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Merck CPO Julie Gerberding On The Deadliness Of Covid-19

Merck CPO Julie Gerberding On The Deadliness Of Covid-19

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Julie Gerberding coronavirus wuhan lab accident

CNBC’s Tyler Mathisen interviews Merck Chief Patient Officer Julie Gerberding and Scripps Research Executive Vice President Eric Topol from CNBC’s Healthy Returns Summit today

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Q1 2020 hedge fund letters, conferences and more

WHEN: Today, Tuesday, May 12, 2020

Interview With Julie Gerberding And Eric Topol

Following is the unofficial transcript of a CNBC interview with Merck Chief Patient Officer Julie Gerberding and Scripps Research Executive Vice President and Scripps Research Translational Institute Founder and Director Eric Topol live from CNBC’s Healthy Returns virtual summit on Tuesday, May 12th.

TYLER MATHISEN:  Good, as always, to remember that more people recover from this illness than those who succumb from it, which is not to minimize the pain and distress of those we have lost and the families of those people have suffered.  As we move now to our final discussion, sort of to tie it all up, join me in welcoming Julie Gerberding, who used to run the CDC and is now the Chief Patient Officer at Merck.  We also expect to have Eric Topol with us.  He is the founder and director of the Scripps Institute and a best-selling author.  We're working out a few technical hairballs there.  Julie, I'm sure you understand, so it will be you and me at first.  And welcome, we're delighted to have you with us.

JULIE GERBERDING:  Thank you, I'm happy to be here.  Thank you.

TYLER MATHISEN:  So glad you could run the anchor leg with us here.  You were one of the first people way back in January to sound a kind of clarion call.  Maybe even before some of the people who are both in government now, including Dr. Fauci and others, you realized that this coronavirus was a beast of an entirely different sort.  What told you that?

JULIE GERBERDING:  Well, you know, I had been involved very much in the original SARS outbreak in 2003, and one of the characteristics of that outbreak is it wasn't very transmissible at the community level.  So when I saw the case numbers in China, and then when I recognized the situation on the cruise ships and other people in very confined areas, I really could see that this was going to be a much more transmissible problem in the community.  And that was frightening.

TYLER MATHISEN:  Did you have a sense, beyond the transmissibility of the illness, which was truly alarming, did you have a sense of how deadly and vicious it was?

JULIE GERBERDING:  Well, you know, my first fear was the fact that the original 2003 SARS coronavirus had a very high fatality rate, about 10 percent.  So imagine if this very transmissible virus had that kind of a fatality rate.  So I was very worried about how serious this was going to be.  When I recognized the data coming out of China that indicated it wasn't as fatal as we had feared, I still didn't feel much relief when the numbers started showing that it was significantly more deadly than influenza.  So we were dealing with something that was highly transmissible and had a fatality rate that was significantly higher than what we were used to dealing with in seasonal influenza and even in the 2009 influenza pandemic.  So on a global basis, this was a huge threat, and indeed it proved to be a pandemic of the kind that we haven't seen for a century.

TYLER MATHISEN:  I want to talk a little bit about the experience in China and then the experience we've had here in the United States with more cases by far than any other country.  But I guess I would like to ask you what we've learned so far about this pandemic, this virus.  Was it realistic, ever, that we or China could contain this virus?

JULIE GERBERDING:  Well, I think it was worth a try.  And we have to give China some credit for the fact that they made heroic efforts to try to clamp down and reduce the transmission of this virus, and I think it did buy the world some time so that we could understand a little bit better what was happening there and take some of the steps for preparation that were necessary. So that was not something that you would argue against doing, but it did not prove to be successful.  And no one was surprised when we began to see this spill over into other countries and when it ultimately spread across the world. The biggest lesson learned, I think so far, has been that when the world faces a pandemic like this, people can really align around the idea of mitigation and working together to try and reduce the surge in cases so that our health systems have a chance of managing the tremendous burden that they encounter, and that those social distancing measures actually do have an impact.  I think we had that hypothesis based on the experience in the 1918 influenza pandemic.  But country after country, community after community, we are really seeing the data that the kinds of steps that are intrusive and challenging and difficult for everyone to sustain actually do save lives, slow down the peak of the curve; and ultimately, if we are willing to sustain the course, they will help lower the area under the curve, which means lives will be saved while we are waiting for treatments that reduce mortality or vaccines that can protect us from infection.

TYLER MATHISEN:  Before I bring in Eric Topol, who is now good -- Mr. Topol, welcome.  We're glad to have you with us.  Because we're on kind of a thread here talking about the origin of this disease in China, I want to ask you, Dr. Gerberding, the Chinese incidence appears to have fallen very, very dramatically.  They had a high rise and then a very steep falloff.  If the numbers of new cases coming out of China are to be believed, why did that happen there?  What can we learn, what can we take from their experience; or is the take-away that the Chinese were never really honest about the numbers in the first place and aren't being so now?

JULIE GERBERDING:  Well, of course I don't have insight into the ground truth in China, since I'm not in the government and I'm not privy to some of the confidential communications that are probably going back and forth.  But as I said, I think social distancing can really matter, and in China they have the capacity to impose mandatory social distancing that exceeds anything we could probably imagine experiencing in the United States or in the western world.  So if that is what it takes to really contain the epidemic, we've learned an important lesson there. I suspect, however, that like we're seeing in other countries, as China gets back to business and people begin to resume their normal lives, we're going to see hot spots there, because this virus hasn't gone away, and there's nothing that says that the risk today of a hot spot emerging is any less than the risk was several months ago.

TYLER MATHISEN:  Eric Topol, weigh in here.  We have about 4 percent of the world's population in the United States, but we've got something like 28 -- a third of the coronavirus cases, 28 percent of the confirmed deaths.

ERIC TOPOL:  Right.

TYLER MATHISEN:  Why have we been hit so hard, so much --

ERIC TOPOL:  Good to be with you, Tyler and Julie.  I think the main issue is that we were so far behind the outbreak.  So, instead of getting the testing in gear even before it arrived in the U.S. with the first patient January 21st, we were basically paralyzed for at least a month and a half; and at the same time, of course, we know South Korea mobilized, they got testing going right away, and they got in front of the outbreak. So if you just look at that and you look at all the other countries in the world that were successful, and there's over 20 of them, the common theme is that they got testing going early, they had containment, and they wound up with much better outcomes. So we're at the main, I think, breakdown that led to everything else was just never getting any sense of containment, letting the virus run rampant through the U.S., diffuse spread; and you know, we're living with that now, unfortunately.

