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Macro and Prices: Sentiment Swings Between Inflation and Recession

(On vacation for the rest of the month.  Going to Portugal.  Commentary will resume on June 1.   Good luck to us all.)The market is a fickle mistress….



(On vacation for the rest of the month.  Going to Portugal.  Commentary will resume on June 1.   Good luck to us all.)

The market is a fickle mistress. The major central banks were judged to be behind the inflation curve. Much teeth-gashing, finger-pointing. Federal Reserve Chair Powell was blamed for denying that 75 bp hike was under consideration. Bank of Japan Governor Kuroda was blamed for keeping the 0.25% cap on the 10-year Japanese Government Bond yield. Even though European Central Bank President Lagarde had indicated previously that rates could be increased within weeks of the end of the bond purchases, many observers embraced it as a new sign that the ECB was belated to hike rates as early as July. For the better part of three weeks, the swaps market has been pricing in a 20 bp rate hike. It peaked not when Lagarde spoke last week but on April 22.

The US 10-year breakeven rate (the difference between the yield of the inflation-protected security and the conventional note yield) rose from 2.60% at the end of last year to a high a little bit above 3.05% on April 22. Since then, it has been trending erratically lower and bottomed near 2.63%, before the CPI report. It finished last week around 2.74%, falling about 12 bp on the week. The three-week decline is the longest since January.

Many observers write and speak as if the Fed needs to catch up to the market. But this seems like a variant of the hubris virus that they often diagnose the central bank with. The relationship is much more complicated. Consider that a week ago, the swaps market was pricing in a terminal Fed funds rate of 3.75%. After elevated CPI and PPI prints, the terminal rate is now, ironically, projected close to 3.0%. Or consider that shortly after the Fed's statement and before Powell's press conference, the December Fed funds futures contract implied a 2.89% yield. It finished last week near 2.63%.  

There is an industry built on criticizing the Federal Reserve. The Fed is damned if they do and damned if they don't. It is an easy mark. When it raised by 25 bp in March, it was criticized for not being more aggressive. When the Fed raised rates by 50 bp earlier this month, it was blamed for taking 75 bp off the table. Often, the same voices criticize the Fed for risking a recession.

Many accept that the economic contraction in Q1 was the result of GDP math. Importing too many goods (relative to exports) and accumulating

 inventories at a slower pace than the record set in Q4 were critical drags. Consumption and business investment rose. That is ultimately what drives the economy. Nevertheless, some pundits play up the risk that the US is on the verge of a recession. We have expressed concerns about tightening monetary and fiscal policy as the economy slows. We brought attention to the doubling of oil prices, which has preceded the last three US recessions. The inventory cycle looks mature and is unlikely to be the tailwind going forward. The build-up of savings and pent-up consumer demand appear to have run their course.

However, the doom and gloom camp is over-hyping the case. Monetary policy is known for its variable lags. The federal deficit may be halved this year, but that still leaves it above 5% of GDP. The US job growth remains impressive. Through last month, non-farm payrolls have risen by over 2 mln this year. It is not far off the pace in the same period last year (~2.2 mln). Weekly initial jobless claims are hovering around 200k, roughly half the pace of May 2021. Yes, the improvement in the labor market will slow, and it will have to slow much more than it has to support a recession scenario after the contraction in Q1. 

Like those who see a currency war every year or so, the doom and gloom camp or the always-critical of the Fed crowd are crying wolf. And therein lies the importance of the economic data in the days ahead. There may be no reason to let the facts interfere with a good story, but the economic data may show a solid gain in consumption and continued growth in industrial output.  Or, to say the same thing, the data should show an expanding, not contracting, economy.

April retail sales are expected to rise by a solid 1% by the median forecast in Bloomberg's survey after a revised 0.7% (from 0.5%) gain in March. We already know that auto sales were stronger, which likely lifted the headline figure. Some economic models use components for GDP calculations, which exclude autos, gasoline, building materials, and food services (the models pick up the information from different time series), are expected to rise by 0.6% after a revised 0.7% gain from -0.1) in March. Industrial output rose by nearly 3% in Q1, and that pace will not be sustained. Last year, industrial output rose by 0.3% a month. In April, output may have increased by 0.4%.

