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JPMorgan Warns The Ghost Of 2018 Will Steamroll Goldman’s Bullish Narrative

JPMorgan Warns The Ghost Of 2018 Will Steamroll Goldman’s Bullish Narrative

Despite the wild rollercoaster ride in markets which refuses to…

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JPMorgan Warns The Ghost Of 2018 Will Steamroll Goldman's Bullish Narrative

Despite the wild rollercoaster ride in markets which refuses to slow down due to the record low liquidity in the emini S&P which is whipsawing risk assets on a daily basis, and despite Goldman's chief equity strategist David Kostin cutting his year-end S&P estimate from 5,100 to 4,900 last Friday as the bank scrambles to catch down to far more downbeat realistic strategists such as Michael Wilson and Michael Hartnett, Goldman flow trader Scott Rubner pointed to one of the most remarkable, and perhaps perplexing, features of the market in 2022 - despite the sharp drop in stock prices, the YTD period has been marked by a relentless tidal wave of inflows as burst after BTFD burst enters - which Rubner cited as a reason why it is unlikely that we will see a capitulatory flush lower in stocks.

As a reminder, on Sunday we noted that according to EPFR data, cumulative equity flows YTD in 2021 have hit a record $153bn, exceeding the pace of early-2021 (when the year started with $151bn in inflows, ahead of a record year of more than $1tn inflows), despite what appears to be widespread revulsion toward risk assets.

Picking up on this peculiar flow dynamic, Rubner wrote that "with money flowing into global equities "at extreme levels", this would need to change before a larger correction can take place: I would turn bearish if the money slows or reverses" he said, adding that "portfolio rebalances of this size typically last for the full quarter (Q1 2022)."

But if Rubner's trigger to turn bearish is the slowing or reversal of record inflows, then JPMorgan quant Nick Panigirtzoglou who publishes the popular weekly Flows and Liquidity newsletter, has some bad news: the record tsunami of inflows is coming to an end.

Speaking to Bloomberg, Panigirtzoglou echoes what we first said last Friday in "Despite Turmoil, Stocks Seeing Largest Ever Inflows In 2022", and points to the record $152 billion in equity fundflows sunk by investors YTD (or $5.7 billion on average for each of the 27 trading days this year, which annualizes to $1.322 Trillion), after a gangbusters 2021 for both stock returns and flows, which defies the worst January for the S&P 500 since 2009...

... even as bond funds have already seen the first outflows in two years.

But unlike his Goldman peer, Panigirtzoglou believes that stock managers are set to join their outflow-lashed peers in the bond world as upcoming rate hikes spur greater volatility just like in 2018. Back then, FOMOed investors funneled capital into equity funds in the first quarter, only to divest en masse as monetary policy tightened further.

“There is a good chance that 2022, in terms of equity fund flows, will look like 2018,” Panigirtzoglou told Bloomberg in an interview. “It started very strong in continuation of the previous year, but at some point that flow picture will be wilting.”

With bond funds having already seen $20 billion in outflows YTD, this quarter is shaping up to the biggest win for stock allocations since 2013. The diverging flows - which as we discussed previously have been sparked by a Pavlovin BTFD reaction among both retail and institutional investors and follow a retail trading boom born out of the depths of the pandemic boredom - are noteworthy because individual investors largely dumped stocks in favor of bonds during the 10-year bull market that started in March 2009, only to see this trend reverse dramatically in 2021.

Of course, calls for a "great rotation" are nothing new and virtually every single year since 2009 we have heard one or more sellside analysts predict that a massive rotation out of bonds and into stocks is imminent, yet one never arrived (the massive equity inflows in 2021 were coupled with sizable inflows into bonds as well as trillions in newly created money were allocated across all risk assets). Meanwhile, thanks to faster price appreciation, equity allocation from U.S. households has already stood at a record high.

Curiously 2022 may be the closest we have come to a pure "great rotation", as U.S. large-cap stock funds attracted $34.1 billion alone in the week to Feb. 9, the most ever, even after the new year bleeding in technology companies. The inflows were funded from withdrawals from fixed-income and money-market funds.

