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“I Feel Young Again” – Jeff Gundlach Annual Just Markets Webcast Live

"I Feel Young Again" – Jeff Gundlach Annual Just Markets Webcast Live

It’s that time of the year when Jeffrey Gundlach, the billionaire money manager and chief investment officer at DoubleLine Capital, gives his outlook for 2021 in his annual

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"I Feel Young Again" - Jeff Gundlach Annual Just Markets Webcast Live

It's that time of the year when Jeffrey Gundlach, the billionaire money manager and chief investment officer at DoubleLine Capital, gives his outlook for 2021 in his annual “Just Markets” webcast today at 4:15 p.m., this time titled "I feel young again. Readers can register for the free webcast which will only discuss markets here (or by clicking on the image below).

As Bloomberg reminds us, we last heard from Gundlach at the start of December when he focused heavily on inflation, saying that it was likely we could see a 7% print for the CPI reading (it will tomorrow). He also told us that he thought markets could be facing rougher, choppier waters after the Federal Reserve signaled that it was willing to quicken its tapering program.

Since then, we’ve learned -- through the release of meeting minutes -- that central bank officials might favor earlier and faster rate hikes as well as a balance-sheet runoff. Indeed, that’s caused a lot of choppiness in the stock market, with richly valued equities taking a big beating so far this year.

Gundlach’s talking points may overlap with the prominent themes we’ve been seeing discussed in 2022 outlooks. Listeners will want to know his take on the Federal Reserve’s path toward tightening and how it’ll play out in markets, as well as his outlook on inflation and what lingering impact the variants of the coronavirus may have.

We will highlight the key presentation notes in this post, which starts off with a bang, and a comparison between Biden and Carter...

... as part of his contrast of today’s negative real rates with the 1970s. Back then interest rates were high, and inflation even higher. Now, rates are low and inflation high. Gundlach says Powell today further acknowledged the inflationary problem. He’s referring to the Fed chairman’s appearance in front of Congress for his re-confirmation hearing.

Gundlach then goes straight to the big guns, showing the surge in the market via the famous JPM chart which goes back to 1996, and where Gundlach says “we had this huge run” that was largely uninterrupted from 1998-2018"....

... comparing it to pre- and post-covid goods spending, saying that we’ve had similar goods spending in the past two years as we did in the previous decade...

... and ultimately the Fed's balance sheet change.

Gundlach says Powell is dusting off the 2018 “playbook” in terms of shrinking the balance sheet, noting that autopilot-QT led to a selloff in the stock market in 2018 which ultimately caused the Fed to pivot. He says that it looks like Powell is talking about repeating the quantitative tightening formula, which of course will lead to the same policy error.

Remarkably, Gundlach says something we have been warning about for the past month, namely that the Fed is hiking into a slowdown, only he goes one step further saying that “I do think recessionary pressure is building.”

The Doubleline strategist then shows various cross-asset returns in 2021, pointing out that bank loans were his top bet from last year’s webcast and that those securities outperformed...

... as well as the return of the S&P vs commodities, with Gundlach suggesting that commodities are set for a massive melt up.

Oil was the big winner last year and oil and commodities have rebounded again. Commodities are coming “roaring back,” he says and indeed, Exxon just had its best day since Feb 2021.

Going back to his recessionary point, Gundlach says consumer sentiment has “given up the ghost,” and looks like a recessionary level when scouring the chart. “This bears watching,” he says, noting to the “freefalling” sentiment which Gundlach says looks “somewhat recessionary”

He attributes this to the collapsing affordability (i.e. surging prices) of autos, which has led to the lowest ever reading in the series whether this is a good time to buy a car (he notes that people can make money by buying cars and turning around and flipping them, which is “interesting” and “unbelievable")...

... or house.

One reason for this: mortgage rates are now well below wage growth rates. Gundlach says there are some signs that “mortgage financing looks pretty cheap” given high inflation and low rates. So far there hasn’t been much of an increase in mortgage rates.

