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JPMorgan: Trillions of More Stimulus Dollars Required to Avoid Another Market Meltdown

JPMorgan Concludes The World Is Drowning In Too Much Debt For Stocks To Go Down Again



This article was originally published by ZeroHedge.

JPMorgan Concludes The World Is Drowning In Too Much Debt For Stocks To Go Down Again Tyler Durden Sun, 07/05/2020 - 08:55
Earlier this week, JPM's quant Nicholas Panigirtzoglou spotted an ominous signal for equities: similar to what happened in mid-2018 (just before the Fed's overtightening sent stocks tumbling into a mini bear market in Q4 2018), and then again in the late summer of 2019, when the "break" in the repo market (which incidentally was caused by JPMorgan) forced the Fed to launch "Not QE", last week the front end of the US Treasury curve (which is a far better signal of financial stress than the long-end which now is mostly a function of global QE) represented by the 1m OIS 2Y-1Y forward spread and which to the JPM quant "is a better signal of policy expectations", once again inverted, sending an ominous alert signal across asset classes. As the JPM quant continued, "while the spread between the 1- and 2-year forward points of the US OIS curve in Figure 2 had improved rapidly and turned significantly positive after the dramatic policy response to the virus crisis last March, it has been slipping over the past couple of months and turned negative last week. It printed -3bp negative on Monday, June 29th." To JPM, this suggests that rate markets are signaling the need for further monetary and/or fiscal policy stimulus across DM economies. And, logically, if the Fed turns a deaf ear to this latest extortion attempt by market, and additional stimulus is not delivered, then the inversion at the front end could worsen, "eventually becoming a more problematic signal for equity and risky markets going forward." In short: unless the Fed wants another market meltdown on its hands, it better pre-emptively stimulate and do so to the tune of trillions. In other words, having injected over $3 trillion in liquidity in the past three months, JPM argues that this is nowhere near enough, and incidentally, the House of Morgan is not alone: after all this is precisely the same argument that Goldman made in mid-May when the bank "spotted a huge problem for the Fed", namely that the Fed will need to monetize much more debt - about $1.6 trillion more - than it currently envisions in order to avoid a disorderly surge in Treasury yields. And while it probably wasn't the intention of JPM to spook clients and other investors, it appears that it did just that, because just two days after Panigirtzoglou published his ominous warning, the Greek JPMorganite is back with a report whose purpose is simple: to talk back all of the anxiety sparked by his observation that the front-end has inverted. The argument is even simpler: there is too much debt, and too much liquidity, for stocks to drop. No really... Yup: any other time the breakneck increase in public and private debt would have been a 140 dB warning claxon going off 24/7, but now - in a time of helicopter money and MMT - it is precisely what the central planning doctor ordered to make sure that stocks never again suffer even a modest pullback, and paradoxically, that's precisely what Panigirtozglou is pitching in his latest note, which ironically, comes just two days after the same JPM quant warned that the Fed had not done enough. Well, looks like he got the tap on the shoulder to make it clear that the Fed has done whatever it can. For those who care about this bizarre, unexpected and total U-turn, we have reproduced it below in its entirety, even though it could be summarized much better in just a few short words.
Similar to the Lehman crisis, the virus crisis is causing a step increase in the amount of debt in the financial system. The need to replace lost income is inducing more debt creation by both the private sector, i.e. households and non-financial corporations, but also by the government sector, which, via stimulus programs, aims at smoothing private sector's income disruption. According to the IMF, the global fiscal support in response to the virus crisis stands at around $9tr or 12% of global GDP ($76tr at end-2019 exchange rates), half of which is via direct budget support and the other half in the form of additional public sector loans and equity injections, guarantees, and other quasifiscal operations. This implies that, at a global level, after also factoring in a decline to GDP by 5% this year, the government debt-to-GDP ratio would increase from around 88% at the end of 2019 to 105% by the end of this year. Private sector indebtedness is also seeing a sharp increase. Bank lending to