Others, such as Rich Weiss, CIO at American Century Investments, agree: he notes that the current taste for equity funds reflects the fact that the S&P 500 has posted three straight years of double-digit returns. As rates rise at a time when profit growth is estimated to slow, he doesn’t view the backdrop as constructive for equities either.

“The flows follow the returns, not the other way around,” Weiss said. “By moving out of bonds and going into stocks because you’re afraid of rising interest rates, you’re likely jumping out of the frying pan into the fire in many cases.”

While the past is hardly prologue, consider the events of 2018 highlighted by Panigirtzoglou when real rates were also on the rise. Investors initially funneled almost $220 billion into equities in the first quarter, extending a robust streak of inflows from 2017. But after the S&P 500 suffered a 10% decline from its peak in that February, money dwindled to $60 billion a quarter for the rest of 2018. Flows then turned outright negative at the start of 2019 after the benchmark plunged to the brink of a bear market.

Not everyone agrees with this unexpectedly gloomy outlook from the JPM quant, one which flies in the face of everything that Panigirtzoglou's co-worker (and boss) Marko Kolanovic has been preaching in his weekly "BTFD" permabull sermons. And indeed, the bull case for equities will be familiar to many: while soaring inflation threatens to crush profit magins, and erode the value of future bond returns and devalues future "growth" company cash flows, companies have ridden the wave of price pressures to record profits. With income from S&P 500 firms expected to expand in each of the next two years (not if Morgan Stanley's Michael Wilson has anything to say about it) many view stocks as being better positioned than fixed income. That’s especially true with Treasuries down almost 4% in 2022 already and could well close out the year in the red at this rate, in what would be the first back-to-back annual losses in history.

Indeed, one can argue - as we have - that while stocks are poised to drop, bonds will suffer even greater losses as the Fed proceeds to hike rates and drain trillions in liquidity, as such flows out of the greater of two evils and into stocks is certainly conceivable: after all, there will come a moment when the Fed will capitulate and ease, a moment which will send risk assets explosively higher.

Meanwhile, as we discussed yesterday corporate bonds - whose liquidity is suddenly collapsing - have slipped 5.9% since January, on course for the worst quarter since the 2008 financial crisis.

“Bonds typically are where you can put money in and just wait out any volatility, but right now I think the volatility is centered in the bond market and will continue to be centered in the bond market,” said Chris Gaffney, president of world markets at TIAA Bank. “You’re almost guaranteed to see those assets lose value in the coming year. And therefore it pushes investors to move out of bonds into equities.”

The worst possible scenario, if 2018 is any guide, is that both bond and stock fund managers may face an uphill battle attracting money from investors. And with traders pricing seven rate hikes this year, the appeal of cash-like instruments is poised to rise at long last, according to Panigirtzoglou who agrees with Goldman's tactical call from this weekend to go into cash..

“As the Fed raises rates and other central banks are following the Fed, the risk is that at some point equity fund flows dissipate, or even turn negative,” he said. “I would not be surprised if we could have some sort of a repeat of 2018.”

Tyler Durden Wed, 02/16/2022 - 19:00

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International

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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Government

Buried Project Veritas Recording Shows Top Pfizer Scientists Suppressed Concerns Over COVID-19 Boosters, MRNA Tech

Buried Project Veritas Recording Shows Top Pfizer Scientists Suppressed Concerns Over COVID-19 Boosters, MRNA Tech

Submitted by Liam Cosgrove

Former…

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Buried Project Veritas Recording Shows Top Pfizer Scientists Suppressed Concerns Over COVID-19 Boosters, MRNA Tech

Submitted by Liam Cosgrove

Former Project Veritas & O’Keefe Media Group operative and Pfizer formulation analyst scientist Justin Leslie revealed previously unpublished recordings showing Pfizer’s top vaccine researchers discussing major concerns surrounding COVID-19 vaccines. Leslie delivered these recordings to Veritas in late 2021, but they were never published:

Featured in Leslie’s footage is Kanwal Gill, a principal scientist at Pfizer. Gill was weary of MRNA technology given its long research history yet lack of approved commercial products. She called the vaccines “sneaky,” suggesting latent side effects could emerge in time.

