Government
#MacroView: The Threats To The Bullish Thesis Have Grown
#MacroView: The Threats To The Bullish Thesis Have Grown

Since the March lows, the markets have rallied on optimism of a “V-shaped” economic recovery and constant stimulus from the Fed. So far, that has been the right call. However, in recent weeks, the threats to the bullish thesis have grown.
We recently discussed the Fed’s inflation of an asset bubble. The crux of the analysis was the unprecedented amount of monetary stimulus to counter the “pandemic.”
“The Fed was able to inflate another asset bubble to restore consumer confidence and stabilize the credit markets. The problem is that since the Fed never unwound their previous policies, current policies will have a more muted long-term effect.
However, this time there are 50+ million unemployed, wage growth is declining, and bankruptcies are on the rise. The Fed’s attempt to inflate another bubble to offset the damage from the deflation of the last bubble, will likely not work.”
In the short-term, the Fed’s actions had the intended outcome by providing “stability” to the financial markets.
The Paradox
What is most imperative for the Fed is those market participants, and consumers “believe” in their actions. With the financial ecosystem more heavily levered than ever, the “instability of stability” remains the most significant risk.
“The ‘stability/instability paradox’ assumes that all players are rational. That assumption implies participants will avoid complete destruction. In other words, all players will act rationally, and no one will push ‘the big red button.’”
The problem the Fed, and Global Central banks, currently face is an inability to extract themselves from ongoing monetary policy measures. After the “Financial Crisis,” the Fed had hoped they would be able to reduce their accommodation as economic growth and inflation returned.
Neither ever happened.
A Diminishing Rate Of Return
Instead, as each year passed, more monetary policy was required just to sustain economic growth. Whenever the Fed tightened policy, economic growth weakened, and financial markets declined. The table shows it takes increasingly larger amounts of QE to create an equivalent increase in asset prices.
As with everything, there is a “diminishing rate of return” on QE over time. Since QE requires more debt to be issued, the consequence is slower economic growth over time.
“The relevance of debt growth versus economic growth is all too evident. Debt issuance initially exploded during the Obama administration. It further accelerated under President Trump, and has taken ever-increasing amounts of debt to generate $1 of economic growth.”
In other words, without debt, there has been no organic economic growth.
Importantly, after a decade of unprecedented monetary policy programs in U.S., the risks in the system have been expanded. It is now imperative that everyone continues to “act rationally.”
By not letting the system correct, letting weak companies fail, and allowing valuations to mean revert, the Fed has trapped itself. Such was a point we discussed previously:
“One way to view this problem is by looking at the Nasdaq 100 versus the S&P 500 index. That ratio is now at the highest level ever.”
These levels of extremes rarely exist for extended periods. It currently seems as if “nothing can stop the bullish market.” However, it is always an unexpected, exogenous event, which pops the bubble.
The Bear Case
My colleague Doug Kass recently penned an interesting post on this issue:
“In aggregate terms, COVID -19 will likely have a sustained impact on the domestic economy. Such will be seen in reduced production and profitability for several years and forever in some industries.
At the core of my concerns:
- Important Industries Gutted: Several key labor-intensive industries, such as education, lodging, entertainment, restaurant, travel, retail, and non-residential real estate, all face an existential threat. For these industries, they simply cannot survive the conditions they face. For these gutted industries, we face, at best, an 80% to 85% recovery in the years to come. In the case of some of these sectors like retail, Covid-19 only sped up what was already a secular decline.
- A Negative Knock-On Effect: Tangential industries, like food and other services surrounding less utilized offices, malls, and other spaces, will also get hit. They, too, face at best, an 80% recovery.
- Widening Income and Wealth Inequality: The combined unemployment impact will run deep and cause adverse economic ramifications and intensified social imbalances.
- A Battered Public Sector: With a lower revenue base, the Federal government and municipalities will cut services (and employment).
- Rising Tax Rates and Redistribution: To fund the revenue shortfall tax rates will steadily increase. Such will exacerbate the disruption described above, and create a less than virtuous cycle.
Negative Impact To Stocks
As Doug also notes, there are substantial impacts to companies individually, which will eventually manifest in lower asset prices.
- Weak Capital Spending: With a large output gap and higher debt loads ($2.5 trillion of Federal Debt and $16 trillion of non-financial debt), the outlook for capital spending is weak over the next several years.
- Higher Costs And Lower Profit Margins: The surviving companies in a post-virus world will face higher costs of doing business.
- The Competitive Influence of Zombie Companies Exacerbate Lower Profitability: Corporations will face further pressure on profit margins from “zombie companies.” These companies compete aggressively on cost, and take longer to die due to low interest rates and weak loan covenants.