Among the first places to look at financial conditions biting are the interest rate sensitive sectors, like housing. April housing starts will be reported on May 18. A decline is indeed expected after two months of gains, but the takeaway is that the level of activity is elevated. March housing starts were the highest in 16 years. The same is true of permits. 

Another place to look for financial conditions biting is in the translation of foreign earnings into dollars for US companies. Figures cited in Barron's from Sentieo, a financial analytics company, noted that 20 US companies with market caps of more than $100 bln cited the dollar's appreciation as a headwind, which is twice from a year ago. What was left unsaid was that there are around 100 such companies, meaning something on the magnitude of 80% of the giants did not complain about the dollar's appreciation.  

In addition to translation, there is an issue of competitiveness too. According to the OCED's model of purchasing power parity, the euro, sterling, and yen have not been this undervalued in at least 30 years. It may not be a short-run consideration, but it can impact the relative competitiveness and exposure of even purely domestic US companies to a foreign competition that may not have been there a couple of years ago.

In addition to the divergence of monetary policy, part of the current political and economic environment is that America's two rivals, Russia and China, are shooting themselves in the foot. America's penchant for exaggerating the strength of Russian strength has again proved wide of the mark. Moscow's ability to project its power will be curtailed. NATO will be bigger than before--more members and a greater presence--and Russia's economy has been traumatized despite the capital-controls induced rouble appreciation. China's Covid response seems over-the-top and is hobbling the economy. Despite the best efforts of the Chinese government, the world has gotten a glimpse of the gap between the Chinese people and the rulers in Beijing. For years, Chinese officials have raised questions about the US model, but the chickens have come home to roost, and China's developmental model is being questioned in new ways.

The sharp drop in Chinese lending in April is a warning of a dismal economic performance as the lockdowns and social restrictions crippled around half of its economy. The silver lining is that Shanghai may appear from the lockdowns shortly, and a "V" type recovery is possible ifCovid can be brought under control. There is scope for China to cut its benchmark 1-year medium-term lending facility (MLF) rate, which has remained at 2.85% since being cut by 10 bp in January. A reduction in the MLF at the start of the new week would boost the chances of a cut in the loan prime rate at the end of the week.

Japan has two data points that will be of interest. First, it will report Q1 GDP. It is expected to have contracted by 0.4%-0.5%. The Covid restrictions and earthquake weakened the economy after growing by 1.1% in Q4 22. The government has responded with a spending package, and in any event, the economy already appears to be recovering. Second, Japan will report the national CPI figures for April at the end of the week. The market got a hint of what to expect from the surge in the Tokyo CPI. In addition to rising food and energy prices, the dropping of last year's cuts in cell phone charges will lift measured inflation. Excluding fresh food and energy, Japan's CPI rose above zero in April for the first time since July 2020.

The market does not pay much attention to Japan's trade figures. That seems to be the most straightforward explanation why so many observers insist on characterizing Japan as export-oriented. Japan will report its April trade figures early on May 19 in Tokyo. A sharp deterioration is expected (~JPY1.2 trillion deficit from a JPY414 bln shortfall in March. It will be the ninth consecutive monthly trade deficit. In April 2021, it recorded a nearly JPY227 bln trade surplus.

The UK reports employment figures, April CPI, and retail sales. Employment growth is expected to slow, and average earnings growth will likely be little changed. Economists anticipate the unemployment rate to remain in the trough near 3.8%, which is also where it was at the end of 2019. Still, it is understood to be a lagging indicator. UK retail sales likely fell for the third consecutive month when gasoline is excluded. With two exceptions, it has been falling since last May as the cost-of-living squeeze intensifies. Meanwhile, CPI will surge. A 54% rise in the household energy cap was announced in February, effective in April. That alone will lift the month-over-month rate by more than 1.5%. The Bank of England forecast the year-over-year rate to rise to 9.1% from 7.0% in March.

Lastly, we note that UK Prime Minister Johnson is expected to address Northern Ireland's protocol in a speech in the coming week. Tensions have been rising, and the recent election defeat for the Democratic Unionist Party allows it to play the obstructionist role. It refuses to join the government unless the protocol that was a result of extended negotiations is jettisoned.