Gill goes on to illustrate how the vaccine formulation process was dramatically rushed under the FDA’s Emergency Use Authorization and adds that profit incentives likely played a role:

"It’s going to affect my heart, and I’m going to die. And nobody’s talking about that."

Leslie recorded another colleague, Pfizer’s pharmaceutical formulation scientist Ramin Darvari, who raised the since-validated concern that repeat booster intake could damage the cardiovascular system:

None of these claims will be shocking to hear in 2024, but it is telling that high-level Pfizer researchers were discussing these topics in private while the company assured the public of “no serious safety concerns” upon the jab’s release:

Vaccine for Children is a Different Formulation

Leslie sent me a little-known FDA-Pfizer conference — a 7-hour Zoom meeting published in tandem with the approval of the vaccine for 5 – 11 year-olds — during which Pfizer’s vice presidents of vaccine research and development, Nicholas Warne and William Gruber, discussed a last-minute change to the vaccine’s “buffer” — from “PBS” to “Tris” — to improve its shelf life. For about 30 seconds of these 7 hours, Gruber acknowledged that the new formula was NOT the one used in clinical trials (emphasis mine):


“The studies were done using the same volume… but contained the PBS buffer. We obviously had extensive consultations with the FDA and it was determined that the clinical studies were not required because, again, the LNP and the MRNA are the same and the behavior — in terms of reactogenicity and efficacy — are expected to be the same.

According to Leslie, the tweaked “buffer” dramatically changed the temperature needed for storage: “Before they changed this last step of the formulation, the formula was to be kept at -80 degrees Celsius. After they changed the last step, we kept them at 2 to 8 degrees celsius,” Leslie told me.

The claims are backed up in the referenced video presentation:

I’m no vaccinologist but an 80-degree temperature delta — and a 5x shelf-life in a warmer climate — seems like a significant change that might warrant clinical trials before commercial release.

Despite this information technically being public, there has been virtually no media scrutiny or even coverage — and in fact, most were told the vaccine for children was the same formula but just a smaller dose — which is perhaps due to a combination of the information being buried within a 7-hour jargon-filled presentation and our media being totally dysfunctional.

Bohemian Grove?

Leslie’s 2-hour long documentary on his experience at both Pfizer and O’Keefe’s companies concludes on an interesting note: James O’Keefe attended an outing at the Bohemian Grove.

Leslie offers this photo of James’ Bohemian Grove “GATE” slip as evidence, left on his work desk atop a copy of his book, “American Muckraker”:

My thoughts on the Bohemian Grove: my good friend’s dad was its general manager for several decades. From what I have gathered through that connection, the Bohemian Grove is not some version of the Illuminati, at least not in the institutional sense.

Do powerful elites hangout there? Absolutely. Do they discuss their plans for the world while hanging out there? I’m sure it has happened. Do they have a weird ritual with a giant owl? Yep, Alex Jones showed that to the world.

My perspective is based on conversations with my friend and my belief that his father is not lying to him. I could be wrong and am open to evidence — like if boxer Ryan Garcia decides to produce evidence regarding his rape claims — and I do find it a bit strange the club would invite O’Keefe who is notorious for covertly filming, but Occam’s razor would lead me to believe the club is — as it was under my friend’s dad — run by boomer conservatives the extent of whose politics include disliking wokeness, immigration, and Biden (common subjects of O’Keefe’s work).

Therefore, I don’t find O’Keefe’s visit to the club indicative that he is some sort of Operation Mockingbird asset as Leslie tries to depict (however Mockingbird is a 100% legitimate conspiracy). I have also met James several times and even came close to joining OMG. While I disagreed with James on the significance of many of his stories — finding some to be overhyped and showy — I never doubted his conviction in them.

As for why Leslie’s story was squashed… all my sources told me it was to avoid jail time for Veritas executives.