“Home prices are still going up a lot,” Gundlach says, pointing out the obvious.

Gundlach then spends some time discussing soaring inflation, including still clogged-up west coast ports, and focuses on export and import prices. "They’re really high", he says, adding that a lot of people don’t think export prices matter but the things we export, we also consume domestically. He also says that with export prices at all time highs, nearly 20%, all those conspiracy theorists who claim that inflation is artificially suppressed are likely correct.

Gundlach also notes that the ISM manufacturing PMI series shows some positive signs on inflation, noting that prices paid are “rolling over." But not yet, noting that CPI will be around 7% in tomorrow's report.

The DoubleLine founder also looks at surging wage growth, pointing to the record quits rate and the high appetites among Americans to switch jobs before citing JPMorgan CEO Jamie Dimon who sees the biggest wage inflation in his lifetime. Gundlach predicts that gains in entry-level wages will push up costs.

Gundlach then shows the Citi Inflation Surprise index, noting that every region tracked by Citi has surprised to the upside on inflation. That according to Gundlach, is one of the impetuses for Powell to change his tone from “transitory” to where he is now.

Gundlach shifts topics, and is now discussing the US dollar, where he remains bearish over the long-term and neutral currently. He claims that the dollar is broadly correlated with the “twin deficits” - the current account and federal budget gaps.

He also shows a chart comparing the (inverted) dollar to the yield curve (via the 2s10s), which he says suggests more weakness is coming, and more USD weakness..

... and also shows the historical correlation of the USD vs commodities.

Addressing the yield curve chart, Gundlach says the yield curve is now starting to flash “weaker economy ahead,” adding that when it gets to 50 basis points, that will be a signal to watch. The 2/10s spread is currently 85 basis points, so not too far away from the 50 mark that Gundlach mentions. It’s up from 73 basis points late last month.

Moving away from the yield curve and the dollar, Gundlach says that he is "quite bullish" on gold over the long-term for the same reason he is bearish on the dollar. However, currently he is neutral.

Gundlach next shows a chart of the “shadow” Fed policy rate target which is far lower than it hit back in the Carter era, he says, at -8.7% (thanks to soaring inflation). This takes the near-zero nominal federal funds rate target and adds in an estimate of the impact of quantitative easing. “The most aggressive stimulus in the history of this data series,” he says, while noting this is “academic.”

In an interesting detour, Gundlach notes that the economy has “broken” at a lower and lower level of two-year yields over time, echoing the famous chart from BofA which shows that every tightening cycle ends in a crisis at a lower and lower rate.

Here Gundlach says the Fed will follow the two-year yield until the short end reads the “riot act” to policy makers. Two-year yields tend to lead both tightening and easing moves by the Fed, he says and make the key observation that the Fed may be able to get to 1.5% for the federal funds rate before it needs to stop, about a percent below where it ended its rate hike cycle in 2018.

His conclusion: “We’re going to be more on recession watch than we have been,” which leads straight to our observations that the Fed will never be able to do 4 or even 3 rate hikes this year as the economy will contract long before that.

There is much more in the full DoubleLine presentation below.

Tyler Durden Tue, 01/11/2022 - 16:20

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International

A-levels: A grades are up compared to pre-pandemic results

The pandemic has has a serious impact on school pupils – but a record number have applied to university.

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Fewer students are getting their first choice of university than in 2021. Monkey Business Images/Shutterstock

The 2022 A-level results are in, and the number of students receiving A or A* grades has fallen – down by 8.4% on 2021.

For the first time since 2019, A-level results are being decided by formal exams. Students were warned that grades were likely to be lower than in 2020 and 2021, when cancelled exams and teacher assessments in A-levels led to record high results. Nevertheless, the proportion of students receiving A grades is up from pre-pandemic levels in 2019.

A busy end to the admissions round is under way for universities and students, and the next steps for students still living with the impact of the pandemic are becoming clearer.