the private sector and net corporate bond issuance have together amounted to $5tr in the first half of the year. Assuming a further $2tr into the second half would raise private sector indebtedness by another 9% of GDP or so. At a global level, after also factoring in a decline to GDP by 5% this year, the private sector, i.e. household and non-financial corporate sector, debt to GDP ratio would increase from around 155% at the end of 2019 to 173% by the end of this year. In all, adding $16tr of additional debt this year would raise the total debt in the world, private and government debt, to a new record high $200tr by the end of this year. Factoring in a decline to GDP by 5% this year, would raise the total debt to GDP ratio for the world as a whole by around 35 percentage points, from 243% at the end of 2019 to 278% by the end of this year. This 35% of GDP increase in global indebtedness is even bigger than the 20% of GDP increase seen in the year after the Lehman crisis. There are three main implications from the big increase in global indebtedness.
  • First, the private sector would likely be inclined to save more in the future, sustaining the persistently high savings rates seen in the decade after the Lehman crisis. In turn, persistently high private sector savings rates would keep economic growth and inflation low and make it even more difficult for debt levels to decline vs. incomes in the future.
  • Second, very accommodative central bank policy policies and low interest rates are likely to continue for a very long time to make it possible for both the government sector and the private sector to sustain their much higher debt levels. Indeed, Figure 1 shows that there has been an inverse relationship between debt levels and interest rates.
  • The third implication is more liquidity. More credit and more monetary stimulus in the form of QE, both imply more liquidity, i.e. extra money supply and cash balances, which in turn would result in more asset reflation.
The rapid increase in debt creation implies a rapid creation of liquidity both directly and indirectly. Bank lending creates money directly, and is how most money is created during normal times. This is because as a bank creates a new loan, it simultaneously creates a new deposit, and the increase in net bank lending in the economy essentially increases deposits by the same amount. While bond issuance does not create deposits directly in the same way bank lending does, when QE purchases by central banks absorb (mostly government) bonds from the portfolios of private non-bank investors, such as pension funds, asset managers and insurance companies, which has been the case with QE so far, liquidity is being created. This means that debt creation should create a similar amount of liquidity. Indeed, there has already been a significant expansion of global M2 as depicted in Figure 2, which converts M2 to US dollars using constant FX rates to abstract from the influence of currency fluctuations. It shows a sharp increase in M2 from the beginning of the year to end-May of around $6tr ex China or $8tr including China. The amount of liquidity or money creation so far is similar to the magnitude of M2 creation during the financial crisis of 2008/2009, but has occurred much more quickly, in only a few months, as policy makers responded more aggressively to the impact of the pandemic. But given that debt creation and QE will continue to be stronger than normal until 2021, we believe that the total money or liquidity creation could exceed $15tr or more globally by the middle of 2021. As a result of this liquidity creation, our estimation of the share of cash holdings in global non-bank investors’ portfolios, which rose sharply in March, remains well above pre-pandemic levels despite the nearly 40% rise in global equities that have seen equities retrace three quarters of their March drawdowns. And these elevated cash holdings create a strong background support for non-cash assets such as bonds and equities. But given how low bond yields are at the moment, less than 1% in the Global Agg bond index, we believe that most of this liquidity will eventually be deployed into equities as the need for precautionary savings subsides over time.
And so on. TL/DR: there is just too much debt in the world right now for either interest rates to go up again, or for stocks to go down. And that, being the dumbest yet perhaps most accurate analysis we have read in a while, is how virtually all strategists on Wall Street just became obsolete, because no amount of brilliant analysis will ever again top what is truly the bottom line for a world drowning in debt - the system will continue growing on the back of trillions and trillions in debt, until one everything comes crashing down.