TYLER MATHISEN:  So I guess that leads me to a question, Mr. Topol, about science and government working together.  And I would love, Julie, to hear your thoughts on this as well.  Generally speaking, what you just pointed to would be either a failure of science or a failure of government to react quickly enough, or a failure for the two of them to agree and coalesce around a strategy.  So talk to me about that and whether science and government -- let's focus here on the United States -- have been working well together.  Eric?

ERIC TOPOL:  Well, I guess I would start and say that our government wasn't working because it was -- it knew that we needed the tests, but even though they were failing and they were contaminated, there was no back-up plan and so we were caught flat-footed.  And, in fact, other countries started testing randomly, even before there was a patient in their country.  Iceland is notable, but several others, as well. So we were totally unprepared.  We were in a state of denial; that is, some of our leading government officials, that this wasn't even going to come to the U.S., which was, you know, remarkably naive. So the science -- I mean, any epidemiologist would know that this was going to come, come to the U.S., and we just had no readiness whatsoever.  And the inability to test for what really turned out to be a couple of months just let this just go like a wildfire through the country.  And we are in this irrevocable path where we know --

TYLER MATHISEN:  -- how do you think they can be used to improve our overall health care system?  And I'll ask the same question to you, Eric, in just a moment.

JULIE GERBERDING:  The serious and I think most tragic learning in all of this is how fragile our health system is when it comes to managing surge capacity.  Now, this was something that was known and has been an issue several times in recent years when we've had a bad flu season or in 2009 when we had the flu pandemic, but we really have not yet sufficiently invested in surge.  Our health systems operate on thin margins and try to minimize the unnecessary utilization or stockpiling, so to speak, of resources.  And yet, when we see a requirement that exceeds our baseline capacity, it's really hard to meet that capacity.  And so the incredible effort on the part of health workers, Merck and Pfizer and Lilly came together and said, we have many health workers, let's allow them to volunteer and pay their salaries so that we can help augment the health care workforce, which was spread so thin.  These are problems that should have been anticipated and, yet, they are very difficult to solve.  We don't have the mentality that pandemic preparedness is a national security capacity that we need to manage in the same way we manage our defense capacity, so that we have something available if we need it and just pray that we don't.  So I think that's really one of the most important things that I hope changes as we go forward, that we will have redundancies and capabilities to manage surge. On the other side, though, there is a good thing in this, and that is the science, in that we have really I think understood that science has advanced so far.  It's on our side, and we're really beginning to identify the marvelous engagements, as we've been hearing all afternoon, in the antivirals and the immunologic therapies and the vaccines that hopefully will come down the pike sooner rather than later.

TYLER MATHISEN:  Eric, I guess it's early to come away with deep learnings.  Because as we began this day, we asked Dr. Gottlieb what inning are we in, and he said, Maybe we're in the second inning, and this may be a double header.  We don't know when this is going to come back.  But talk to me a little bit about from where you stand, what are the deep learnings?  And I know in another question -- and I know it's one that you have an opinion on, and that is from one of the viewers, how rapidly is the virus mutating?  Knock that one out first, maybe, and then go to the deep learning.

ERIC TOPOL:  Yeah, well, that's one thing that's really fortunate, Tyler, is the virus is not mutating in any rapid way.  In fact, it's quite slow.  So while that gives a wonderful ability for genomicists to track the virus from state to state, country to country, just by those mutations that are basically innocent, we haven't seen a new strain at all.  And so that's one of the only good things about the COVID-19 virus story.  Mutations, yes; but they're basically just good for detective work for tracking the virus and nothing more.  There is no evidence that there's been a mutation that is pathogenic, that is worse transmissibility or worse potency or anything like that.

TYLER MATHISEN:  And what about that deep learning question?

ERIC TOPOL:  Usually I ascribe deep learning for artificial intelligence, for deep neural networks.  But here our learning hopefully is substantial, because this I think is the greatest public health blunder, catastrophe, in the history of the country.  So hopefully we'll learn a lot.  But the one thing that we have to learn besides preparedness is that we have a very shaky information system.  So we are the third largest country in the world, and instead of having all our data together, like so many other countries that have real health systems, learning health systems -- I'll give you an example.

In the UK they have this ICNARC, which is every ICU patient, real time, being able to learn from each of those patients.  So, for example, if you know that mechanical ventilation can make people worse, you're going to learn that much sooner than in the U.S. where we have lack of cohesiveness, which is so incredibly not coalesced with that rich data that we could have to help guide us and learn from every patient.  So that's something that we need to work on in the future.

TYLER MATHISEN:  Okay.  I'm going to ask a couple of questions about reopening the economy, and then we'll go to a kind of lightning round with the time we have, we'll spill over just a little bit.  Dr. Fauci, this morning Dr. Gerberding said, in front of Congress, that we risk needless suffering and death if we open society too soon and then run the risk of reinfection or a spread of it.  As we have seen in some of the states where steps have been taken to reopening the economy, the case count has been rising and rising rather dramatically. On the other hand, the testing count in some of those cases has been rising rather dramatically, as well.  So there's a confusion, I would think, among epidemiologists to the point of are we seeing more cases because we're reopening, or are we identifying more cases because we're testing more? So how do you get to the bottom of this, and if you are a policymaker or an epidemiologist, make the conclusion that we reopen too soon; or not?

JULIE GERBERDING:  Well, first of all, the frame of this is the fact that while there are hot spots where many people have been infected, as a population of people across the United States, the vast majority of us have not been infected and we are not immune, and we remain susceptible. So anything that introduces the virus into that population of people is prone to set off another hot spot and increase the probability of transmission.

That's just a fact, and we don't need testing and a lot of other interventions to figure that out.  I do think that the epidemiologists have a tough job because testing is all over the map, and we also recognize that now we have a variety of tests, some of which are more accurate than others, so we have that confounder, but the lagging indicater and the one that probably is the most meaningful in terms of the morbidity and mortality of the recrudescence is the hospitalization; and that, we don't need a test to observe.  We can count the number of patients who are admitted and the number of people who are in the intensive care unit.

