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Heavy Dollar amid Month-End Pressure

Heavy Dollar amid Month-End Pressure

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Overview: The dollar is lower across the board as dealers attribute the selling to month-end pressures ahead of the FOMC today and ECB tomorrow and long-holiday weekend for many.  Japan's Golden Week holiday has already begun.  Despite the loss in US equities yesterday, despite the higher opening, it has not spilled over, as Alphabet earnings helped lift sentiment.   The MSCI Asia Pacific Index rose for a third session as is approaching the halfway mark of this year's range.  Europe's Dow Jones Stoxx 600 little changed near the month's high.  US shares are firm, and the S&P 500 is poised to recover most of yesterday's loss. Caterpillar earnings before the US are awaited for global economic insight as it operates in nearly all countries.  Peripheral European bond yields begin off higher, with Italy under the most pressure after Fitch downgraded it late yesterday.  Core bond yields are a little lower, and the US 10-year is near 60 bp.  The Antipodean currencies are leading the move against the US dollar by the major currencies, with sterling the laggard, having been turned back from the $1.25 area yesterday.  JP Morgan's Emerging Market Currency Index rose a little more than 1% yesterday, its best showing in April, and is extending those gains today.  Gold is little changed, hovering around $1700, while oil is firmer.  

Asia Pacific

Australia's Q1 CPI was reported a bit higher than expected at 2.2% year-over-year. This was above the Bloomberg survey median forecast of 1.9% after 1.8% in Q4 19. This represents a five-year highThe trimmed mean was also higher at 1.8% (vs. 1.6% in the previous quarter).   Food (vegetable prices) and pharmaceuticals lifted the CPI. The rise in price pressures is understood to be temporary with deflationary forces from the compression of demand, and falling oil prices likely be evident in Q2.  

South Korea saw March industrial output jump 4.6% or more than three times more than economists expected.  In February, industrial production fell by 3.8%.  The number of working days may have helped inflate the series.  Tomorrow South Korea reports April trade figures as is seen as a barometer of regional and electronic trade.  Foreign investors had been large sellers of South Korean equities this month, but it has slowed in recent days. 

The dollar is extending its fall against the Japanese yen for the sixth consecutive session.  It has not closed above JPY108 since April 10 and is now near JPY106.35, which is the lowest level since March 17.  The next important technical target is closer to JPY105.20.   Immediate resistance is seen around JPY106.60 and then JPY107.00.  The Australian dollar reached almost $0.6550, its best level since March 10.  The next target is around $0.6600, and the 200-day moving average is closer to $0.6700.  Here is April, the Aussie has led the majors with around a 6.3% rally.  The New Zealand dollar is in second place with about a 2.2% gain.  The yen is the third-best with roughly a 1% gain. The Chinese yuan is little changed as the dollar is "trapped" in a CNY7.06-CNY7.0950 range.  It is virtually unchanged this month.   

Europe

Although S&P did not downgrade Italy ahead of last weekend, Fitch moved late yesterday, cutting the sovereign rating to BBB-, but it changed the outlook to stable from negative.   Remember how the ECB works.  It takes the best rating of the four main agencies (includes DBRS).  Also, the ECB has indicated since Italy had an investment-grade rating in early April, that it would continue to accept its bonds as collateral through September 2021, if it lost it.  The ECB's backstop may be the critical consideration allowing Italy to keep the investment-grade status.  

Italy, Spain, and France will report Q1 GDP estimates ahead of the aggregate figure tomorrow. The median forecast in the Bloomberg survey sees a 3.7% quarter-over-quarter contraction.  Separately, the preliminary April CPI will be reported.  The headline pace is expected to slow to 0.1% from 0.7%, and the core rate may fall to 0.7% from 1.0%. The ECB meets tomorrow.  There is some expectation that it will increase is Pandemic Emergency Purchase Program from 750 bln euros announced six weeks ago.  While an increase is likely at some point, we see it as too soon now.  In terms of the signaling effect, it could achieve the same by suggesting that its operations are scalable.  Separately, alongside a surge in M3 money supply growth (7.5% vs. 5.5%), lending to non-bank financial companies surged in March to about 118 bln euros, which is near twice the previous record from December 2007.  

