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March Ends like A Lion, No Lamb in Sight

March Ends like A Lion, No Lamb in Sight

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Overview: The coronavirus plague upended the world in March.  Equities are finishing the month on a firm note.  Strong gains in the US yesterday and an unexpectedly strong Chinese PMI (yes, to be taken with the proverbial grain of salt) helped lift most Asia Pacific and European markets today.  Japan and Australia are exceptions to the generalization.  The Dow Jones Stoxx 600 is slightly higher but appears to be waiting for US leadership to break higher.  Benchmark 10-year yields are narrowly mixed.  Peripheral European yields are a little softer, while the US 10-year hovers around 70 bp.  The dollar saw strong demand at the Tokyo fix, and only the Norwegian krone among the majors is gaining on the greenback. Perhaps it is helped by the bounce in oil, encouraged by expected Chinese refinery demand and so much pressure on some US shale producers, that cooperation with OPEC is being considered.  The JP Morgan Emerging Market Currency Index is flat after falling more than 2% over the past two sessions.  Gold is softer in the middle of the $1600-$1650 near-term range.  


Asia Pacific

China's March PMI surged, and even officials there cautioned against reading too much into it.  The questions are phrased relative to the previous month, not pre-crisis.  The manufacturing PMI rose to 52.0 from 35.7.  A sub-index of export orders rose to 46.4 from 28.7.  The non-manufacturing PMI rose to 52.3 form 29.6.   Combined, these lifted the composite to 53.0 from 28.9.   The take-away is that the Chinese economy is on the mend, and we know from a variety of data, like road traffic, power plant usage of coal, and air quality, that industry is recovering.  The broad direction may be more important than the precise location of the recovery.  

Japan's industrial output and retail sales data for February was also better than expected.  Industrial production rose by 0.4%, while the median forecast in the Bloomberg survey was for a flat report.  Similarly, retail sales had been expected to fall by 1.7% but instead rose by 0.6%.  The January rise of 0.6% was revised to 1.5%, suggesting the consumer was recovering from the sales tax increase slump more than had been appreciated.  The jobless rate was steady in February at 2.4%, but the job-to-applicant ratio slipped to 1.45 from 1.49, a small hint of what is to come.  Separately, we note that South Korea's February industrial output better than anticipated as well.  It fell by 3.8%, whereas the Bloomberg survey expected a 4.5% drop.  Tomorrow, South Korea will report March trade figures.  

Strong demand for dollars was seen at the Tokyo fix, and the greenback surged to JPY108.70 after having tested the JPY107.70 area yesterday.  There are two options expiring today of note.  The first is for about $365 mln at JPY108.50, and the second is for nearly $2 bln at JPY109.00.  An hourly trendline is found around JPY108.00-JPY108.20 in the North American morning that may offer support.  The Australian dollar poked above $0.6200 for the first time since March 16, but this seems to have exhausted the interest.  It has traded on both sides of yesterday's narrow range (~$0.6110-$0.06195), and a close beyond it may be a signal of the near-term direction.  The yuan's reference rate was set slightly weaker than the models' forecast. Extremely narrow ranges prevailed yesterday and today.  

Europe

In a week's time, the Eurogroup of EMU finance ministers is to have proposals ready for the heads of state to deal with the funding of the emergency.  While corona bonds are one option, it does not seem like the most likely.  There appears to be some movement to a credit line with the European Stabilization Mechanism for around 2% of GDP.  Germany is reported skeptical of unconditional borrowing but seems like it is a starting point.  Still, given the magnitude of the spending that is required, and the stock of existing debt, it is not clear that a 2% credit line is sufficient to move most government's debt and debt servicing needles.

German unemployment rose by 1k in March, and the unemployment rate was unchanged at 5.0%.  While Europe may still be trying to figure out a collective approach to the debt, it will likely have a more stable labor market.  Several countries have adopted the German practice of the state, absorbing some part of wage costs if employers reduce workers' hours without dismissing them.  Outside of the EMU, the UK and Canada have also unveiled similar programs. The US approach saw over 3 mln people claim unemployment benefits in the week ending March 21 and another surge, perhaps even larger, is expected last week, when data is reported on April 2. Separately, EMU March CPI rose 0.5% on the month, but the year-over-year rate slumped to 0.7% from 1.2%, and the core rate eased to 1.0% from 1.2%.  Deflation forces will likely gather steam in the period ahead.  