Turning to the price action:  

Dollar Index:  The Dollar Index rose for the sixth consecutive week and pushed to almost 105.00 for the first time since late 2002. The main driver is the aggressiveness of the Federal Reserve and, secondarily, the poor news stream from Europe, Russia, and China. The momentum indicators are stretched but do not appear poised to turn lower. The 104.00 area may provide support as it capped the upside for a little bit. There is little on the charts until closer to 106.00.

Euro:  The single currency continues to struggle to sustain even minor upticks. It has fallen for the past four sessions and made a new five-year low near $1.0350 ahead of the weekend. A break of the 2017 low ($1.0340) leaves very little to deter a test on parity. Given the elevated volatility (three-month ~9.5%), a move to $1.0 is not so much a tail risk. The $1.05 area now may offer the nearby cap.  A convincing move above $1.06 would suggest a bottom of some import could be in place. 

Japanese Yen: The exchange rate and US yields continue to move nearly in lockstep. The direction seems more important than the level on a day-to-day basis. In the first four sessions last week, the 10-year US yield fell nearly 30 bp, and the dollar fell from around JPY130.50 to about JPY128.30. The yield rose ahead of the weekend, and the dollar traded a full yen off the lows. The momentum indicators have pulled back as one would expect, with a nearly 3% pullback in spot. We often find the dollar-yen pair to be rangebound, and when it does trend, it frequently is moving to a new trend. We suspect that the JPY127.00 area marks the lower end of the range. 

British Pound:  Sterling fell for the fourth consecutive week, and it is poised to fall further. The $1.20 area is the next important target. There have been 23 sessions since April 13, and sterling has fallen in all but four sessions, and none of them was last week. In fact, sterling takes a seven-day slump into next week's activity. It fell to almost $1.2155 before the weekend, its lowest level since May 2020. The momentum indicators are stretched but show little inclination of turning. Initial resistance is likely around $1.2250 but probably takes a move above $1.24 to be of technical significance.

Canadian Dollar:  The close movement of the yen and US 10-year yield has a parallel with the Canadian dollar and the S&P 500. For the past 30 and 60 sessions, the correlation of the changes is tighter with the Canadian dollar and the S&P 500 than between the yen and US yields. The US dollar reached almost CAD1.3080 on May 12, its highest level since late 2020. The recovery in US equities ahead of the weekend sent the greenback to almost CAD1.2900. A break of the CAD1.2850 area is needed to boost the chances that a high is in place. The MACD appears poised to turn down from extreme levels. The Slow Stochastic has fluctuated a bit but is essentially flat this month despite the rise in spot. Macroeconomic fundamentals look to be among the best in the G7.

Australian Dollar:  Since the central bank induced bounce in the Australian dollar (May 4), it has tumbled about 6% to the May 12 low of around $0.6830. Nearly half of that decline was recorded on May 11 and 12, yet the bounce ahead of the weekend was not particularly impressive. It was unable to rise above the previous day's high (~$0.6955), and the close was still the second lowest since mid-2020. The Aussie fell by 2.3% last week, and it was the sixth weekly decline in the past seven. It lost around 8% this run. The momentum indicators are stretched. The MACD could turn higher in the coming days, but the Slow Stochastic is still trending lower in oversold territory. The next important target on the downside is around $0.6760, the halfway point of the Aussie's rally from the pandemic low near $0.5500 in March 2020 to slightly above $0.8000 a year later.

Mexican Peso:  The peso's resilience is impressive even if under-appreciated. While the US dollar has been appreciating multiyear highs against the other major currencies, the peso has held its own. The peso has appreciated by a little less than 2% this year. Leaving aside the Russian rouble, only two other emerging market currencies are up for the year. The Brazilian real has appreciated by 9.6%, and the Peruvian sol has gained nearly 6%. The swaps market is pricing in 135 bp rate increases in the next three months when there are three meetings, which is about what the Fed funds futures have priced in for the Federal Reserve. The momentum indicators have flatlined near mid-range. Support is seen near MXN20.00, which held earlier this month. Initial resistance may be around MXN20.25-MXN20.30. It takes a four-day rally into the week ahead. 

Chinese Yuan: There is nothing special about the Chinese yuan in some ways. It is falling like nearly all the currencies. The yuan has depreciated by about 6.4% so far this year. The bulk of the move has taken place in the last four weeks. The greenback rose from around CNY6.37 to reach a high a little more than CNY6.81 before the weekend. We suspect the dollar would be higher, but the PBOC seems to be moderating its rise by setting the dollar's reference rate lower than the market projects consistently since returning from the labor holidays earlier this month. We suspect the yuan may begin stabilizing and do not expect it to rise above CNY6.85. Initially, support may be in the CNY6.72-CNY6.74 area. 