And as those numbers begin to increase, we know that we've gone too far in relieving our social distancing.  It's tragic to have to get to that point, but that's exactly what Dr. Fauci was trying to say this morning, is that if that's what we do, we can anticipate that we will pay a big price.

TYLER MATHISEN:  That's very interesting.  We were speaking yesterday in a different venue, I was, with the mayor of Scottsdale, Arizona.  And he made exactly that point; that the real telltale for him is hospital admissions, ICU admissions, and that that, you don't need a test to know about that.  You have the real numbers. Mr. Topol, you mentioned earlier sort of the slowness and speaking with conflicting voices.  It feels to me as though the messaging around coronavirus has been -- there's been a lot of dissonant messaging:  We've got tests for everybody.  No, we don't; yes, we do.  This is going to go away; no, it isn't.  It's a serious threat; no, it isn't.  There's been a lot of conflicting messaging that I think has confused people.  Am I right?

ERIC TOPOL:  Absolutely.  No, I think -- you could go back to, you know, March 6th, when everyone can have a test, and we still aren't there here in May.  So, no, there's been terrible problems with mixed and missed messaging, and I think that has certainly set us back, as well. But, you know, I think that the problem was that we were flying blind during those months, part of January, all of February, and the first half of March.

And now we're flying blind again because we don't have the testing infrastructure in place.  The other thing that we could do, of course, is get digital surveillance.  We've already seen this week a report about using smartphone apps for just collecting symptoms.  And what we can also do is get resting heart rate.  If we did that for 100 million people, or even a tiny fraction of that, of Americans that have a fitness band or a smart watch, we could get resting heart rate as a way to not fly blind while we're waiting for the testing infrastructure to get whole.

What I'm amazed about, Tyler, is that we've had all these weeks of relative lookdowns or absolute lookdowns, and we still haven't gotten this testing story right.  Of course, the problem is, if you don't get that right -- and that includes testing people who don't have any symptoms, even random testing, at scale, you know, we haven't done that yet.  And if you don't do that, you're not ready to do contact tracing and isolation.

TYLER MATHISEN:  Yeah.

ERIC TOPOL:  So the basic steps here, we're just violating.

TYLER MATHISEN:  I guess I find that -- we'll skip beyond this, but the idea of using smart devices for patient monitoring.  Americans have a very ambiguous, ambivalent relationship with sharing personal data.  On the one hand, they're very scared of an intrusive government listening to what they do or say; on the other hand, they are more than happy to share their location with Waze all the time to help them get through traffic.  But I see a big opportunity there for personal monitoring devices. Dr. Gerberding, let me go back to a question about reopening the economy. Can we ever really go back to a fully reopened economy unless we have an effective vaccine against this disease?  And how hopeful are you that we will be able to come up with a vaccine?  Coronavirus is the common cold -- the common cold is a coronavirus, and we have no vaccine against that.  What tells you we'll be able to have a vaccine on this, and will we really go back to normal until we do?

JULIE GERBERDING:  Well, let me say a few things about the vaccine.  And I say this with some humility, because Merck did cross the finish line with a vaccine for Ebola that was developed under somewhat similar circumstances, an emergent public health crisis in western Africa and then a second public health crisis in the Eastern DRC. And I think some of the things we learned there in that context is that when you have an emergency like this, you really do rally the biopharmaceutical ecosystem to come to the rescue, and people will put aside their competitive pressures or the things that are normally on their plate and work hard to try to contribute to solutions.

These situations demand multiple shots on goal; we saw that with Ebola, and we are certainly seeing it now with more than 130 antivirals and many dozens of vaccine candidates, some of which are in clinical trials already.  So those shots on goal is important, and I think that allows us to have more confidence that something will cross the finish line that will be valuable and hopefully provide durable protection.  The bar for safety is very high in this regard, so we can't promise that we're going to give the right balance of a great vaccine that's also very safe in the fastest manner possible, but we should be hopeful that we have a prospect of doing that.  And ultimately, the way to end the pandemic, we have three choices, and all could come into play.

One is that we do find treatments that lower the fatality rate and the hospitalization rate to the point where it is more like seasonal influenza and we can manage it; or we develop a vaccine that offers protective immunity to broad swaths of the population; or, worst case scenario, we just wait until enough people have had it that we develop population-level herd immunity and the epidemic can't be propagated.  I am most hopeful that we'll find antivirals fast.  I think the prospects for a vaccine are an area that we should be optimistic; but the timeline is challenging, and herd immunity will eventually happen one way or another, but I hope and pray that that isn't what we have to resort to.

TYLER MATHISEN:  One last question to you, Dr. Gerberding, before I go back to Eric for the final question of the afternoon.  There's been increased worry about children, and at one point there was some thinking that children were relatively resistant to this virus.  But we've seen lots of cases now in which the illness is either detected or some other manifestation of this illness, something like an inflammatory response, like Kawasaki, has taken effect.  Talk to me a little about that, and then answer a couple of questions that I asked Dr. Gottlieb this morning.  If you had a young child, would you send that young child away to sleepaway camp this summer, day camp this summer; and what about going to either a public or a swim club swimming pool?

JULIE GERBERDING:  So, yeah, I think the situation with the pediatrics, the very, very young infants as well as children, is confusing.  Because we typically expect, or basically every respiratory virus with which I'm familiar, that the children will be the sort of cesspool where the virus gets transmitted in daycares or schools, and that children are really important in the transmission at the community level.  Now, clearly we know children are not immune to this virus.

We have plenty of examples where children have been ill and hospitalized, but they are a minority of the cases.  And so that suggests that either they manage it as a mild upper respiratory illness and that doesn't go any further, or there's something about their receptor status or their host immune response that protects them from developing the symptomatic disease. We don't know how capable they are of transmitting, even when asymptomatic, but as we see the epidemic expand and we have the opportunity to study the disease more closely, the awareness that some children do develop this very difficult autoimmune disorder, something like Kawasaki's disease, if it's not exactly Kawasaki's disease, this is a very serious and often fatal condition.