Emergency times call for emergency measures to be sure, but the move in Hungary is breathtaking, and once again, underlines the importance of initial conditions in terms of institutional relations.  Prime Minister Orban has been at the forefront of pushing the envelope of illiberal market economies, often bringing it into conflict with the EC.  Parliament, yesterday, suspended itself, after declaring a state of emergency and granting Orban unlimited powers.  His power to rule by decree is open-ended.  Along with all but a handful of emerging market currencies, the forint was sold to start the week.  It settled at record low against the euro and is consolidating today.  The pattern that the cross has carved looks to be a continuation formation and suggests potential toward HUF268-HUF278. Separately, Poland's Deputy Prime Minister appears to have been among the first to suggest that the May 10 presidential election should be postponed.  The main challenger to the incumbent Duda is called on supporters to boycott the election and suspended her campaign over the weekend.  

The euro is pulling back for the second consecutive session after rallying every day last week.  It is met the initial retracement (38.2%) objective near $1.0965 today, and the pre-weekend low was almost $1.0950.  If this area does not hold, the next retracement (50%) is found closer to $1.09.  Expiring options may discourage the upside.  There is an option for roughly 760 mln euro at $1.10, and another 520 mln at $1.1015, and nearly 600 mln at $1.1036.  That said, North American dealers will return to their desks with the euro over-extended on an intraday basis.  Note that there is a 1.5 bln euro option expiring tomorrow at $1.10.  Sterling had approached $1.25 in last week's surge and being sold yesterday, and in Asia today, it reached about $1.2245.  It is trying to recover in the European morning but is likely blocked by resistance near $1.24.  

America

A fourth US fiscal package is taking shape. It looks to be around $600 bln, and will include more aid to states, the mortgage market, the travel industry, and bolster worker safety.  With the Federal Reserve committed to an open-ended Treasury and MBS purchases program, the US debt market shows no concern for the coming supply.  The US fiscal efforts are already estimated at around 10% of GDP, which is the most among the major industrialized countries.  

While oil output exceeds demand, the problem of storage is growing. Saudi Arabia has signaled a further discount in next month sales from the benchmark rate, nearly doubling it to $6.5.  A couple of producers in Texas are lobbying to strike a deal with OPEC, which still seems highly unlikely.  There is talk that Cushing is experiencing a huge surge in storage.  With falling prices and rising storage costs, producers are at a disadvantage.  News that China's refineries are going to dramatically boost their processing rate helps blunt drop in runs by refineries in India, Canada, and South Africa.  Some Indian refiners are citing force majeure to turn down shipments.

Mexico and Brazil have been slow to respond to the COVID-19 threat. It declared a health emergency late yesterday.  Separately, the central bank will auction dollars from the Fed swap line tomorrow.   Twitter and Facebook removed re-posts by Brazil's President Bolsonaro on the grounds of harmful misinformation regarding the virus.  Both currencies are among the hardest hit in the past month.  Both saw record lows.  The peso is off about 18.6% this month, and the Brazilian real has depreciated by nearly 14%.

The US dollar is firmer against the Canadian dollar today despite the rise in oil and firm equities.  At CAD1.4200, the greenback has retraced (38.2%) of the recent decline. The next retracement (50%) is found closer to CAD1.4300.  The US dollar is over-extended on an intraday basis. Initial support is seen near CAD1.4200 now, and below there, support is seen by CAD1.4160.  The greenback is consolidating yesterday's gains against the peso.   It appears to be forging a near-term range between MXN23.50 and MXN24.50.  


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The Coming Of The Police State In America

The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now…

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The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now patrolling the New York City subway system in an attempt to do something about the explosion of crime. As part of this, there are bag checks and new surveillance of all passengers. No legislation, no debate, just an edict from the mayor.

Many citizens who rely on this system for transportation might welcome this. It’s a city of strict gun control, and no one knows for sure if they have the right to defend themselves. Merchants have been harassed and even arrested for trying to stop looting and pillaging in their own shops.

The message has been sent: Only the police can do this job. Whether they do it or not is another matter.

Things on the subway system have gotten crazy. If you know it well, you can manage to travel safely, but visitors to the city who take the wrong train at the wrong time are taking grave risks.

In actual fact, it’s guaranteed that this will only end in confiscating knives and other things that people carry in order to protect themselves while leaving the actual criminals even more free to prey on citizens.

The law-abiding will suffer and the criminals will grow more numerous. It will not end well.

When you step back from the details, what we have is the dawning of a genuine police state in the United States. It only starts in New York City. Where is the Guard going to be deployed next? Anywhere is possible.

If the crime is bad enough, citizens will welcome it. It must have been this way in most times and places that when the police state arrives, the people cheer.

We will all have our own stories of how this came to be. Some might begin with the passage of the Patriot Act and the establishment of the Department of Homeland Security in 2001. Some will focus on gun control and the taking away of citizens’ rights to defend themselves.

My own version of events is closer in time. It began four years ago this month with lockdowns. That’s what shattered the capacity of civil society to function in the United States. Everything that has happened since follows like one domino tumbling after another.