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Growing Number Of Doctors Say They Won’t Get COVID-19 Booster Shots

Growing Number Of Doctors Say They Won’t Get COVID-19 Booster Shots

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




Growing Number Of Doctors Say They Won’t Get COVID-19 Booster Shots

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

A growing number of doctors say that they will not get COVID-19 vaccine boosters, citing a lack of clinical trial evidence.

I have taken my last COVID vaccine without RCT level evidence it will reduce my risk of severe disease,” Dr. Todd Lee, an infectious disease expert at McGill University, wrote on Twitter.

A vial of the Pfizer-BioNTech COVID-19 vaccine is seen in a file photograph. (Justin Sullivan/Getty Images)

Lee was pointing to the lack of randomized clinical trial (RCT) results for the updated boosters, which were cleared in the United States and Canada in the fall of 2022 primarily based on data from experiments with mice.

Lee, who has received three vaccine doses, noted that he was infected with the Omicron virus variant—the vaccines provide little protection against infection—and described himself as a healthy male in his 40s.

Dr. Vinay Prasad, a professor of epidemiology and biostatics at the University of California, San Francisco, also said he wouldn’t take any additional shots until clinical trial data become available.

“I took at least 1 dose against my will. It was unethical and scientifically bankrupt,” he said.

Allison Krug, an epidemiologist who co-authored a study that found teenage boys were more likely to suffer heart inflammation after COVID-19 vaccination than COVID-19 infection, recounted explaining to her doctor why she was refusing a booster and said her doctor agreed with her position.

She called on people to “join the movement to demand appropriate evidence,” pointing to a blog post from Prasad.

“Pay close attention to note this isn’t anti-vaccine sentiment. This is ‘provide [hard] evidence of benefit to justify ongoing use’ which is very different. It is only fair for a 30 billion dollar a year product given to hundreds of millions,” Lee said.

Dr. Mark Silverberg, who founded the Toronto Immune and Digestive Health Institute; Kevin Bass, a medical student; and Dr. Tracy Høeg, an epidemiologist at the University of California, San Francisco, joined Lee and Prasad in stating their opposition to more boosters, at least for now.

Høeg said she did not need clinical trials to know she’s not getting any boosters after receiving a two-dose primary series, adding that she took the second dose “against my will.”

I also had an adverse reaction to dose 1 moderna and, if I could do it again, I would not have had any covid vaccines,” she said on Twitter. “I was glad my parents in their 70s could get covid vaccinated but have yet to see non-confounded data to advise them about the bivalent booster. I would have liked to see an RCT for the bivalent for people their age and for adults with health conditions that put them at risk.”

The U.S. Food and Drug Administration (FDA) granted emergency use authorization to updated boosters, or bivalent shots, from Pfizer and Moderna in August 2022 despite there being no human data.

Observational data suggests the boosters provide little protection against infection and solid shielding against severe illness, at least initially.

Five months after the authorization was granted, no clinical trial data has been made available for the bivalents, which target the Wuhan strain as well as the BA.4 and BA.5 subvariants of Omicron. Moderna presented efficacy estimates for a different bivalent, which has never been used in the United States, during a recent meeting. The company estimated the booster increased protection against infection by just 10 percent.

The FDA is preparing to order all Pfizer and Moderna COVID-19 vaccines be replaced with the bivalents. The U.S. Centers for Disease Control and Prevention, which issues recommendations on vaccines, continues advising virtually all Americans to get a primary series and multiple boosters.

Professor Calls for Halt to Messenger RNA Vaccines

A professor, meanwhile, became the latest to call for a halt to the Pfizer and Moderna vaccines, which are both based on messenger RNA technology.

At this point in time, all COVID mRNA vaccination program[s] should stop immediately,” Retsef Levi, a professor of operations management at the Massachusetts Institute of Technology, said in a video statement. “They should stop because they completely failed to fulfill any of their advertised promise[s] regarding efficacy. And more importantly, they should stop because of the mounting and indisputable evidence that they cause unprecedented level of harm, including the death of young people and children.”