Feel free to watch Leslie’s full documentary here and decide for yourself.

Fun fact — Justin Leslie was also the operative behind this mega-viral Project Veritas story where Pfizer’s director of R&D claimed the company was privately mutating COVID-19 behind closed doors:

Tyler Durden Tue, 03/12/2024 - 13:40

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International

Association of prenatal vitamins and metals with epigenetic aging at birth and in childhood

“[…] our findings support the hypothesis that the intrauterine environment, particularly essential and non-essential metals, affect epigenetic aging…

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“[…] our findings support the hypothesis that the intrauterine environment, particularly essential and non-essential metals, affect epigenetic aging biomarkers across the life course.”

Credit: 2024 Bozack et al.

“[…] our findings support the hypothesis that the intrauterine environment, particularly essential and non-essential metals, affect epigenetic aging biomarkers across the life course.”

BUFFALO, NY- March 12, 2024 – A new research paper was published in Aging (listed by MEDLINE/PubMed as “Aging (Albany NY)” and “Aging-US” by Web of Science) Volume 16, Issue 4, entitled, “Associations of prenatal one-carbon metabolism nutrients and metals with epigenetic aging biomarkers at birth and in childhood in a US cohort.”

Epigenetic gestational age acceleration (EGAA) at birth and epigenetic age acceleration (EAA) in childhood may be biomarkers of the intrauterine environment. In this new study, researchers Anne K. Bozack, Sheryl L. Rifas-Shiman, Andrea A. Baccarelli, Robert O. Wright, Diane R. Gold, Emily Oken, Marie-France Hivert, and Andres Cardenas from Stanford University School of Medicine, Harvard Medical School, Harvard T.H. Chan School of Public Health, Columbia University, and Icahn School of Medicine at Mount Sinai investigated the extent to which first-trimester folate, B12, 5 essential and 7 non-essential metals in maternal circulation are associated with EGAA and EAA in early life. 

“[…] we hypothesized that OCM [one-carbon metabolism] nutrients and essential metals would be positively associated with EGAA and non-essential metals would be negatively associated with EGAA. We also investigated nonlinear associations and associations with mixtures of micronutrients and metals.”

Bohlin EGAA and Horvath pan-tissue and skin and blood EAA were calculated using DNA methylation measured in cord blood (N=351) and mid-childhood blood (N=326; median age = 7.7 years) in the Project Viva pre-birth cohort. A one standard deviation increase in individual essential metals (copper, manganese, and zinc) was associated with 0.94-1.2 weeks lower Horvath EAA at birth, and patterns of exposures identified by exploratory factor analysis suggested that a common source of essential metals was associated with Horvath EAA. The researchers also observed evidence of nonlinear associations of zinc with Bohlin EGAA, magnesium and lead with Horvath EAA, and cesium with skin and blood EAA at birth. Overall, associations at birth did not persist in mid-childhood; however, arsenic was associated with greater EAA at birth and in childhood. 

“Prenatal metals, including essential metals and arsenic, are associated with epigenetic aging in early life, which might be associated with future health.”

 

Read the full paper: DOI: https://doi.org/10.18632/aging.205602 

Corresponding Author: Andres Cardenas

Corresponding Email: andres.cardenas@stanford.edu 

Keywords: epigenetic age acceleration, metals, folate, B12, prenatal exposures

Click here to sign up for free Altmetric alerts about this article.

 

About Aging:

Launched in 2009, Aging publishes papers of general interest and biological significance in all fields of aging research and age-related diseases, including cancer—and now, with a special focus on COVID-19 vulnerability as an age-dependent syndrome. Topics in Aging go beyond traditional gerontology, including, but not limited to, cellular and molecular biology, human age-related diseases, pathology in model organisms, signal transduction pathways (e.g., p53, sirtuins, and PI-3K/AKT/mTOR, among others), and approaches to modulating these signaling pathways.

Please visit our website at www.Aging-US.com​​ and connect with us:

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Click here to subscribe to Aging publication updates.

For media inquiries, please contact media@impactjournals.com.

 

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