The euro reached almost $1.0890 yesterday before being sold in the North American session back to $1.0820.  Today it was bid to about $1.0875 in the European morning before running out of steam.  Two sets of expiring options catch our eye today.  The first is for 1.1 bln euros at $1.0865.  The other is a set of options between $1.08 and $1.0815 for 1.5 bln euros.  Tomorrow there are options for 1.9 bln euros struck at $1.08 that will expire. Sterling is also trading within yesterday's range (~$1.2405-$1.2520).  There is an option for roughly GBP270 mln at $1.2415 that will be cut today.  We are monitoring a topping pattern (head and shoulders) in sterling.  A close above $1.25 would threaten it, and a break of roughly $1.23 would confirm it.  

America

The first estimate of Q1 US GDP will have little bearing on policy or the present discounted value of investments.  It is little more than an intellectual curiosity.  No matter how poor it is, the one thing that everyone seems to agree on is that Q2 will be far worse.  The median in a recent Reuters poll anticipates a 4.8% contraction.  The Bloomberg survey found a median forecast of a 4.0% decline in output, and The Wall Street Journal's poll's median expectation is a 3.5% fall. A great amount of ink has been spilled, so to speak, in arguing about whether this is a recession or depression.  It is like how many angels dance on the head of a pin.  There is no fixed definition of the end of a business cycle.  Two consecutive quarters is a rule of thumb and one that the US does not officially use.  The record-long US expansion has come to a dramatic end as opposed to fading away as we had thought had begun before the crisis.   Estimates of Q2 GDP appear to be running for the most part in the -20% to -30% range. 

The FOMC meets today amid criticism that the Fed has done too much; that it is buying everything and creating powerful moral hazards in its wake, while others push it to do more.  A recent call from the former President of the Minneapolis Federal Reserve for negative interest rates fanned speculation that this could happen as soon as today.  Don't hold your breath.  Negative interest rates are an ongoing experiment, and the preliminary results are not very favorable.  In fact, the crisis has not seen a central bank with negative interest rates go further down that path.  Numerous Fed officials indicated the likelihood is slim-to-none.  The more relevant question is could US rates go negative without such a move by the Fed.  While the sample size is small, only countries where the central bank took policy rates below zero have bond yields gone negative.  It is true that US T-bills briefly trading with an implied negative yield, but this was an exception and an expression of the dysfunctional market at the time.   Most assuredly, the Fed is definitely not buying everything.  Many central banks, including the Swiss National Bank and the Bank of Japan, have bought equities (for the former international stocks and the latter domestic ETFs). The Fed has not, and Treasury Secretary Mnuchin said just yesterday that he did not expect this to change. 

There are three areas that the Fed could move.  First, there is some thought that the officials may want to include some non-for-profits in its Main Street lending program.  Non-for-profit businesses can apply to assistance under the federal government''s programs, including the Payroll Protection Program.   Second, the Treasury is likely going to ramp up its T-bill issuance to raise funds for its massive stimulus efforts.  To avoid disruptions, the Federal Reserve may resume its purchases.  Third, short-term US benchmarks, including the effective fed funds rate, but also the secured overnight financing rate and general collateral rates are below 10 bp the Fed pays on reserves and is just above zero.  The FOMC may tweak the rate of reverse repos (10 bp) and/or interest rate on reserves higher, rather than lower as those talking about negative rates would suggest.  Moreover, Congress authorized the Fed to pay interest on reserves.  It is not clear that this authorizes it to charge a negative rate on reserves. 

The US dollar is near a two-week low against the Canadian dollar around CAD1.3920. It fell the first two sessions this week, and coming into today had fallen in four of the past five sessions. The price action underscores our insight that the Canadian dollar is more sensitive to the broader risk environment than it is to oil prices (most of the time).  The break of the CAD1.40 area targets the month's low (~CAD1.3855).  The greenback rose every session last week against the Mexican peso but fell Monday and Tuesday, and is lower today.   It peaked at the end of last week near MXN25.29 and tested the MXN24.10 today.  A break of targets the MXN23.80.





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Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

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Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

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

The…

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

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

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

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

People with inadequate…

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Low Iron Levels In Blood Could Trigger Long COVID: Study

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

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

(Shutterstock)

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

Long COVID Patients Have Low Iron Levels

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

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

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

But it can jeopardize a person’s recovery.

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

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

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

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

1 in 5 Still Affected by Long COVID

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

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

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