Levi was referring to post-vaccination heart inflammation, or myocarditis. The condition is one of the few that authorities have acknowledged is caused by the messenger RNA vaccines.

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Tyler Durden Thu, 02/02/2023 - 19:10

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Inside The Secret Government Meeting On COVID-19 Natural Immunity

Inside The Secret Government Meeting On COVID-19 Natural Immunity

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

Four of…



Inside The Secret Government Meeting On COVID-19 Natural Immunity

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

Four of the highest ranking U.S. health officials—including Dr. Anthony Fauci—met in secret to discuss whether or not naturally immune people should be exempt from getting COVID-19 vaccines, The Epoch Times can reveal.

National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci during a Senate hearing in Washington on May 17, 2022. (Shawn Thew/Pool/AFP via Getty Images)

The officials brought in four outside experts to discuss whether the protection gained after recovering from COVID-19—known as natural immunity—should count as one or more vaccine doses.

“There was interest in several people in the administration in hearing basically the opinions of four immunologists in terms of what we thought about … natural infection as contributing to protection against moderate to severe disease, and to what extent that should influence dosing,” Dr. Paul Offit, one of the experts, told The Epoch Times.

Offit and another expert took the position that the naturally immune need fewer doses. The other two experts argued natural immunity shouldn’t count as anything.

The discussion did not lead to a change in U.S. vaccination policy, which has never acknowledged post-infection protection. Fauci and the other U.S. officials who heard from the experts have repeatedly downplayed that protection, claiming that it is inferior to vaccine-bestowed immunity. Most studies on the subject indicate the opposite.

The meeting, held in October 2021, was briefly discussed before on a podcast. The Epoch Times has independently confirmed the meeting took place, identified all of the participants, and uncovered other key details.

Dr. Jay Bhattacharya, a professor of medicine at Stanford University who did not participate in the meeting, criticized how such a consequential discussion took place behind closed doors with only a few people present.

“It was a really impactful decision that they made in private with a very small number of people involved. And they reached the wrong decision,” Bhattacharya told The Epoch Times.

An email obtained by The Epoch Times shows Dr. Vivek Murthy contacting colleagues to arrange the meeting. (The Epoch Times)

The Participants

From the government:

  • Fauci, the head of the U.S. National Institute of Allergy and Infectious Diseases and the chief medical adviser to President Joe Biden until the end of 2022
  • Dr. Vivek Murthy, the U.S. surgeon general
  • Dr. Rochelle Walensky, the head of U.S. Centers for Disease Control and Prevention (CDC)
  • Dr. Francis Collins, head of the U.S. National Institutes of Health, which includes the National Institute of Allergy and Infectious Diseases, until December 2021
  • Dr. Bechara Choucair, the White House vaccine coordinator until November 2021

From outside the government:

  • Offit, director of the Vaccine Education Center at Children’s Hospital of Philadelphia and an adviser to the U.S. Food and Drug Administration on vaccines
  • Dr. Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota and a former member of Biden’s COVID-19 advisory board
  • Akiko Iwasaki, professor of immunobiology and molecular, cellular, and developmental biology at Yale University
  • Dr. Peter Hotez, co-director of Texas Children’s Hospital Center for Vaccine Development and dean of the Baylor College of Medicine’s School of Tropical Medicine

Fauci and Murthy decided to hold the meeting, according to emails The Epoch Times obtained.

“Would you be available tonight from 9-9:30 for a call with a few other scientific colleagues on infection-induced immunity? Tony and I just discussed and were hoping to do this sooner rather than later if possible,” Murthy wrote in one missive to Fauci, Walensky, and Collins.

All three quickly said they could make it.

Walensky asked who would be there.

Murthy listed the participants. “I think you know all of them right?” he said.

Walensky said she knew all but one person. “Sounds like a good crew,” she added.

From top left, clockwise: Dr. Vivek Murthy, Dr. Francis Collins, Dr. Anthony Fauci, and Dr. Rochelle Walensky. (Getty Images)

‘Clear Benefit’

During the meeting, Offit put forth his position—that natural immunity should count as two doses.

At the time, the CDC recommended three shots—a two-dose primary series and a booster—for many Americans 18 and older, soon expanding that advice to all adults, even though trials of the boosters only analyzed immunogenicity and efficacy among those without evidence of prior infection.