In 2021, some universities were over subscribed and had to offer significant incentives for students to defer their places. While the number of students in 2022 accepted on a UK university course – 425,830 – is higher than in 2019 and the second highest on record, it is 2% lower than in 2021. Just a few days before the results were out, thousands of students did not yet hold an offer of an university place.

Over the past two years, students studying qualifications, whether BTEC, T-level or A-level, have had to cope with the consequences of the pandemic for a significant proportion of their course. This has included school closures and remote lessons, social isolation, illness and increased levels of mental stress.

Highest number of applications

Nevertheless, 2022 has seen the highest ever numbers of applications to higher education, with 44% of 18 year olds applying. This number includes record numbers of students from areas of the country with historically low participation in higher education. It demonstrates that many young people believe higher education can make a difference to their future opportunities.

For the lucky ones who get the grades to gain a place at their first choice of university, planning for their degree course starts right away. A record number of Scottish students have already been accepted to their first choice of university.

The best advice for those students who don’t receive confirmation that they have been accepted by their first choice university is to ring the university, who will have staff on hand to explore their options.

For students who haven’t got a university place, it is still possible to explore options though clearing – which allows students without offers to find places on university courses that haven’t been fully subscribed. Students in this position should try to keep calm, write down their options and avoid quick decisions.

For those young people who do go to university, there will be challenges. With the cost of living for all rising rapidly, people on a lower income – as many students are – will feel the pinch of higher bills for food or rent.

Support from universities

The pandemic saw a serious and concerning rise in mental health issues affecting young people. Universities need to be ready to give holistic support to students as they transition into university and settle into undergraduate life. This means support for academic transition needs to be delivered in the context of good available support for mental health and wellbeing.

However, Universities UK, an advocacy groups for universities, has recently pointed out the wide range of benefits for those who study for a degree, including the £9,500 more per year on average graduates in England earn compared with non-graduates. It also draws attention to the value of degrees to improve the life chances of young people, to build skills and to contribute to society.

For many young people, getting a degree gives them access to a vocation such as teaching or working as a health professional. For others it is a path to travel and adventure. For many, the university journey is a place where young people find their tribe and begin to understand their identity.

For the class of 22, making it to university might mean life-changing opportunities. Given the challenges and restrictions of the last few years, this has never been more important.

Helena Gillespie receives funding from the European Union.

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Government

Pfizer Inc (NYSE: PFE) To Acquire Global Blood Therapeutics For $5 Billion

According to sources familiar with the matter, the Wall Street Journal reported that Pfizer Inc (NYSE: PFE) was in advanced discussions to acquire pharmaceutical…

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According to sources familiar with the matter, the Wall Street Journal reported that Pfizer Inc (NYSE: PFE) was in advanced discussions to acquire pharmaceutical company Global Blood Therapeutics (NASDAQ: GBT) for $5 billion.

Pfizer, too, acquired Global Blood Therapeutics 

Pfizer wants to close a deal soon, but there are still other interested parties, according to the article.

Global Blood Therapeutics, which manufactures Oxbryta, the blood disorder medication, saw its shares jump 44%  on Friday afternoon to a two-year high. As of Thursday’s closing, the company’s market cap was $3.12 billion.

A spokesman for Global Blood stated the company does not “comment on market rumors or speculation,” while Pfizer declined to respond on the matter.

With plenty of cash left over after selling its COVID-19 vaccine, New York-based Pfizer is searching for deals that may generate billions of dollars annual sales by 2030.

Its $11.6 billion acquisition of migraine medication manufacturer Biohaven Pharmaceutical Holding (NASDAQ: BHVN) in May was the most recent in a series of purchases that also included Trillium Therapeutics and Arena Pharmaceuticals in recent years.

Oxbryta received approval last year for sickle cell disease management 

In 2019, the US government approved Global Blood’s Oxbryta to manage sickle cell disease in individuals aged 12 and over. The oral medication was approved in December 2021 to treat the illness in younger children. The drug’s sales increased by almost 50% to $194.7 million in 2021.

