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Here’s to a Better Second Quarter

Overview: The global capital markets have begun the new month and quarter on a good note.  Equity markets are encouraged by yesterday’s gains in the US.  Most markets in the Asia Pacific region rallied, led by Hong Kong, even though earnings reports…

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Overview: The global capital markets have begun the new month and quarter on a good note.  Equity markets are encouraged by yesterday's gains in the US.  Most markets in the Asia Pacific region rallied, led by Hong Kong, even though earnings reports saw trading halted in around 50 companies.  Europe's Down Jones Stoxx 600 is edging closer to last year's record high, and US futures are trading with a clear upside bias, led by the Nasdaq.  Benchmark bond yields are a little softer, with the US 10-year yields around 1.71%. The dollar is mostly firmer, but the euro held the $1.1700 support.  The greenback has remained below JPY111, which it approached yesterday.  The Turkish lira, South African rand, and central/eastern European currencies are leading emerging market currencies higher. The JP Morgan Emerging Market Currency Index is posting back-to-back gains for the first time in three weeks.  Gold is extending yesterday's recovery but has met resistance at $1720.  As the market awaits the outcome of the OPEC+ meeting,m May WTI is straddling the $60-level.  

Asia Pacific

Japan's Tankan survey results were a bit better than expected.  Sentiment among all businesses improved more than expected.  This was particularly true of large manufacturers, where reading rose above zero for the first time since Q3 19.  Small businesses are less pessimistic than they were.  Capex plans were stronger, a 3% increase expected rather than a 1.4% decline.  Separately, the March manufacturing PMI rose to 52.2 from 52.0 of the preliminary estimate and 51.4 in February.  Taken together, investors and policymakers may be more a little more confident of a stronger Q2 after the virus-related state of emergency, earthquake, and fire at the chip factor depress growth in Q1.  The BOJ announced it would reduce its JGB buying across the curve in April.  It is not seen as tapering--a step towards removing some accommodation and making it more sustainable for longer.  

China's Caixin manufacturing PMI disappointed.  It unexpectedly fell to 50.6 from 50.9. Economists had expected a gain to 51.4.  Recall that the official manufacturing PMI rose to 51.9 from 50.9.  Yesterday's IMF reserve data (more below) reported an increase in the use of the Chinese yuan.  The media seems to exaggerate it.  Over the past two years, to gain perspective, yuan holdings have risen by about $64.5 bln to $267.5 bln.  Over the same two years, dollar reserves by nearly $382.5 bln.  The dollar increase is more than 50% of the stock of yuan reserves.  

Australia disappointed with a smaller than expected trade surplus as exports fell (1%) and imports rose (5%), more than anticipated.  The trade surplus stood at A$7.53 bln in February, and the January surplus was shaved to A$9.6 bln from A$10.1 bln as exports were revised down to 4% from 6%.   Domestic demand may be holding in better than feared.  Retail sales fell by 0.8% in February.  Economists had projected a larger decline, and the January series was revised to show a 0.3% gain instead of a 1.1% decline as initially reported.  

A worrying sign has emerged that will likely percolate in the coming months.  The low-interest-rate policy in some countries is fueling house price appreciation.  Corelogic reported Australian house prices rose by 2.8% in March, the most since 1988, according to reports, after a 2% gain in February.  In New Zealand, CoreLogic reported, house prices accelerated to 16.1% year-over-year from 14.5% in February.  It is the most in over a decade.  The Governor of the Bank of Canada has raised the tenor of his concerns about Canadians taking on too much debt to invest in housing and warned that price increases are not sustainable.  

The dollar has been confined to about a quarter of a yen today.  It has remained below JPY111.00, where an expiring option for $770 mln is struck.  The greenback has held above JPY110.55, where an option for $200 mln will expire today.  Support is seen in the JPY110.40-JPY110.60 area.  The disappointing data (including China's Caixin PMI) saw the Australian dollar fall to almost $0.7530, a new low for the year.  It has recovered to test the $0.7580 area in the European morning.  A move back above $0.7600 would improve the tone.  Although the dollar did not set new highs for the week/year against the Chinese yuan, the offshore market's close was a fresh high.  The offshore yuan fell to new four-month lows.  While the yuan is falling, the PBOC has been setting the dollar's reference rate very close to what the bank models have anticipated. Today's fix was at CNY6.5584, and the models were at CNY6.5587.  We suspect that what officials are guilty of is not stopping market forces from selling the Chinese bonds and the yuan.  

Europe

The final German manufacturing PMI was unchanged from the flash reading of 66.6, but the other large EMU countries' reports were better than expected.  The French manufacturing PMI rose to 59.3 from the preliminary estimate of 58.8 and 56.1 in February.  Italy's rose to 59.8 from 56.9, and Spain's manufacturing PMI rose to 56.9 from 52.9.  These led to the aggregate manufacturing PMI to tick up to 62.5 from the flash report of 62.5 and 57.9 in February.  Although the pandemic still ravages, and several countries, including France and Italy, are extended social restrictions, the economic momentum appears to be building.  