Research indicated that natural immunity was long-lasting and superior to vaccination. On the other hand, the CDC published a paper in its quasi-journal that concluded vaccination was better.

Osterholm sided with Offit, but thought that having recovered from COVID-19 should only count as a single dose.

“I added my voice at the meeting to count an infection as equivalent to a dose of vaccine! I’ve always believed hybrid immunity likely provides the most protection,” Osterholm told The Epoch Times via email.

Hybrid immunity refers to getting a vaccine after recovering from COVID-19.

Some papers have found vaccination after recovery boosts antibodies, which are believed to be a correlate of protection. Other research has shown that the naturally immune have a higher risk of side effects than those who haven’t recovered from infection. Some experts believe the risk is worth the benefit but others do not.

Hotez and Iwasaki, meanwhile, made the case that natural immunity should not count as any dose—as has been the case in virtually the entire United States since the COVID-19 vaccines were first rolled out.

Iwasaki referred to a British preprint study, soon after published in Nature, that concluded, based on survey data, that the protection from the Pfizer and AstraZeneca vaccines was heightened among people with evidence of prior infection. She also noted a study she worked on that found the naturally immune had higher antibody titers than the vaccinated, but that the vaccinated “reached comparable levels of neutralization responses to the ancestral strain after the second vaccine dose.” The researchers also discovered T cells—thought to protect against severe illness—were boosted by vaccination.

There’s a “clear benefit” to boosting regardless of prior infection, Iwasaki, who has since received more than $2 million in grants from the National Institutes of Health (NIH), told participants after the meeting in an email obtained by The Epoch Times. Hotez received $789,000 in grants from the NIH in fiscal year 2020, and has received other grants totaling millions in previous years. Offit, who co-invented the rotavirus vaccine, received $3.5 million in NIH grants from 1985 through 2004.

Hotez declined interview requests through a spokesperson. Iwasaki did not respond to requests for comment.

No participants represented experts like Bhattacharya who say that the naturally immune generally don’t need any doses at all.

In an email obtained by The Epoch Times, Akiko Iwasaki wrote to other meeting participants shortly after the meeting ended. (The Epoch Times)

Public Statements

In public, Hotez repeatedly portrayed natural immunity as worse than vaccination, including citing the widely criticized CDC paper, which drew from just two months of testing in a single state.

In one post on Twitter on Oct. 29, 2021, he referred to another CDC study, which concluded that the naturally immune were five times as likely to test positive compared to vaccinated people with no prior infection, and stated: “Still more evidence, this time from @CDCMMWR showing that vaccine-induced immunity is way better than infection and recovery, what some call weirdly ‘natural immunity’. The antivaccine and far right groups go ballistic, but it’s the reality.”

That same day, the CDC issued a “science brief” that detailed the agency’s position on natural immunity versus the protection from vaccines. The brief, which has never been updated, says that available evidence shows both the vaccinated and naturally immune “have a low risk of subsequent infection for at least 6 months” but that “the body of evidence for infection-induced immunity is more limited than that for vaccine-induced immunity.”

Evidence shows that vaccination after infection, or hybrid immunity, “significantly enhances protection and further reduces risk of reinfection” and is the foundation of the CDC’s recommendations, the agency said.

Several months later, the CDC acknowledged that natural immunity was superior to vaccination against the Delta variant, which was displaced in late 2021 by Omicron. The CDC, which has made misleading representations before on the evidence supporting vaccination of the naturally immune, did not respond to a request for comment regarding whether the agency will ever update the brief.

Iwasaki had initially been open to curbing the number of doses for the naturally immune—”I think this supports the idea of just giving one dose to people who had covid19,” she said in response to one Twitter post in early 2021, which is restricted from view—but later came to argue that each person who is infected has a different immune response, and that the natural immunity, even if strong initially, wanes over time.

Osterholm has knocked people who claim natural immunity is weak or non-existent, but has also claimed that vaccine-bestowed immunity is better. Osterholm also changed the stance he took in the meeting just several months later, saying in February 2022 that “we’ve got to make three doses the actual standard” while also “trying to understand what kind of immunity we get from a previous infection.”