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Chinese migration to US is nothing new – but the reasons for recent surge at Southern border are

A gloomier economic outlook in China and tightening state control have combined with the influence of social media in encouraging migration.




Chinese migrants wait for a boat after having walked across the Darien Gap from Colombia to Panama. AP Photo/Natacha Pisarenko

The brief closure of the Darien Gap – a perilous 66-mile jungle journey linking South American and Central America – in February 2024 temporarily halted one of the Western Hemisphere’s busiest migration routes. It also highlighted its importance to a small but growing group of people that depend on that pass to make it to the U.S.: Chinese migrants.

While a record 2.5 million migrants were detained at the United States’ southwestern land border in 2023, only about 37,000 were from China.

I’m a scholar of migration and China. What I find most remarkable in these figures is the speed with which the number of Chinese migrants is growing. Nearly 10 times as many Chinese migrants crossed the southern border in 2023 as in 2022. In December 2023 alone, U.S. Border Patrol officials reported encounters with about 6,000 Chinese migrants, in contrast to the 900 they reported a year earlier in December 2022.

The dramatic uptick is the result of a confluence of factors that range from a slowing Chinese economy and tightening political control by President Xi Jinping to the easy access to online information on Chinese social media about how to make the trip.

Middle-class migrants

Journalists reporting from the border have generalized that Chinese migrants come largely from the self-employed middle class. They are not rich enough to use education or work opportunities as a means of entry, but they can afford to fly across the world.

According to a report from Reuters, in many cases those attempting to make the crossing are small-business owners who saw irreparable damage to their primary or sole source of income due to China’s “zero COVID” policies. The migrants are women, men and, in some cases, children accompanying parents from all over China.

Chinese nationals have long made the journey to the United States seeking economic opportunity or political freedom. Based on recent media interviews with migrants coming by way of South America and the U.S.’s southern border, the increase in numbers seems driven by two factors.

First, the most common path for immigration for Chinese nationals is through a student visa or H1-B visa for skilled workers. But travel restrictions during the early months of the pandemic temporarily stalled migration from China. Immigrant visas are out of reach for many Chinese nationals without family or vocation-based preferences, and tourist visas require a personal interview with a U.S. consulate to gauge the likelihood of the traveler returning to China.

Social media tutorials

Second, with the legal routes for immigration difficult to follow, social media accounts have outlined alternatives for Chinese who feel an urgent need to emigrate. Accounts on Douyin, the TikTok clone available in mainland China, document locations open for visa-free travel by Chinese passport holders. On TikTok itself, migrants could find information on where to cross the border, as well as information about transportation and smugglers, commonly known as “snakeheads,” who are experienced with bringing migrants on the journey north.

With virtual private networks, immigrants can also gather information from U.S. apps such as X, YouTube, Facebook and other sites that are otherwise blocked by Chinese censors.

Inspired by social media posts that both offer practical guides and celebrate the journey, thousands of Chinese migrants have been flying to Ecuador, which allows visa-free travel for Chinese citizens, and then making their way over land to the U.S.-Mexican border.

This journey involves trekking through the Darien Gap, which despite its notoriety as a dangerous crossing has become an increasingly common route for migrants from Venezuela, Colombia and all over the world.

In addition to information about crossing the Darien Gap, these social media posts highlight the best places to cross the border. This has led to a large share of Chinese asylum seekers following the same path to Mexico’s Baja California to cross the border near San Diego.

Chinese migration to US is nothing new

The rapid increase in numbers and the ease of accessing information via social media on their smartphones are new innovations. But there is a longer history of Chinese migration to the U.S. over the southern border – and at the hands of smugglers.

From 1882 to 1943, the United States banned all immigration by male Chinese laborers and most Chinese women. A combination of economic competition and racist concerns about Chinese culture and assimilability ensured that the Chinese would be the first ethnic group to enter the United States illegally.

With legal options for arrival eliminated, some Chinese migrants took advantage of the relative ease of movement between the U.S. and Mexico during those years. While some migrants adopted Mexican names and spoke enough Spanish to pass as migrant workers, others used borrowed identities or paperwork from Chinese people with a right of entry, like U.S.-born citizens. Similarly to what we are seeing today, it was middle- and working-class Chinese who more frequently turned to illegal means. Those with money and education were able to circumvent the law by arriving as students or members of the merchant class, both exceptions to the exclusion law.

Though these Chinese exclusion laws officially ended in 1943, restrictions on migration from Asia continued until Congress revised U.S. immigration law in the Hart-Celler Act in 1965. New priorities for immigrant visas that stressed vocational skills as well as family reunification, alongside then Chinese leader Deng Xiaoping’s policies of “reform and opening,” helped many Chinese migrants make their way legally to the U.S. in the 1980s and 1990s.