And so this tells us we have a lot to learn, and we better keep an open mind about the status of our children in this context. So if I had young children, I have to admit that I would not send my young children to camp or to the swimming club this summer until I was confident that my community was not a place where there was active transmission. I hope I'm wrong about that.  And as the studies that Dr. Topol has been talking about get conducted and we understand better the true bottom of the iceberg that is there under the tip, which are all the cases with symptoms and in hospitals, I hope as we understand the true prevalence of the disease in our communities, we will get answers to this question; and I hope that happens sooner rather than later.

TYLER MATHISEN:  I guarantee you, there are millions of parents, including this one, who hope that your hope proves true and that camp is able to happen and swim days are able to happen. Eric, wrap us up here.  We've obviously seen a major outbreak in this country, in Italy, in Great Britain, and to lesser extents in other countries.  But there are other parts of the world where this disease has not ripped through yet the way one might expect.  How worried are you about what could happen as this disease begins to manifest in countries that are even less prepared than we are, or were, to contend with it; countries like Brazil, countries in central and sub-Saharan Africa, countries in Asia and maybe Latin America?

ERIC TOPOL:  All right.  Well, I think the ones that have signed on now to be major trouble spots, countries, are certainly Brazil, as you mentioned, Tyler, India and Russia.  Those are the ones that are really on the rise.  And to add to that, Mexico.  We haven't yet seen the signal of this diffuse spread with cases and fatalities through the continent of Africa, but that's certainly a major liability going forward. So I think this is what many of us think.

There will be a second cycle that Tony Fauci referred to earlier today, and also I know was discussed throughout this program, not the rebound story, but as it cycles around the world because of these other continents that are just now kind of showing up. But just to think that the U.S. is in the same category as Brazil, India and Russia as to its response, it's really -- has to be categorized as a pathetic response. Now, on the other hand, we are really good at things like developing neutralizing antibodies and drugs and vaccines.  So that's the sanguine side of this, and hopefully that will be good for all people in the world, not just those in the U.S. So we have a counterbalancing of seeing momentum, really unprecedented momentum in the programs for drugs and neutralizing antibodies, convalescent plasma and the vaccine.

Hopefully, as these other continents show what is inevitable, and we go through what will be a two- or three-year story at the least with respect to additional cycles and ever-present, you know, we will have remedies.  And I do think that in the months ahead we will see the fatality rate drop down, because we're starting to see therapies that are proven to be effective.  And one just other note, I should have mentioned, Tyler.

When you asked about the messaging, the mask story was just really abominable; that we shouldn't wear a mask because there weren't enough masks, then we should wear masks.  So this has just been part and parcel of the problem of not having a consistent, uniform science-based communication.  I hope we'll see that improve, because this is going to be a long haul.  And as Scott asserted earlier today in the program, whatever inning you want to put it in, it's in the early phases.

TYLER MATHISEN:  Lots of lessons learned, and we've certainly learned a lot today.  Dr. Topol, thank you for leaving us on that hopeful note.  Dr. Gerberding, as someone who is on the front lines in this fight, working with your researches at Merck and elsewhere in the industry, we thank you.  And thank you both for your time today, really appreciate it.

ERIC TOPOL:  Thank you.

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Stocks for a recession: which companies have historically done well during recessions or are likely to this time?

Last week the Bank of England forecast a recession starting this autumn that it now expects to be deeper and longer than previously assumed. It also expects…

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Last week the Bank of England forecast a recession starting this autumn that it now expects to be deeper and longer than previously assumed. It also expects inflation to hit 13% by the end of the year just months after reassuring that it didn’t expect more than modestly high figures.

Having belatedly acknowledged the extent of the inflation problem, admittedly exacerbated by the impact on energy and food prices the war in Ukraine has had, the UK’s central bank’s nine-member Monetary Policy Committee voted to raise interest rates. Thursday’s 0.5 percentage points rise, which took the BoE’s base rate to 1.75%, was the biggest single increase in 27 years.

The European Central Bank and USA’s Federal Reserve have also taken aggressive measures on rates, with the former also raising rates by 0.5% to 0%. It was the ECB’s first rates rise in 11 years. The Fed went even further, raising rates for the fourth and largest time this year with a 0.75 percentage points hike to between 2.25% and 2.5%.

Aggressive interest rate hikes alongside high levels of inflation tend to result in recession with the combination referred to as stagflation. With inflation expected to remain high next year and not dropping back towards the target 2% before 2023, we could be in for an extended period of recession.

Why stock markets fall during a recession but not all stocks do

Stock markets historically do badly during recessions for the simple reason they are a proxy for the economy and economic activity. When economic activity drops, people and companies have less money or are worried about having less money, so they spend less and companies earn less. Investors also become less optimistic about their prospects and valuations drop.

But the kind of drop in economic activity that leads to recessions is not evenly distributed across all areas of an economy. When consumers cut back on spending, they typically choose to sacrifice some things and not others, rather than applying an even haircut across all costs. And there are goods and services that people spend more on rather than less when tightening their belts.

So while the net impact of a recession has always historically been the London Stock Exchange and other major international stock markets losing market capitalisation, or value, that doesn’t mean all the stocks that constitute them go down. Some go down by more than others. And some stocks grow in value because the companies sell the categories of goods and services people spend more on when they are either poorer or worried about becoming poorer.

Should we be investing “for” a recession?

This surely means all investors need to do to mitigate against a recession is to sell out of the stocks that do badly during an economic slump and buy into those that do well? In theory, yes. In practice, doing that successfully would mean being sure a recession will take place some time before it becomes a reality and timing its onset, then the subsequent recovery, well.

That is of course far easier said than done which is why even professional fund managers don’t attempt the kind of comprehensive portfolio flip that would involve. Some investors will make big bets on events like the onset of a recession or inflation spiralling out of control.

They are the kind of bets that make for dramatic wins like those portrayed in the Hollywood film The Big Crash, which tells the story of a group of traders who predicted and bet big on the 2007 subprime mortgage implosion that triggered the international financial crisis. But as the film relies on for its dramatic tension, the big winners of The Big Crash very nearly got their timing wrong. Another few days and they would have been forced to close their positions just before market conditions turned in their favour and lost everything.

The reality is the big, risky bets that result in spectacular investment wins when they come off are usually far more likely to go wrong than right. Which is why regular investors, rather than high risk traders using leverage, shouldn’t take them. At least not with their main investment portfolio if they don’t have the luxury of being able to justify setting aside 10% to 20% of capital for highr isk-high reward bets.

