEW survey for January, Canadian CPI for December, and the US Empire State manufacturing survey for January. Central bank speakers include the ECB’s Centeno and the Fed’s Williams. Finally, earnings releases include Goldman Sachs, Morgan Stanley and United Airlines.

Tyler Durden Tue, 01/17/2023 - 07:36

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Incest Is Best? The Economist Says Copulating-Cousins Cool “In Most Cases”

Incest Is Best? The Economist Says Copulating-Cousins Cool "In Most Cases"

With America facing population collapse thanks to a pandemic which…



Incest Is Best? The Economist Says Copulating-Cousins Cool "In Most Cases"

With America facing population collapse thanks to a pandemic which compounded already-shrinking birth rates, petrified young men who don't want to get #MeToo'd for trying to get past 1st base, and record numbers of young Americans identifying as anything but heterosexual, The Economist wants you to know that it's "probably fine" to bang your cousin, which they also note is "illegal in 25 American states."

After a dig at Kentucky for a 'quickly withdrawn' proposal to remove "first cousin" from the state list of incestuous family relations, the article goes on to 'ackshually' explain that the risk of genetic mutations among the offspring of first cousins is 'greater' than non-incest relations, however 'the increase is quite small.'

Justifying 'kissing cousins' further, The Economist suggests that it's unfair to prevent incest because "Many other couples face far higher risks of genetic complications for their offspring, and those unions are not banned," such as people with recessive genes for certain disorders, such as sickle-cell anemia or cystic fibrosis, their offspring has a 25% chance of being born with that disorder, "Yet those marriages are allowed."

"The law against first-cousin marriage is a major form of discrimination," said University of Washington Department of Medicine Director of Genetic Counseling, Robin Bennett (M.S., CGC, (she/her)).

Robin Bennett, not a PhD, who says it's fine to bang your cousin

According to Bennett, "the risks are very low and not much different than for any other couple."

The Economist then goes on to let us know that 'the Bible does not directly ban sexual relations between cousins,' ("how else would all of mankind have descended from Adam and Eve?" they write), though "The Roman Catholic Church did later prohibit first cousins from marrying, though exceptions were made for a fee."

That said, there are limits, even for The Economist...

Charles Darwin, the father of evolutionary biology, who married his first cousin in 1839, was reportedly conflicted about his own arrangement. The Darwins had ten children, but three of them died during childhood and three of his surviving children never had any offspring with their spouses. Some historians surmise that the children suffered from genetic abnormalities due to their parents being closely related—the families of Darwin and his wife had a long history of intermarriage.

Yet despite the fairly low genetic risk for most couples, the “ick” factor prevails in Western culture. The family dynamics can be difficult to explain to others. Many consanguineous couples choose to keep quiet, says Ms Bennett. For this reason it is difficult to know how many of these couples exist in America. -The Economist

Maybe the plan is to either get people banging their cousins, or keep the border open while praising Biden's amazing 'jobs recovery'?

Also 'probably' just fine?

Tyler Durden Sat, 02/17/2024 - 20:25

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Exchange Rate Pass Through into Import Prices, CPI

Justin Ho of Marketplace discussed the implications of the import/export price release Thursday. My view was that pass through into import prices was low…



Justin Ho of Marketplace discussed the implications of the import/export price release Thursday. My view was that pass through into import prices was low in the short run, and even in the long run was not very large, while pass through into the broader price index was unlikely to be large. Not sure I was alone in this view, but here’re my thoughts.

Figure 1: Import price ex-fuel (blue), nominal trade weighted US dollar exchange rate (up is depreciation) (tan), both in logs, 2020M02=0. NBER defined peak-to-trough recession dates shaded gray. Source: BLS, Federal Reserve Board via FRED, NBER, and author’s calculations.

The variables are defined so that one anticipates the two variables to comove positively. In fact, there is not much of a correlation apparent in (log) levels. Since both series are nonstationary, it makes sense to estimate in log first differences. Sampling the data as end-of-quarter, and estimating the regression from 2002Q1-2023Q4 (with four lags of exchange rate), one gets the long run pass through coefficient at about 0.3 (ignoring any other factors like domestic slack and measures for exporting country costs). The adjusted R2 is 0.41. Note that, as in previous studies, the estimated pass through is much less than unity, which makes sense given that most imports are invoiced in US dollars.

Figure 2: First log difference in Import price ex-fuel (blue), nominal trade weighted US dollar exchange rate (up is depreciation) (tan). NBER defined peak-to-trough recession dates shaded gray. Source: BLS, Federal Reserve Board via FRED, NBER, and author’s calculations.

For comparison, Bussiere, della Chiaie and Peltuonen (2014) estimate the long run pass through at about 0.35 for the United States, over the 1990-2011 period. Results from the earlier 2006 Fed survey, discussed here.

What about for broader indices? For the PPI for tradable industries, the estimate is about 0.3 for 2013-20 in Amiti et al. (2022), but  0.7  for 2021, suggesting the pandemic era exhibits different behavior.

What about the impact on the broader indices? Mattschke and Sattiraju (2022) argue dollar appreciation/depreciation have very little impact on PCE inflation. Pointing out that only about 10% of a core consumer basket involves imported goods. (Oil prices denominated dollars, when they rise, are another matter.)

A caveat is in order. In the above literature, the exchange rate is taken as largely exogenous, not completely implausible given the large unpredictable component of nominal exchange rates. That being said, as Forbes, Hjortsoe and Nenova (2018) and Ha, Stocker and Yilmazkuday (2020) notes, the types of shocks (demand, monetary, supply) matter as well. For advanced economies, Ha et al. find the average exchange rate pass through into the CPI to be about 0.10.



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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,




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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