Even after the restrictive immigration laws ended, Chinese migrants without the education or family connections often needed for U.S. visas continued to take dangerous routes with the help of “snakeheads.”

One notorious incident occurred in 1993, when a ship called the Golden Venture ran aground near New York, resulting in the drowning deaths of 10 Chinese migrants and the arrest and conviction of the snakeheads attempting to smuggle hundreds of Chinese migrants into the United States.

Existing tensions

Though there is plenty of precedent for Chinese migrants arriving without documentation, Chinese asylum seekers have better odds of success than many of the other migrants making the dangerous journey north.

An estimated 55% of Chinese asylum seekers are successful in making their claims, often citing political oppression and lack of religious freedom in China as motivations. By contrast, only 29% of Venezuelans seeking asylum in the U.S. have their claim granted, and the number is even lower for Colombians, at 19%.

The new halt on the migratory highway from the south has affected thousands of new migrants seeking refuge in the U.S. But the mix of push factors from their home country and encouragement on social media means that Chinese migrants will continue to seek routes to America.

And with both migration and the perceived threat from China likely to be features of the upcoming U.S. election, there is a risk that increased Chinese migration could become politicized, leaning further into existing tensions between Washington and Beijing.

Meredith Oyen does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Vaccine-skeptical mothers say bad health care experiences made them distrust the medical system

Vaccine skepticism, and the broader medical mistrust and far-reaching anxieties it reflects, is not just a fringe position in the 21st century.

Women's own negative medical experiences influence their vaccine decisions for their kids. AP Photo/Ted S. Warren

Why would a mother reject safe, potentially lifesaving vaccines for her child?

Popular writing on vaccine skepticism often denigrates white and middle-class mothers who reject some or all recommended vaccines as hysterical, misinformed, zealous or ignorant. Mainstream media and medical providers increasingly dismiss vaccine refusal as a hallmark of American fringe ideology, far-right radicalization or anti-intellectualism.

But vaccine skepticism, and the broader medical mistrust and far-reaching anxieties it reflects, is not just a fringe position.

Pediatric vaccination rates had already fallen sharply before the COVID-19 pandemic, ushering in the return of measles, mumps and chickenpox to the U.S. in 2019. Four years after the pandemic’s onset, a growing number of Americans doubt the safety, efficacy and necessity of routine vaccines. Childhood vaccination rates have declined substantially across the U.S., which public health officials attribute to a “spillover” effect from pandemic-related vaccine skepticism and blame for the recent measles outbreak. Almost half of American mothers rated the risk of side effects from the MMR vaccine as medium or high in a 2023 survey by Pew Research.

Recommended vaccines go through rigorous testing and evaluation, and the most infamous charges of vaccine-induced injury have been thoroughly debunked. How do so many mothers – primary caregivers and health care decision-makers for their families – become wary of U.S. health care and one of its most proven preventive technologies?

I’m a cultural anthropologist who studies the ways feelings and beliefs circulate in American society. To investigate what’s behind mothers’ vaccine skepticism, I interviewed vaccine-skeptical mothers about their perceptions of existing and novel vaccines. What they told me complicates sweeping and overly simplified portrayals of their misgivings by pointing to the U.S. health care system itself. The medical system’s failures and harms against women gave rise to their pervasive vaccine skepticism and generalized medical mistrust.

The seeds of women’s skepticism

I conducted this ethnographic research in Oregon from 2020 to 2021 with predominantly white mothers between the ages of 25 and 60. My findings reveal new insights about the origins of vaccine skepticism among this demographic. These women traced their distrust of vaccines, and of U.S. health care more generally, to ongoing and repeated instances of medical harm they experienced from childhood through childbirth.

girl sitting on exam table faces a doctor viewer can see from behind
A woman’s own childhood mistreatment by a doctor can shape her health care decisions for the next generation. FatCamera/E+ via Getty Images

As young girls in medical offices, they were touched without consent, yelled at, disbelieved or threatened. One mother, Susan, recalled her pediatrician abruptly lying her down and performing a rectal exam without her consent at the age of 12. Another mother, Luna, shared how a pediatrician once threatened to have her institutionalized when she voiced anxiety at a routine physical.