It goes like this:

1) lockdown,

2) loss of moral compass and spreading of loneliness and nihilism,

3) rioting resulting from citizen frustration, 4) police absent because of ideological hectoring,

5) a rise in uncontrolled immigration/refugees,

6) an epidemic of ill health from substance abuse and otherwise,

7) businesses flee the city

8) cities fall into decay, and that results in

9) more surveillance and police state.

The 10th stage is the sacking of liberty and civilization itself.

It doesn’t fall out this way at every point in history, but this seems like a solid outline of what happened in this case. Four years is a very short period of time to see all of this unfold. But it is a fact that New York City was more-or-less civilized only four years ago. No one could have predicted that it would come to this so quickly.

But once the lockdowns happened, all bets were off. Here we had a policy that most directly trampled on all freedoms that we had taken for granted. Schools, businesses, and churches were slammed shut, with various levels of enforcement. The entire workforce was divided between essential and nonessential, and there was widespread confusion about who precisely was in charge of designating and enforcing this.

It felt like martial law at the time, as if all normal civilian law had been displaced by something else. That something had to do with public health, but there was clearly more going on, because suddenly our social media posts were censored and we were being asked to do things that made no sense, such as mask up for a virus that evaded mask protection and walk in only one direction in grocery aisles.

Vast amounts of the white-collar workforce stayed home—and their kids, too—until it became too much to bear. The city became a ghost town. Most U.S. cities were the same.

As the months of disaster rolled on, the captives were let out of their houses for the summer in order to protest racism but no other reason. As a way of excusing this, the same public health authorities said that racism was a virus as bad as COVID-19, so therefore it was permitted.

The protests had turned to riots in many cities, and the police were being defunded and discouraged to do anything about the problem. Citizens watched in horror as downtowns burned and drug-crazed freaks took over whole sections of cities. It was like every standard of decency had been zapped out of an entire swath of the population.

Meanwhile, large checks were arriving in people’s bank accounts, defying every normal economic expectation. How could people not be working and get their bank accounts more flush with cash than ever? There was a new law that didn’t even require that people pay rent. How weird was that? Even student loans didn’t need to be paid.

By the fall, recess from lockdown was over and everyone was told to go home again. But this time they had a job to do: They were supposed to vote. Not at the polling places, because going there would only spread germs, or so the media said. When the voting results finally came in, it was the absentee ballots that swung the election in favor of the opposition party that actually wanted more lockdowns and eventually pushed vaccine mandates on the whole population.

The new party in control took note of the large population movements out of cities and states that they controlled. This would have a large effect on voting patterns in the future. But they had a plan. They would open the borders to millions of people in the guise of caring for refugees. These new warm bodies would become voters in time and certainly count on the census when it came time to reapportion political power.

Meanwhile, the native population had begun to swim in ill health from substance abuse, widespread depression, and demoralization, plus vaccine injury. This increased dependency on the very institutions that had caused the problem in the first place: the medical/scientific establishment.

The rise of crime drove the small businesses out of the city. They had barely survived the lockdowns, but they certainly could not survive the crime epidemic. This undermined the tax base of the city and allowed the criminals to take further control.

The same cities became sanctuaries for the waves of migrants sacking the country, and partisan mayors actually used tax dollars to house these invaders in high-end hotels in the name of having compassion for the stranger. Citizens were pushed out to make way for rampaging migrant hordes, as incredible as this seems.

But with that, of course, crime rose ever further, inciting citizen anger and providing a pretext to bring in the police state in the form of the National Guard, now tasked with cracking down on crime in the transportation system.

What’s the next step? It’s probably already here: mass surveillance and censorship, plus ever-expanding police power. This will be accompanied by further population movements, as those with the means to do so flee the city and even the country and leave it for everyone else to suffer.

As I tell the story, all of this seems inevitable. It is not. It could have been stopped at any point. A wise and prudent political leadership could have admitted the error from the beginning and called on the country to rediscover freedom, decency, and the difference between right and wrong. But ego and pride stopped that from happening, and we are left with the consequences.

The government grows ever bigger and civil society ever less capable of managing itself in large urban centers. Disaster is unfolding in real time, mitigated only by a rising stock market and a financial system that has yet to fall apart completely.

Are we at the middle stages of total collapse, or at the point where the population and people in leadership positions wise up and decide to put an end to the downward slide? It’s hard to know. But this much we do know: There is a growing pocket of resistance out there that is fed up and refuses to sit by and watch this great country be sacked and taken over by everything it was set up to prevent.

Tyler Durden Sat, 03/09/2024 - 16:20

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

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February Employment Situation

By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…

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By Paul Gomme and Peter Rupert

The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.

Temporary help services employment continues a steep decline after a sharp post-pandemic rise.

Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.

The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.

The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.

Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.

As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.

Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.

The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.

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