- Small Businesses Gutted: The greatest brunt from the pandemic is faced by small businesses that historically account for the largest job creators.
- The Specter of a Secular Erosion in Unemployment: Permanent job losses will be surprisingly large, ultimately killing consumption.
- More Cautious Business Confidence and Spending: The surviving companies were ill-prepared operationally and financially, in early 2020 for the disruptive impact of COVID- 19. Such will force companies to maintain a “buffer” of additional capital (and cash) in the event of another unforeseen event or tragedy. In all likelihood, this will make for less ambitious capital spending and expansion plans relative to the past.
- Financial Repression Holds Multiple Risks: A sustained period of low-interest rates, necessary (by some) to offset reduced economic growth, could backfire. Repressing interest rates runs the risk of a pension fund crisis, and intransigence on the part of businesses to expand and may impair the U.S. banking system.
- A Political Stasis: Political divisiveness and partisanship could intensify – dimming the probability of effective, pro-growth fiscal policy necessary in a low growth economy.
Overly Bullish
When reading through Doug’s list, the immediate response from readers who have a “bullish bias,” is “yeah…but what about the Fed?”
In the short-term, the Fed’s monetary interventions can certainly lift asset prices. As noted in the table above, the biggest “bang for the buck” is when asset markets are profoundly depressed, and negative sentiment is exceptionally high.
Such is not the case currently with retail investors chasing momentum in the markets with reckless disregard of the underlying investment risk. The sharp rise in the Russell 2000 index, as noted by Sentiment Trader, supports this view:
“Below is the percentage of Russell 2000 firms that have negative operating earnings over the trailing-12 months. It just moved above 30%, the most in over a decade. Only twice before in 20 years have such a high proportion of these small companies lost money. Those two periods were in April 2002 and December 2009 through February 2010.”
Furthermore, you have a near-record number of small traders speculating on asset prices through the use of options.
As noted previously, investors are also using 24-month forward estimates to justify overpaying for assets.
But, by nearly any metric, stocks are extremely expensive. There is only so much “future growth” that can be pulled forward. Eventually, “the piper must be paid.”
The Risks Of Being Bullish
At the moment, none of these risks seem to matter.
What is vital to understand none of these issues will “cause” the “bear market.”
They are just the “fuel” that will exacerbate an eventual decline when the right catalyst is applied. Much like a can of gasoline stored in your garage, gas is inert until introducing the proper catalyst (a match.)
Concerning the financial markets, it will most likely not be a resurgence of the virus, weak economic data, or even a dismal earnings season. Such has already been “priced in” by the market. However, as stated, it will require an unexpected, exogenous event to ignite the fuel. At the point, it will become hard to contain the flames.
From an investment standpoint, it is critical to understand the “risk” under which you deploy capital into overvalued and extended assets.
While it may seem like a “no-lose” scenario due to the Fed’s liquidity programs, mean reversions can, and have previously, occurred.
As Doug concluded:
“While the Federal Reserve can provide the necessary ammunition (and liquidity) to stabilize activity briefly – it is unlikely a longer-term solution.
As we pass another Independence Day, the downcast prospects will impact the markets in the coming weeks and months
These are not an ingredient for a “Bull Market” or rising valuations. Instead, the above factors may be an ingredient to:
- Increased market volatility.
- Increasing economic uncertainty and cautiousness in the C-suite.
- An irregular period of growth.
- Lower price-earnings ratios.
- More social unrest.
The U.S. economy and our financial markets now face a crossroad – they are once again decoupling. The test of economic aspiration and market optimism will come in the years ahead.”
Navigating The Risk
Whenever I write an article that discusses a “bearish view” on the financial markets, readers construe it to mean I am sitting in cash, or short the “bull market.”
Nothing could be further from the truth. As stated over the last few weeks, we are currently “uncomfortably long” the market on our portfolios’ equity side. While we continue to hedge our risks to some degree through our bond, gold, and cash holdings, we are still well exposed to potential downside risks.
Having a thorough understanding of the “risk” is to have better control over long-term outcomes. While it is essential to make money while markets are rising, it is even more critical to control the losses. Spending a bulk of your time getting “back to even” is not a long-term investment strategy.
In January and February of this year, we discussed taking profits in stocks like AAPL, MSFT, AMZN, and others. The reason was not some prediction about the impact of the virus, but rather the gross deviation and extension of these positions from long-term means.
That risk reduction benefited us much when the crash came in March.