As women giving birth, they often felt managed, pressured or discounted. One mother, Meryl, told me, “I felt like I was coerced under distress into Pitocin and induction” during labor. Another mother, Hallie, shared, “I really battled with my provider” throughout the childbirth experience.

Together with the convoluted bureaucracy of for-profit health care, experiences of medical harm contributed to “one million little touch points of information,” in one mother’s phrase, that underscored the untrustworthiness and harmful effects of U.S. health care writ large.

A system that doesn’t serve them

Many mothers I interviewed rejected the premise that public health entities such as the Centers for Disease Control and Prevention and the Food and Drug Administration had their children’s best interests at heart. Instead, they tied childhood vaccination and the more recent development of COVID-19 vaccines to a bloated pharmaceutical industry and for-profit health care model. As one mother explained, “The FDA is not looking out for our health. They’re looking out for their wealth.”

After ongoing negative medical encounters, the women I interviewed lost trust not only in providers but the medical system. Frustrating experiences prompted them to “do their own research” in the name of bodily autonomy. Such research often included books, articles and podcasts deeply critical of vaccines, public health care and drug companies.

These materials, which have proliferated since 2020, cast light on past vaccine trials gone awry, broader histories of medical harm and abuse, the rapid growth of the recommended vaccine schedule in the late 20th century and the massive profits reaped from drug development and for-profit health care. They confirmed and hardened women’s suspicions about U.S. health care.

hands point to a handwritten vaccination record
The number of recommended childhood vaccines has increased over time. Mike Adaskaveg/MediaNews Group/Boston Herald via Getty Images

The stories these women told me add nuance to existing academic research into vaccine skepticism. Most studies have considered vaccine skepticism among primarily white and middle-class parents to be an outgrowth of today’s neoliberal parenting and intensive mothering. Researchers have theorized vaccine skepticism among white and well-off mothers to be an outcome of consumer health care and its emphasis on individual choice and risk reduction. Other researchers highlight vaccine skepticism as a collective identity that can provide mothers with a sense of belonging.

Seeing medical care as a threat to health

The perceptions mothers shared are far from isolated or fringe, and they are not unreasonable. Rather, they represent a growing population of Americans who hold the pervasive belief that U.S. health care harms more than it helps.

Data suggests that the number of Americans harmed in the course of treatment remains high, with incidents of medical error in the U.S. outnumbering those in peer countries, despite more money being spent per capita on health care. One 2023 study found that diagnostic error, one kind of medical error, accounted for 371,000 deaths and 424,000 permanent disabilities among Americans every year.

Studies reveal particularly high rates of medical error in the treatment of vulnerable communities, including women, people of color, disabled, poor, LGBTQ+ and gender-nonconforming individuals and the elderly. The number of U.S. women who have died because of pregnancy-related causes has increased substantially in recent years, with maternal death rates doubling between 1999 and 2019.

The prevalence of medical harm points to the relevance of philosopher Ivan Illich’s manifesto against the “disease of medical progress.” In his 1982 book “Medical Nemesis,” he insisted that rather than being incidental, harm flows inevitably from the structure of institutionalized and for-profit health care itself. Illich wrote, “The medical establishment has become a major threat to health,” and has created its own “epidemic” of iatrogenic illness – that is, illness caused by a physician or the health care system itself.

Four decades later, medical mistrust among Americans remains alarmingly high. Only 23% of Americans express high confidence in the medical system. The United States ranks 24th out of 29 peer high-income countries for the level of public trust in medical providers.

For people like the mothers I interviewed, who have experienced real or perceived harm at the hands of medical providers; have felt belittled, dismissed or disbelieved in a doctor’s office; or spent countless hours fighting to pay for, understand or use health benefits, skepticism and distrust are rational responses to lived experience. These attitudes do not emerge solely from ignorance, conspiracy thinking, far-right extremism or hysteria, but rather the historical and ongoing harms endemic to the U.S. health care system itself.

Johanna Richlin does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…



Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.


What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

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