Offit has been the leading critic on the Vaccines and Related Biological Products Advisory Committee, which advises U.S. regulators on vaccines, over their authorizations of COVID-19 boosters. Offit has said boosters are unnecessary for the young and healthy because they don’t add much to the primary series. He also criticized regulators for authorizing updated shots without consulting the committee and absent clinical data. Two of the top U.S. Food and Drug Administration (FDA) officials resigned over the booster push. No FDA officials were listed on invitations to the secret meeting on natural immunity.

Fauci and Walensky Downplay Natural Immunity

Fauci and Walensky, two of the most visible U.S. health officials during the pandemic, have repeatedly downplayed natural immunity.

Fauci, who said in an email in March 2020 that he assumed there would be “substantial immunity post infection,” would say later that natural immunity was real but that the durability was uncertain. He noted the studies finding higher antibody levels from hybrid immunity.

In September 2021, months after claiming that vaccinated people “can feel safe that they are not going to get infected,” Fauci said that he did not have “a really firm answer” on whether the naturally immune should get vaccinated.

“It is conceivable that you got infected, you’re protected—but you may not be protected for an indefinite period of time,” Fauci said on CNN when pressed on the issue. “So I think that is something that we need to sit down and discuss seriously.”

After the meeting, Fauci would say that natural immunity and vaccine-bestowed immunity both wane, and that people should get vaccinated regardless of prior infection to boost their protection.

Walensky, before she became CDC director, signed a document called the John Snow Memorandum in response to the Great Barrington Declaration, which Bhattacharya coauthored. The declaration called for focused protection of the elderly and otherwise infirm, stating, “The most compassionate approach that balances the risks and benefits of reaching herd immunity, is to allow those who are at minimal risk of death to live their lives normally to build up immunity to the virus through natural infection, while better protecting those who are at highest risk.”

The memorandum, in contrast, said there was “no evidence for lasting protective immunity to SARS-CoV-2 following natural infection” and supported the harsh lockdown measures that had been imposed in the United States and elsewhere.

In March 2021, after becoming director, Walensky released recommendations that the naturally immune get vaccinated, noting that there was “substantial durability” of protection six months after infection but that “rare cases of reinfection” had been reported.

Walensky hyped the CDC study on natural immunity in August 2021, and the second study in October 2021. But when the third paper came out concluding natural immunity was superior, she did not issue a statement. Walensky later told a blog that the study found natural immunity provided strong protection, “perhaps even more so than those who had been vaccinated and not yet boosted.”

But, because it came before Omicron, she said, “it’s not entirely clear how that protection works in the context of Omicron and boosting.”

Walensky, Murthy, and Collins did not respond to requests for interviews. Fauci, who stepped down from his positions in late 2022, could not be reached.

Murthy and Collins also portrayed natural immunity as inferior. “From the studies about natural immunity, we are seeing more and more data that tells us that while you get some protection from natural infection, it’s not nearly as strong as what you get from the vaccine,” Murthy said on CNN about two months before the meeting. Collins, in a series of blog posts, highlighted the studies showing higher antibody levels after vaccination and urged people to get vaccinated. He also voiced support for vaccine mandates.

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Tyler Durden Thu, 02/02/2023 - 21:10

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Apple Pares Much Of Drop During Earnings Call

Apple Pares Much Of Drop During Earnings Call

Update 6:00pm:  Apple has staged a remarkable reversal after hours, and erased almost the entire…



Apple Pares Much Of Drop During Earnings Call

Update 6:00pm:  Apple has staged a remarkable reversal after hours, and erased almost the entire loss after the company said that it expects a 5% impact from FX rates in Q2, and also expects iPhone revenue growth to accelerate in Q2. CEO Tim Cook was also asked whether the move to higher ASPs for the iPhone is sustainable in light of the sharp decline in sales, and whether this will continue in a worsening economy. Cook said the 14 Pro and 14 Pro Max did extremely well until the supply-chain constraints. He says this is definitely a “strong Pro cycle” and credits the new features in the device. He says he’s happy that Apple is now shipping to the demand.

Tim Cook also said that AI is critical to Apple and mentions features like crash-and-fall detection and the use of AI in features like EKG on the Apple Watch. He says AI will effect everything the company does, including all products and services.

Apple is quite bullish on India and other emerging markets, with CEO Tim Cook saying the company will soon open its first retail stores in India. He also said Apple saw marked improvement in China in December (versus November) after another round of Covid re-openings.