On Wednesday, we took profits in AAPL, MSFT, NFLX, and AMZN. (Taking profits does not mean we sold the entire position.)
I don’t know what might cause the next correction, or if there will even be one. But what I do know is that when stocks are this extended, overbought, and deviated above long-term means, bad things tend to happen.
The post #MacroView: The Threats To The Bullish Thesis Have Grown appeared first on RIA.
Government
Who Can You Trust?
Who Can You Trust?
Authored by James Howard Kunstler via Kunstler.com,
“I’m sick and tired of hearing Democrats whining about Joe Biden’s…

Authored by James Howard Kunstler via Kunstler.com,
“I’m sick and tired of hearing Democrats whining about Joe Biden’s age. The man knows how to govern. Just shut up and vote to save Democracy.”
- Rob Reiner, Hollywood savant
Perhaps you’re aware that the World Health Organization (WHO) is cooking up a plan to impose its will over all the sovereign nations on this planet in the event of future pandemics.
That means, for instance, that the WHO would issue orders to the USA about lockdowns, vaccines, and vaccine passports and we US citizens supposedly would be compelled to follow them.
Why the “Joe Biden” regime would go along with this globalist fuckery is one of the abiding mysteries of our time - except that they go along with everything else that the cabal of Geneva cooks up, such as attacks on farmers, and on oil production, and on relations between men and women, and on personal privacy, and on economic liberty throughout Western Civ, as if they’re working overtime to kill it off. And all of us with it.
I think they are working overtime at that because the sore-beset citizens of Western Civ are onto their game, and getting restless about it. So, the Geneva cabal is in a race against time before the center pole of their circus tent collapses and the nations of the world are compelled to follow the zeitgeist in the direction of de-centralizing, foiling all their grand plans.
The “Joe Biden” regime is pretending to ignore the reality that this WHO deal is actually a treaty that would require ratification by a two-thirds vote in the senate, an unlikely outcome. In any case, handing over authority to the WHO — in effect, to its chief Tedros Adhanom Ghebreyesus — to push around American citizens like a giant herd of cattle would be patently unlawful.
That center pole of the circus tent is the wobbling global economy. It’s barely holding up the canvas over the three rings of the circus. In the center ring, the death-defying spectacle of the Biden Family crime case is playing out before a huge audience (us). This week, a gun went off at the FBI and smoke is curling out of the barrel. FBI Director Christopher Wray was forced to verify that he’s been sitting on an incriminating document for three years from a “trusted” confidential human source, i.e., an informant, stating that the Biden Family received a $5-million bribe from a foreign entity when “JB” was vice-president.
That’s only one bribe of many others, of course, as documented in the Hunter Biden laptop, and it must be obvious it represents treasonous behavior that will demand resignation or impeachment. As this spools out in the weeks and months ahead, do you think Americans will be in the mood to accept further insults such as “Joe Biden” surrendering our national sovereignty to the WHO?
Anyway, you must ask yourself: why on earth should I trust the WHO about anything? Did they not participate in laying a trip on the world with Covid-19? How did those lockdowns work out? Do you think they destroyed enough businesses and ruined enough households? How’s the vaccination program doing? Effective? Safe? Yeah, maybe not so much. Maybe killing a lot of people, wrecking immune systems, sterilizing reproductive organs, causing gross disabilities, shattering lives.
Of course, in over three years neither the WHO nor the US medical authorities showed the slightest interest in helping to figure out how the Covid-19 virus was made in a lab, and exactly how it got loose in the world. Lately, Dr. Ghebreyesus has warned the world about much worse future pandemics supposedly coming down at us. Oh? Really? What does he know that we don’t? That possibly new efforts to concoct chimeric diseases are ongoing in labs around the world? (You know that dozens of such labs were discovered in Ukraine as the war got underway there in 2022.) What’s Dr. Ghebreyesus doing to stop that?
If US orgs and citizens are involved in this “research,” why doesn’t the WHO alert our government leaders so they can stop it? (Would they? I’m not so sure.) And, who is behind it this time? The Eco-Health Alliance again, like with Covid-19? By the way, that outfit got another whopping grant last fall from the NIH to “study” bat viruses — right after the NIH terminated a previous grant on account of The Eco-Health Alliance failing to turn over notebooks and other records.
No, you cannot trust the WHO about anything. The “trust horizon” (a concept introduced by the great Nicole Foss, late of The Automatic Earth dot com) is shrinking. You can no longer trust any distant authorities. You also cannot trust the US federal government (especially the executive branch behind “Joe Biden”). And notice: the trust horizon is shrinking just as the world is de-centralizing. This, you see, is the main contradiction behind all the Globalists’ twisted ambitions to control everything, including you. They are working against the current tide of human history which is pushing everything toward down-scaling, re-localization, and re-assertion of the sovereign individual person.