If you have a well-balanced investment portfolio with a long term horizon and you are happy with the overall quality of your investments, you may choose to do nothing at all to mitigate against the recession that is almost certainly coming. If you have ten years or more until you expect to start drawing down an income from your portfolio, your investments should have plenty of time to recover from this period.

But if you do want to rebalance because you feel your portfolio is generally too heavily weighted towards the kind of growth stocks particularly vulnerable to inflation, higher interest rates and recession, you might want to consider rotating some of your capital into the kind of stocks that might do well in a recession.

How to pick stocks that will do well in a recession?

There are two ways to highlight stocks that might do well in a recession. The first is the most obvious and simplest approach – look at which did well in previous recessions. We had a very brief recession at the start of the Covid-19 pandemic and a much more significant one in 2008/09 in the wake of the international financial crisis. Which companies did well over those periods?

The second approach is to add a layer of complexity into the equation and consider how and why the coming recession might differ from the two most recent historical examples. The 2020 recession was extremely unusual in its brevity. Within a couple of months, stock markets were soaring again as people under quarantine and social distancing restrictions spent more in the digital economy and generally on services and products to enhance their experience being couped up at home.

The 2008/09 recession was also different because it was caused by a systemic failure in the financial sector. Unemployment leapt which is not expected to happen this time around with an especially tight labour market one result of the combination of the pandemic and Brexit. Many households also have higher levels of savings built up during the pandemic which a significant number of analysts believe is softening the impact of inflation.

While there are likely to be constants throughout recessions, there are also differences that should be taken into account. Normally energy companies do badly during a recession as lower economic activity means less energy being used. But energy companies are currently posting record profits because of sky-high energy prices which are one of the major factors behind the expected recession. They should continue to do well while the recession lasts as energy prices dropping again is likely to be one of the catalysts behind the recovery.

The online trading company eToro recently published two baskets of “recession winning stocks” – one made up of Wall Street-listed companies and the other companies listed in the UK. The stocks in each basket were selected because they were the biggest gainers during the last two recessions. Interestingly, they also did well during the intervening period between 2009 and 2020, as well as in the aftermath of the coronavirus crash.

The portfolio of US stocks beat the S&P 500 index of large American businesses by 60 percentage points through the financial crisis between 2007 and 2009 and by 9 percentage points during the Covid crisis in 2020.

The portfolio of UK stocks beat FTSE-100 by 35 percentage points during the financial crisis and by 17 percentage points in the Covid crash. Since 2007, the US portfolio has gained 834%, more than twice the return of the Nasdaq and about five times that of the S&P 500. The UK portfolio’s 129% return is eight times more than the FTSE 100’s, excluding dividends.

eToro says:

“Well represented segments included discount and everyday-low-price retailers as consumers trade down, like Walmart (WMT), Ross Stores (ROST) and Dollar Tree (DLTR).”

“Fast food McDonalds (MCD) is related. Similarly, home DIY, like Home Depot (HD) Lowe’s (LOWE), and auto repair parts stocks Autozone (AZO) and O’Reilly (ORLY). Health care and big biotech is well-represented as inelastic non-discretionary purchases, like Abbott (ABT), Amgen (AMGN), Vertex (VRTX).”

“Also, domestic comforts from toys (Hasbro, HAS) to candy (Hershey, HSY), and getting more from your money and tax (H&R Block, HRB), and educating yourself (2U, TWOU).”

The UK portfolio included the drug makers AstraZeneca and GlaxoSmithKline, which did well because spending money on healthcare and medicines is essential and families don’t tend to cut back even when struggling financially.

The cigarette makers British American Tobacco and Imperial Brands also don’t usually see any downturn in demand because they benefit from a customer base addicted to their products. Both companies pay high and rising dividends. Consumer goods firms such as Unilever and Premier Foods also typically do well because they own strong brands that people bought even after price rises have been passed on.

Proactive Investor also picks out a range of London-listed stocks it expects to do well over the next year or so. In the energy sector that is doing so well at the moment it highlights Harbour Energy as a “core sector stock” and Diversified Energy Company as having “one of the lowest-risk free cash flow profiles in the sector”, while Energean (a client) provides “excellent visibility on multi-decade cash flows”.

Another difference to recent recessions could be how miners do during the one expected from autumn. Normally lower economic activity reduces for demand for commodities but the sector is also facing supply constraints that should see prices supported or rebound quickly.

Copper, mineral sands and diamonds look among the commodities most constrained in terms of supply, with limited supply growth under development. Mining and commodity stocks to look at are suggested as:

“Atalaya Mining (AIM:ATYM, TSX:AYM), Central Asia Metals, Kenmare Resources, Petra Diamonds and Antofagasta, with Tharisa PLC (LSE:THS, JSE:THA) tagged on as platinum group output to be in focus as automotive sales recover.”

“Gold stocks are seen as outperforming the market during the pullback phase, as in March 2020 and in the initial stages of a rebound, with top picks currently Pan African Resources PLC (AIM:PAF, OTCQX:PAFRY, JSE:PAN, OTCQX:PAFRF), Pure Gold Mining Inc (TSX-V:PGM, LSE:PUR, OTC:LRTNF), Wheaton Precious Metals and Yamana Gold (TSX:YRI, LSE:AUY).”

Credit Suisse has also picked out stocks that have historically outperformed during recessions, highlighting:

“London Stock Exchange Group PLC (LSE:LSEG), RELX PLC (LSE:REL), Experian (LSE:EXPN) PLC, Microsoft Corporation (NASDAQ:MSFT) and Visa Inc (NYSE:V).”

Don’t panic

While there is nothing wrong with doing some periodic portfolio rebalancing and potentially rotating more assets into stocks seen as likely to thrive in a recession, don’t panic. Recessions have always come and gone as part of the economic cycle and stock markets traditionally go on to greater heights during the subsequent recovery.

That means the chances are your portfolio will regain its losses and add new gains over the years ahead. Buying cheap growth stocks seen as likely candidates to flourish again during the recovery could be seen as just as sensible a tactic as rotating into recession-proof stocks. But if you do decide to reposition to some extent, look for stocks that have not only historically done well during recessions, or could be expected to during this one ahead, but are also healthy companies you would expect to keep doing well when markets recover. Then your success won’t come down to the fickle fate of whether or not you get your timing right.