After a gloomy start to the calendar year, when a lack of significant purchases and clinical-stage treatment failures lowered investor morale and restricted funding, the biotech dealmaking pace has recently picked up again.

Also, Amgen Inc (NASDAQ: AMGN) also decided to purchase ChemoCentryx Inc on Thursday for $3.7 billion to obtain access to a possible breakthrough medication for inflammatory illnesses. AstraZeneca’s $39 billion acquisition of Alexion Pharmaceuticals in 2020 has put the realm of immune diseases in the limelight. The deal, which was announced before trading opened, will also give the corporation control of at least two investigational immune disorders medicines.

Please make sure to read and completely understand our disclaimer at https://www.wallstreetpr.com/disclaimer. While reading this article one must assume that we may be compensated for posting this content on our website.

The post Pfizer Inc (NYSE: PFE) To Acquire Global Blood Therapeutics For $5 Billion appeared first on Wall Street PR.

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Spread & Containment

German Official Trashes Cost Of Living Protesters As “Enemies Of The State”

German Official Trashes Cost Of Living Protesters As "Enemies Of The State"

Authored by Paul Joseph Watson via Summit News,

A top German…

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German Official Trashes Cost Of Living Protesters As "Enemies Of The State"

Authored by Paul Joseph Watson via Summit News,

A top German official has trashed people who may be planning to protest against energy blackouts as “enemies of the state” and “extremists” who want to overthrow the government.

The interior minister of the German state of North Rhine-Westphalia (NRW), Herbert Reul (CDU), says that anti-mandatory vaxx and anti-lockdown demonstrators have found a new cause – the energy crisis.

In an interview with German news outlet NT, Reul revealed that German security services were keeping an eye on “extremists” who plan to infiltrate the protests and stage violence, with the unrest being planned via the Telegram messenger app, which German authorities have previously tried to ban.

“You can already tell from those who are out there,” said Reul. “The protesters no longer talk about coronavirus or vaccination. But they are now misusing people’s worries and fears in other fields. (…) It’s almost something like new enemies of the state that are establishing themselves.”

Despite the very real threat of potential blackouts, power grid failures and gas shortages, Reul claimed such issues were feeding “conspiracy theory narratives.”

However, it’s no “conspiracy theory” that Germans across the country have been panic buying stoves, firewood and electric heaters as the government tells them thermostats will be limited to 19C in public buildings and that sports arenas and exhibition halls will be used as ‘warm up spaces’ this winter to help freezing citizens who are unable to afford skyrocketing energy bills.

As Remix News reports, blaming right-wing conspiracy theorists for a crisis caused by Germany’s sanctions on Russia and is suicidal dependence on green energy is pretty rich.

“Reul, like the country’s federal interior minister, Nancy Faeser, is attempting to tie right-wing ideology and protests against Covid-19 policies to any potential protests in the winter.”

“While some on the right, such as the Alternative for Germany (AfD), have stressed that the government’s sanctions against Russia are the primary factor driving the current energy crisis, they have not advocated an “overthrow” of the government. Instead, they have stressed the need to restart the Nord Stream 2 pipeline, end energy sanctions against Russia, and push for a peaceful solution to end the war.”

Indeed, energy shortages and the cost of living crisis are issues that are of major concern to everyone, no matter where they are on the political spectrum.

To claim that people worried about heating their homes and putting food on the table this winter are all “enemies of the state” is an utter outrage.

As we highlighted last week, the president of the Thuringian Office for the Protection of the Constitution, Stephan Kramer, said energy crisis riots would make anti-lockdown unrest look like a “children’s birthday party.”

“Mass protests and riots are just as conceivable as concrete acts of violence against things and people, as well as classic terrorism to overthrow it,” Kramer told ZDF.

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Tyler Durden Thu, 08/18/2022 - 03:30

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