As Bloomberg notes, the company also stuck to a line that revenue and sales of individual product categories would have been higher if not for supply-chain constraints and issues stemming from the macroeconomic environment.

* * *

With both Amazon and Google sliding after reporting disappointing earnings and mixed guidance, it was all up to the world's biggest company, AAPL, to provide some hail mary for the tech earnings season which for better or worse is concentrated in a one hour stretch this afternoon. Alas, it was not meant to be and after missing on the top and bottom line, AAPL has joined the parade of selling and tumbled after hours due to numbers which the market was clearly not impressed with.

  • EPS $1.88 vs. $2.10 y/y, missing estimate $1.94
  • Gross margin $50.33 billion, -7.2% y/y, missing estimate $52.03 billion
  • Revenue $117.15 billion, -5.5% y/y, missing estimate $121.14 billion
    • Products revenue $96.39 billion, -7.7% y/y, missing estimate $98.98 billion
    • IPhone revenue $65.78 billion, -8.2% y/y, missing estimate $68.3 billion
    • Mac revenue $7.74 billion, -29% y/y, missing estimate $9.72 billion
    • IPad revenue $9.40 billion, +30% y/y, beating estimate $7.78 billion
    • Wearables, home and accessories $13.48 billion, -8.3% y/y, missing estimate $15.32 billion
    • Service revenue $20.77 billion, +6.4% y/y, beating estimate $20.47 billion
    • Greater China rev. $23.91 billion, -7.3% y/y, beating estimate $21.8 billion
  • Cash and cash equivalents $20.54 billion, -45% y/y, estimate $29.91 billion

And here is AAPL's diluted EPS in context: needless to say, could have been better.

Commenting on the quarter, Tim Cook said that “during the December quarter, we achieved a major milestone and are excited to report that we now have more than 2 billion active devices as part of our growing installed base.”

CFO Luca Maester chimed in: “our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop. We continued to invest in our long-term growth plans, generated over $24 billion in operating cash flow, and returned over $29 billion to our shareholders during the quarter. The strength of our ecosystem, unmatched customer loyalty, and record sales spurred our active installed base of devices to a new all-time high. This quarter capped another record-breaking year for Apple, with revenue growing over $28 billion and operating cash flow up $18 billion versus last year.”

Going back to the results, Apple missed consensus revenue in most product categories, with the exception of iPads, to wit:

  • IPhone revenue $65.78 billion, missing estimate $68.3 billion
  • Mac revenue $7.74 billion, missing estimate $9.72 billion
  • Wearables, home and accessories $13.48 billion, missing estimate $15.32 billion
  • IPad revenue $9.40 billion, beating estimate $7.78 billion

Of note: Apple recorded its first decline in iPhone revenue since the third quarter of 2020; yet in context, the 8% drop was still less than the 20% decrease reported by Samsung. Other major smartphone providers that have yet to report are expecting to see double-digit losses. Ironically, Apple may have fared comparatively well on smartphone revenue.

The silver lining: service revenue $20.77 billion, +6.4% y/y, beating estimates of $20.47 billion...

... and rose 6.5% Y/Y, an improvement from last quarter's 5.0%

One other place where investors were pleasantly surprised was China sales, which at $23.91 billion, beat the estimate of $21.8 billion by more than $2 billion.

None of that changes the fact that AAPL's sales by region were uniformly negative across the board.

And another potential problem: AAPL's gross cash continues to slide, dropping to $165 billion, the lowest since June 2014...

... while cash net of debt rebounded modestly from $49 billion to $54 billion, just above a 12 year low with the company having spent hundreds of billions on stock buybacks. Let's hope that Apple doesn't actually need to use that cash.

Commenting on the results, Bloomberg writes that the results show that Apple hasn’t been able to dodge the tech slowdown afflicting many of its competitors. Demand for smartphones and computers has slumped in the past year, and Covid-19 restrictions in China added to Apple’s woes during the holiday sales period. Timing was another issue: The company didn’t launch new Macs and HomePods until recent weeks, missing the end of the first quarter.

In response to these disappointing earnings, the stock predictably slumped as much as 4% before recouping some losses, although even with the drop it is back to where it was... yesterday.

Tyler Durden Thu, 02/02/2023 - 18:05

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