The post Stocks for a recession: which companies have historically done well during recessions or are likely to this time? first appeared on Trading and Investment News.

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TDR’s U.S. Stock Market Preview For The Week Of August 8, 2022

A weekly stock market preview and the data that will impact the tape. Sunday Evening Futures Open – Stock Market Preview Weekend News And Developments…

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A weekly stock market preview and the data that will impact the tape.

Sunday Evening Futures Open – Stock Market Preview

Weekend News And Developments

Berkshire Hathaway dramatically slowed new investment in the second quarter after setting a blistering pace at the start of the year, as the US stock market sell-off pushed the insurance-to-railroad conglomerate to a $43.8bn loss.

China’s southern island province of Hainan started mass Covid-19 testing on Sunday, locking down more parts of the province of over 10 million residents, as authorities scramble to contain multiple Omicron-driven outbreaks, including the worst in capital Sanya, often called “China’s Hawaii”.

Cuba: 17 missing, 121 injured as fire rages in oil tank farm in Matanzas City

Equity positioning for both discretionary and systematic investors remains in the 12th percentile of its range since January 2010, according to Deutsche Bank published last week.

Fisker Inc. (NYSE:FSR) unveils a process for qualifying US-based reservation holders of the Fisker Ocean all-electric SUV to retain access to the existing federal tax credit. The current $7,500 tax credit would be unavailable should Congress pass the Inflation Reduction Act of 2022 and President Biden signs the legislation into law.

Former Labour prime minister Gordon Brown has called for an emergency budget before the UK hits a “financial timebomb” this autumn. Mr. Brown said millions would be pushed “over the edge” if the government does not address the cost of living crisis.

Israel said Sunday it killed a senior Islamic Jihad commander in a crowded Gaza refugee camp, the second such targeted attack since launching its high-stakes military offensive against the militant group just before the weekend. The Iran-backed militant group has fired hundreds of rockets at Israel in response, raising the risk of the cross-border fighting turning into a full-fledged war.

NexJ Systems (TSX: NXJ) announced financial results for its second quarter ended June 30, 2022.

Rhine river hit by drought conditions, hampers German cargo shipping. According to reports, transport prices have shot up as drought and hot weather have affected water levels in the river Rhine in Germany leading cargo vessels to reduce loads during transportation.

Taiwan’s defense ministry said it had detected 66 Chinese air force planes and 14 Chinese warships conducting activities in and around the Taiwan Strait on Sunday, Reuters reports. Thursday’s drills involved the live firing of 11 missiles.

Unifor: 1,800 members from across the country arrive in Toronto this weekend before Monday’s start to the union’s 4th Constitutional Convention, where delegates will elect a new National President and vote on key priorities and initiatives. Unifor is Canada’s largest union in the private sector, representing 315,000 workers in every major area of the economy. 

U.S. rate futures have priced in a 69% chance of a 75 bps hike at its September meeting, up from about 41% before the payrolls data. Futures traders have also factored in a fed funds rate of 3.57% by the end of the year.

What The Analysts Are Saying…

Anybody that jumped on the ‘Fed is going to pivot next year and start cutting rates’ is going to have to get off at the next station, because that’s not in the cards. It is clearly a situation where the economy is not screeching or heading into a recession here and now.” — Art Hogan, chief market strategist at B. Riley Financial

“It is not a market bottom, things are not going to go up consistently from here because we are going to be buying low tech products for a while, so everyone has something to make up as COVID demand = pre-COVID​, there are fewer units for this. Reality check – unlike ‘Big Tech’, consumer discretionary related companies are offering more cautious guidance.”Morgan Stanley analyst commentary on a potential market bottom

The fact of the matter is this (Aug. 5 nonfarm payroll report) gives the Fed additional room to continue to tighten, even if it raises the probability of pushing the economy into recession. It’s not going to be an easy task to continue to tighten without negative repercussions for the consumer and the economy”. — Jim Baird, chief investment officer at Plante Moran Financial Advisors

“We are surprised to not see investors start to chase upside calls in fear of underperforming the market. People are just watching.” — Matthew Tym, head of equity derivatives trading at Cantor Fitzgerald

What We’re Watching

Psychedelic Sector Gaining Momentum: What started out as bottoming action after a protracted multi-quarter decline has now morphed into a tangible bullish impulse. We believe Netflix new docuseries How To Change Your Mind has played an important roll in the creation of critical mass awareness for the sector—and a rebound in broad market risk assets hasn’t hurt. At the tip of the spear for this sentiment shift is COMPASS Pathways plc (CMPS), which has risen 62.64% since  the docuseries debuted on July 12. Price on the benchmark Horizons Psychedelic Stock Index ETF has now breached the 20-day MA/EMA.

We are watching to see if investor sentiment shifts into laggard names such as Cybin Inc. and MindMed, which has continued to fall following a proposed 15-1 reverse stock split initiative announced this year. Many Tier-2/3 names still 90%+ off their highs…

Revive Therapeutics (RVV:CSE, RVVTF:OTC): This has been on our radar for the last couple of weeks, and remains on our watch list. The company has already confirmed that their statistician is in possession of 210 unblinded patient data for its Phase 3 clinical trial to evaluate Bucillamine to treat COVID-19. The company is currently attempting to revise endpoint data from a hospitalization/death focus to a symptoms focus. If they are to achieve this, it will mark a material event in the course of the trial.

YTD performance (+33.09%), Revive Therapeutics (RVVTF); Red line = 7day EMA

We believe an endpoint decision, either positive or negative, is imminent and will have cause a material price action event.

Consumer Price Index, August 10: Consumer inflation expectations for July are released by the New York Fed, while the University of Michigan’s preliminary survey of consumers for August is on tap. Taken together, these should give investors a better picture of how consumers are feeling about current economic conditions. 

As of June, it’s running at 9.1% on an annual basis. Investors, economists and consumers will be watching to see if price increases are easing as everything from gasoline to food is elevated.

Given the mixed signals on the overall state of the economy (i.e. indications of recession vs. this week’s strong nonfarm payrolls number), CPI will be in-focus by market participants. Scotiabank expects 8.9% y/y (9.1% prior) and 0.4% m/m for headline CPI; ex-food-and-energy: 6.1% y/y led by a 0.6% m/m gain.