That trend will become increasingly evident as things organized at the giant scale start to implode — giant retail chains, medical behemoths, hedge funds, big banks, you name it. The world no longer has the mojo for globalism. There’s reason to wonder these days whether the USA has the mojo to remain a unified national polity of states. Our federal government is not only financially bankrupt beyond any coherent reckoning, it is also morally bankrupt, and it has decided to make war against its own people. None of this is satisfactory and none of this is working. It’s time to figure out who and what you can trust and act accordingly.
International
Removing antimicrobial resistance from the WHO’s ‘pandemic treaty’ will leave humanity extremely vulnerable to future pandemics
Drug-resistant microbes are a serious threat for future pandemics, but the new draft of the WHO’s international pandemic agreement may not include provisions…

In late May, the latest version of the draft Pandemic Instrument, also referred to as the “pandemic treaty,” was shared with Member States at the World Health Assembly. The text was made available online via Health Policy Watch and it quickly became apparent that all mentions of addressing antimicrobial resistance in the Pandemic Instrument were at risk of removal.
Work on the Pandemic Instrument began in December 2021 after the World Health Assembly agreed to a global process to draft and negotiate an international instrument — under the Constitution of the World Health Organization (WHO) — to protect nations and communities from future pandemic emergencies.
Read more: Drug-resistant superbugs: A global threat intensified by the fight against coronavirus
Since the beginning of negotiations on the Pandemic Instrument, there have been calls from civil society and leading experts, including the Global Leaders Group on Antimicrobial Resistance, to include the so-called “silent” pandemic of antimicrobial resistance in the instrument.
Just three years after the onset of a global pandemic, it is understandable why Member States negotiating the Pandemic Instrument have focused on preventing pandemics that resemble COVID-19. But not all pandemics in the past have been caused by viruses and not all pandemics in the future will be caused by viruses. Devastating past pandemics of bacterial diseases have included plague and cholera. The next pandemic could be caused by bacteria or other microbes.
Antimicrobial resistance

Antimicrobial resistance (AMR) is the process by which infections caused by microbes become resistant to the medicines developed to treat them. Microbes include bacteria, fungi, viruses and parasites. Bacterial infections alone cause one in eight deaths globally.
AMR is fueling the rise of drug-resistant infections, including drug-resistant tuberculosis, drug-resistant pneumonia and drug-resistant Staph infections such as methicillin-resistant Staphylococcus aureus (MRSA). These infections are killing and debilitating millions of people annually, and AMR is now a leading cause of death worldwide.
Without knowing what the next pandemic will be, the “pandemic treaty” must plan, prepare and develop effective tools to respond to a wider range of pandemic threats, not solely viruses.
Even if the world faces another viral pandemic, secondary bacterial infections will be a serious issue. During the COVID-19 pandemic for instance, large percentages of those hospitalized with COVID-19 required treatment for secondary bacterial infections.
New research from Northwestern University suggests that many of the deaths among hospitalized COVID-19 patients were associated with pneumonia — a secondary bacterial infection that must be treated with antibiotics.

Treating these bacterial infections requires effective antibiotics, and with AMR increasing, effective antibiotics are becoming a scarce resource. Essentially, safeguarding the remaining effective antibiotics we have is critical to responding to any pandemic.
That’s why the potential removal of measures that would help mitigate AMR and better safeguard antimicrobial effectiveness is so concerning. Sections of the text which may be removed include measures to prevent infections (caused by bacteria, viruses and other microbes), such as:
- better access to safe water, sanitation and hygiene;
- higher standards of infection prevention and control;
- integrated surveillance of infectious disease threats from human, animals and the environment; and
- strengthening antimicrobial stewardship efforts to optimize how antimicrobial drugs are used and prevent the development of AMR.
The exclusion of these measures would hinder efforts to protect people from future pandemics, and appears to be part of a broader shift to water-down the language in the Pandemic Instrument, making it easier for countries to opt-out of taking recommended actions to prevent future pandemics.
Making the ‘pandemic treaty’ more robust
Measures to address AMR could be easily included and addressed in the “pandemic treaty.”
In September 2022, I was part of a group of civil society and research organizations that specialize in mitigating AMR who were invited the WHO’s Intergovernmental Negotiating Body (INB) to provide an analysis on how AMR should be addressed, within the then-draft text.