The final UK manufacturing PMI was also better than expected.  It stands at 58.9 in March, up from the initial estimate of 57.9 after 55.1 in February.  The UK economy also enjoys upside momentum after contracting at the start of the year.  The upward revisions to Q4 GDP (1.3% vs. 1.0%) were driven by increased government spending, business investment, and stepped-up exports.  

The euro already seems to be on the long holiday weekend.  It has been confined to yesterday's range (~$1.1705-$1.1760).  It had tested the $1.1950-level last week and has been subsequently sold to almost $1.1700, where a tentative base has been found. However, the single currency has not been able to rise above the previous session's high since March 22.   Sterling also has been confined to a narrow range within yesterday's price action (~$1.3715-$1.3810).  It has stopped today just shy of $1.38, where a nearly GBP400 mln option is set to expire.  Note that the euro has tested the GBP0.8500 area.  It has held and may be spurring some position adjustments.  Today's high so far has been about GBP0.8530.  A move above GBP0.8560 would encourage ideas that a bottom may be in place.  

America

Ahead of tomorrow's holiday, during which the US will report monthly jobs data, there is a slew of economic reports.  Of note, weekly jobless claims are expected to show another decline.  The final estimate for the March manufacturing PMI will be reported.  Recall it finished last year at 57.1 and rose to 59.2 before falling to 58.6 in February.  The preliminary estimate for March put it at 59.0, but it will likely be revised higher and could match or surpass the January peak.  Construction spending is expected to have pulled back 1% in February after a 1.7% gain in January.  The ISM manufacturing will draw some attention, and the prices paid may cool a bit from high levels (86.0 in February).  Lastly, March auto sales are expected to have rebounded from February's softness (15.67 mln seasonally adjusted annual pace).  

Canada reports February building permits ( a decline of around 1.4% is expected after an 8.2% jump in January) and March manufacturing PMI.  A gain is likely as the Canadian economy picks up momentum.  Mexico's manufacturing PMI will be released next week.  Note that the finance ministry boosted its forecasts for 2021 and 2022 growth, apparently encouraged by increased access to vaccines and US stimulus/growth.  However, Espinosa, the Deputy Governor of the central bank, warned that inflation risks were tilted to the upside, citing shifting consumption patterns of households and businesses, increased service prices, the peso's weakness, and global forces.  While the government seems to be relying on the external sector, Espinosa advocated strengthening domestic demand.  

The IMF reported Q4 20 reserve data (COFER).  It is the most authoritative data on global reserves.  Many market observers seized on the fact that the dollar's share of global reserves slipped below 60% for the first time since 1995.  It was understood to signal the shift away from the dollar that has long been the subject of news reports, analyst commentary, and speculation.  However, be skeptical, very skeptical.  First, the amount of dollars held in reserves reached a new high of a little more than $7 trillion.  Rather than sell dollars, central banks accumulated more.  

Second, the value of the non-dollar currencies held in reserves is converted into dollars.  It makes little sense to talk about the reserves without taking valuation changes into account.  The dollar fell against other reserves currencies in Q4 20.  Sterling appreciated by 5.8%, the euro by 4.2%, and the yen by 2.2%.  The Chinese yuan appreciated by 4%.  Imagine you are a central bank, and at the start of the period, you have half your reserves in dollars and half in euros.  The euro appreciates by 10% at the end of the period.  The allocation of your reserves changed.  You now have 55% of the dollar value of your reserves in euros and 45% in dollars without doing a thing.  Central banks, like some private asset managers, may periodically seek to rebalance their reserves.  In Q4 20, the COFER data showed that the dollar value of euro reserves increased by 7%.  If we adjust for the shift in exchange rates, the quantity change (as opposed to price) is a more modest 3%, for example.  What can we say going forward?  The dollar has appreciated relative to many of the reserve currencies in Q1 21, including 6.7% against the yen and 4% against the euro. Sterling and the Canadian dollar were was an exception.  They rose by 1.2%, about 0.8%, respectively.   The Fed offers custodial services for foreign central bank Treasury and Agency holdings.  These reached a record high in mid-March of almost $3.58 trillion.  Lastly, we note an article in the BIS quarterly review (Dollar Funding of Non-US Banks through Covid) concludes: "Overall, these findings indicate that the dollar of the dollar in international finance and the attendant policy issues are likely to endure.  

The US dollar is trading firmly against the Canadian dollar, but it is also within yesterday's range (~CAD1.2540-CAD1.2635).  The greenback has flirted with the CAD1.2600 level in late Asia/early European turnover.  An option for about $815 mln at CAD1.26 expires today.  Last week, the US dollar peaked near MXN21.00.  Yesterday, it fell through MXN20.50 for the first time, nearly two weeks.  The greenback has slipped a little further today and eased below MXN20.39.  March's low was set in the MXN20.28-MXN20.29 area.  While that is the next target, the light participation may make it difficult to see until maybe next week.  



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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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