Pot stocks earnings continue, with several Tier-1/Teri-2 names reporting including Curaleaf Holdings, Trulieve Cannabis, Marimed Inc., Cronos Group, TerrAscend Corp. and more. Last Wednesday, Green Thumb Industries allayed fears somewhat that this earnings season would be a write-off, producing solid numbers which beat expectations on several key metrics. An additional strong report or two will go a long way to help improve sentiment for a sector that’s been decimated over the past six quarters.

U.S. Economic Calendar

TIME (ET)REPORTPERIODMEDIAN FORECASTPREVIOUS
Monday, August 8
11:00 AMNY Fed 3-year inflation expectationsJuly3.60%
Tuesday, Aug. 9
6:00 AMNFIB small-business indexJuly89.589.5
8:30 AMProductivityQ2-4.30%-7.30%
8:30 AMUnit labor costsQ29.30%12.60%
Wednesday, August 10
8:30 AMConsumer price indexJuly0.30%1.30%
8:30 AMCore CPIJuly0.60%0.70%
8:30 AMCPI (year-over-year)July-8.70%9.10%
8:30 AMCore CPI (year-over-year)July6.10%5.90%
10:00 AMWholesale inventories (revision)June1.90%1.70%
2:00 PMFederal budget (compared with year earlier)July-$302 billion
Thursday, August 11
8:30 AMInitial jobless claimsAug. 6265,000260,000
8:30 AMContinuing jobless claimsJuly 301.42 million
8:30 AMProducer price indexJuly0.20%1.10%
Friday, Aug. 12
8:30 AMImport price indexJuly-0.80%0.20%
10:00 AMUMich consumer sentiment index (preliminary)Aug.5352
10:00 AMUMich 5-year inflation expectations (preliminary)Aug.2.90%

Meme Of The Week

Key Earnings (US Markets)

DateCompanySymbolEarnings estimate
Monday, August 83D SystemsDDD$0.00 per share
BarrickGOLD$0.22
BioNTechBNTX$7.08
EnergizerENR$0.76
News Corp.NWSA$0.08
NovavaxNVAX$5.18
Palantir TechnologiesPLTR$0.03
Take-Two Interactive SoftwareTTWO$0.86
Tyson FoodsTSN$1.97
UpstartUPST$0.08
Tuesday, Aug. 9Akamai TechnologiesAKAM$1.31
AramarkARMK$0.24
Bausch HealthBHC$0.91
Carlyle GroupCG$1.07
CoindeskCOIN-$2.68
Cronos GroupCRON-$0.07
EbixEBIX$0.58
EmersonEMR$1.29
GlobalFoundriesGFS$0.45
Grocery OutletGO$0.24
H & R BlockHRB$1.24
Hilton Grand VacationsHGV$0.88
Hyatt HotelsH$0.03
IAC/InterActiveCorpIAC-$2.35
iRobotIRBT-$1.55
Maxar TechnologiesMAXR$0.12
Norwegian Cruise LineNCLH-$0.83
Plug PowerPLUG-$0.20
Rackspace TechnologyRXT$0.16
Ralph LaurenRL$1.71
RobloxRBLX-$0.26
Spirit AirlinesSAVE-$0.46
Super Micro ComputerSMCI$2.35
SyscoSYY$1.11
The Trade DeskTTD$0.20
TTEC HoldingsTTEC$0.85
Unity SoftwareU-$0.21
Warner Music GroupWMG$0.20
World Wrestling EntertainmentWWE$0.55
Wynn ResortsWYNN-$0.97
Wednesday, August 10AppLovinAPP$0.50
CoherentCOHR$2.13
CoupangCPNG-$0.10
CyberArk SoftwareCYBR$0.01
Dutch BrosBROS$0.07
Fox Corp.FOXA$0.77
Franco-NevadaFNV$0.98
Jack in the BoxJACK$1.42
Manulife FinancialMFC$0.76
MatterportMTTR-$0.14
Pan Am SilverPAAS$0.14
Red Robin GourmetRRGB-$0.16
SonosSONO$0.21
TraegerCOOK$0.04
Wendy’sWEN$0.22
Wolverine World WideWWW$0.65
Thursday, August 11AerCapAER$1.42
BaiduBIDU$10.92
Brookfield Asset ManagementBAM$0.69
Canada GooseGOOS$2.98
Cardinal HealthCAH$1.18
Dillard’sDDS$2.88
Flower FoodsFLO$0.27
IlluminaILMN$0.64
LegalZoomLZ$0.02
Melco Resorts & EntertainmentMLCO-$0.44
NioNIO-$1.36
PoshmarkPOSH-$0.25
Rivian AutomotiveRIVN-$1.63
Ryan Specialty GroupRYAN$0.35
Six FlagsSIX$1.04
Solo BrandsSOLO$0.28
ToastTOST-$0.12
Utz BrandsUTZ$0.12
Warby ParkerWRBY-$0.02
W&T OffshoreWTI$0.37
Wheaton Precious MetalsWPM$0.32
Friday, Aug. 12Broadridge FinancialBR$2.65
Honest CompanyHNST$-$0.09
Spectrum BrandsSPB$1.42

FDA Calendar

None

Source: CNN Business – TDR’s stock market preview sentiment indicator

Past Week What’s Hot… and What’s Not

Source: TradingView – TDR’ stock market preview what’s hot this past week

Top 12 High Short Interest Stocks

TickerCompanyExchangeShortIntFloatShares O/SIndustry
BBBYBed Bath & Beyond Inc.Nasdaq46.38%61.57M79.96MRetail (Specialty Non-Apparel)
ICPTIntercept Pharmaceuticals IncNasdaq43.76%23.62M29.71MBiotechnology & Medical Research
MSTRMicroStrategy IncNasdaq39.29%9.32M9.33MSoftware & Programming
BYNDBeyond Meat IncNasdaq37.91%56.79M63.54MFood Processing
SWTXSpringWorks Therapeutics IncNasdaq37.51%31.64M49.41MBiotechnology & Medical Research
BIGBig Lots, Inc.NYSE37.37%26.49M28.92MRetailers – Discount Stores
EVGOEvgo IncNasdaq35.65%67.76M69.00MUtilities – Electric
UPSTUpstart Holdings IncNasdaq35.60%72.32M84.77MConsumer Lending
BGFVBig 5 Sporting Goods CorpNasdaq34.65%20.85M22.33MRetailers – Miscellaneous Specialty
SRGSeritage Growth PropertiesNYSE34.38%23.58M43.68MReal Estate Operations
NKLANikola CorporationNasdaq32.77%265.95M421.14MAuto & Truck Manufacturers
BLNKBlink Charging CoNasdaq32.54%33.98M50.20MUtilities – Electric

Tags: stock market preview, stock market preview August 8, 2022.