They outlined that including bacterial pathogens in the definition of “pandemics” was critical. They also identified specific provisions that should be tweaked to track and address both viral and bacterial threats. These included AMR and recommended harmonizing national AMR stewardship rules.
In March 2023, I joined other leading academic researchers and experts from various fields in publishing a special edition of the Journal of Medicine, Law and Ethics, outlining why the Pandemic Instrument must address AMR.
The researchers of this special issue argued that the Pandemic Instrument was overly focused on viral threats and ignored AMR and bacterial threats, including the need to manage antibiotics as a common-pool resource and revitalize research and development of novel antimicrobial drugs.
Next steps
While earlier drafts of the Pandemic Instrument drew on guidance from AMR policy researchers and civil society organizations, after the first round of closed-door negotiations by Member States, all of these insertions, are now at risk for removal.
The Pandemic Instrument is the best option to mitigate AMR and safeguard lifesaving antimicrobials to treat secondary infections in pandemics. AMR exceeds the capacity of any single country or sector to solve. Global political action is needed to ensure the international community works together to collectively mitigate AMR and support the conservation, development and equitable distribution of safe and effective antimicrobials.
By missing this opportunity to address AMR and safeguard antimicrobials in the Pandemic Instrument, we severely undermine the broader goals of the instrument: to protect nations and communities from future pandemic emergencies.
It is important going forward that Member States recognize the core infrastructural role that antimicrobials play in pandemic response and strengthen, rather than weaken, measures meant to safeguard antimicrobials.
Antimicrobials are an essential resource for responding to pandemic emergencies that must be protected. If governments are serious about pandemic preparedness, they must support bold measures to conserve the effectiveness of antimicrobials within the Pandemic Instrument.
Susan Rogers Van Katwyk is a member of the WHO Collaborating Centre on Global Governance of Antimicrobial Resistance at York University. She receives funding from the Wellcome Trust and the Social Sciences and Humanities Research Council of Canada.
treatment pandemic coronavirus covid-19 deaths canada world health organizationSpread & Containment
Repeated COVID-19 Vaccination Weakens Immune System: Study
Repeated COVID-19 Vaccination Weakens Immune System: Study
Authored by Zachary Stieber via The Epoch Times (emphasis ours),
Repeated COVID-19…

Authored by Zachary Stieber via The Epoch Times (emphasis ours),
Repeated COVID-19 vaccination weakens the immune system, potentially making people susceptible to life-threatening conditions such as cancer, according to a new study.
Multiple doses of the Pfizer or Moderna COVID-19 vaccines lead to higher levels of antibodies called IgG4, which can provide a protective effect. But a growing body of evidence indicates that the “abnormally high levels” of the immunoglobulin subclass actually make the immune system more susceptible to the COVID-19 spike protein in the vaccines, researchers said in the paper.
They pointed to experiments performed on mice that found multiple boosters on top of the initial COVID-19 vaccination “significantly decreased” protection against both the Delta and Omicron virus variants and testing that found a spike in IgG4 levels after repeat Pfizer vaccination, suggesting immune exhaustion.
Studies have detected higher levels of IgG4 in people who died with COVID-19 when compared to those who recovered and linked the levels with another known determinant of COVID-19-related mortality, the researchers also noted.
A review of the literature also showed that vaccines against HIV, malaria, and pertussis also induce the production of IgG4.
“In sum, COVID-19 epidemiological studies cited in our work plus the failure of HIV, Malaria, and Pertussis vaccines constitute irrefutable evidence demonstrating that an increase in IgG4 levels impairs immune responses,” Alberto Rubio Casillas, a researcher with the biology laboratory at the University of Guadalajara in Mexico and one of the authors of the new paper, told The Epoch Times via email.
The paper was published by the journal Vaccines in May.
Pfizer and Moderna officials didn’t respond to requests for comment.
Both companies utilize messenger RNA (mRNA) technology in their vaccines.
Dr. Robert Malone, who helped invent the technology, said the paper illustrates why he’s been warning about the negative effects of repeated vaccination.
“I warned that more jabs can result in what’s called high zone tolerance, of which the switch to IgG4 is one of the mechanisms. And now we have data that clearly demonstrate that’s occurring in the case of this as well as some other vaccines,” Malone, who wasn’t involved with the study, told The Epoch Times.
“So it’s basically validating that this rush to administer and re-administer without having solid data to back those decisions was highly counterproductive and appears to have resulted in a cohort of people that are actually more susceptible to the disease.”
Possible Problems
The weakened immune systems brought about by repeated vaccination could lead to serious problems, including cancer, the researchers said.
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Who Can You Trust?