The post TDR’s U.S. Stock Market Preview For The Week Of August 8, 2022 appeared first on The Dales Report.

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Senate Passes $740 Billion Tax, Climate Package — Will Go To House Next

Senate Passes $740 Billion Tax, Climate Package — Will Go To House Next

Update (1532ET): After much wrangling, the Democrats finally passed…

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Senate Passes $740 Billion Tax, Climate Package -- Will Go To House Next

Update (1532ET): After much wrangling, the Democrats finally passed their sweeping economic package through the Senate on Sunday.

The estimated $740 billion "Inflation Reduction Act" - far less ambitious than their original $3.5 trillion vision - next heads to the House, where its passage is a foregone conclusion. According to Axios, a vote could come as early as Friday before it heads to President Biden's desk.

The package includes provisions to address climate change, pharmaceutical costs, and a supercharged IRS.

"It’s been a long, tough and winding road, but at last, at last we have arrived," said Senate Majority Leader Chuck Schumer (D-NY). "The Senate is making history. I am confident the Inflation Reduction Act will endure as one of the defining legislative measures of the 21st century."

As the Washington Post notes, "Senators engaged in a round-the-clock marathon of voting that began Saturday and stretched late into Sunday afternoon. Democrats swatted down some three dozen Republican amendments designed to torpedo the legislation. Confronting unanimous GOP opposition, Democratic unity in the 50-50 chamber held, keeping the party on track for a morale-boosting victory three months from elections when congressional control is at stake."

And as Axios reports,

The Senate returned to the Capitol Saturday afternoon, and began voting late Saturday night and into Sunday on a series of amendments — part of the process known as "vote-a-rama."

  • Senate Republicans offered dozens of amendments aimed at minimizing the bill, including stripping out funding for the Internal Revenue Service and eliminating COVID-19-related school mandates.
  • Democrats held firm in their unity, with the help of Harris, of preserving the core elements of the package and voting down each GOP amendment.

.  .  .

The bill includes:

  • $370 billion for climate change - the largest investment in clean energy and emissions cuts the Senate has ever passed.
  • Allows the federal health secretary to negotiate the prices of certain expensive drugs for Medicare.
  • Three-year extension on healthcare subsidies in the Affordable Care Act.
  • 15% minimum tax on corporations making $1 billion or more in income. The provision offers more than $300 billion in revenue.
  • IRS tax enforcement.
  • 1% excise tax on stock buybacks.

Drilling down on the climate portion - Axios' Andrew Freedman writes:

  • This includes tax incentives to manufacture and purchase electric vehicles, generate more wind and solar electricity and support fledgling technology such as direct air capture and hydrogen production. 
  • Independent analyses show the bill, combined with other ongoing emissions reductions, would cut as much as 40% of U.S. greenhouse gas emissions by 2030, short of the White House's 50% reduction target. However, if enacted into law, it would reestablish U.S. credibility in international climate talks, which had been flagging due in part to congressional gridlock. 
  • As part of Democrats' concessions to Sen. Manchin, the bill also contains provisions calling for offshore oil lease sales in the Gulf of Mexico and off the coast of Alaska, and a commitment to take up a separate measure to ease the permitting of new energy projects. 

*  *  *

Senate Democrats late on Aug. 6 advanced a mammoth spending bill on climate and energy, health care, and taxes, after overcoming unanimous Republican opposition in the evenly divided chamber.

The procedural vote to advance the Democratic bill - which authorizes over $400 billion in new spending - was 51–50 after Vice President Kamala Harris arrived at the Capitol to cast a vote, breaking the deadlock in the Senate over the measure that Democrats say would reform the tax code, lower the cost of prescription drugs, invest in energy and climate change programs, all while lowering the federal deficit.

The vote means that senators will have 20 hours to debate on the measure, followed by a vote-a-rama, a marathon open-ended series of amendment votes that has no time limit. After that, the bill will head to a final vote. The measure is anticipated to pass the chamber as early as this weekend.

The House, where Democrats have a majority, could give the legislation final approval on Aug. 12, when lawmakers are scheduled to return to Washington.

The vote came after the Senate parliamentarian - the chamber’s nonpartisan rules arbiter - gave a thumbs-up to most of the Democrats’ revised 755-page bill.

But Democrats had to drop a significant part of their plan for lowering prescription drug prices, Parliamentarian Elizabeth MacDonough said.

The provision would have essentially forced companies not to raise prices higher than inflation. MacDonough said Democrats violated Senate budget rules with language in the bill imposing hefty penalties on drugmakers who raise their prices beyond inflation in the private insurance market.

As Mimi Nguyen Ly details at The Epoch Times, while the bill’s final costs are still being determined, it includes about $370 billion on energy and climate programs over the next 10 years, and about $64 billion to extend subsidies for Affordable Care Act program for federal subsidies of health insurance for three years through 2025.

It also seeks generate about $700 billion in new revenue over the next 10 years, which would leave roughly $300 billion in deficit reduction over the coming decade, which would represent just a tiny proportion of the next 10 year’s projected $16 trillion in budget shortfalls.

A large portion of the $700 billion—an estimated $313 billion—is expected to be generated by increasing the corporate minimum tax to 15 percent, while the remaining amounts include $288 billion in prescription drug pricing reform and $124 billion in Internal Revenue Service tax enforcement.

According to the current version of the bill, the new 15 percent minimum tax would be imposed on some corporations that earn over $1 billion annually but pay far less than the current 21 percent corporate tax. Companies buying back their own stock would be taxed 1 percent for those transactions, swapped in after Sinema refused to support higher taxes on private equity firm executives and hedge fund managers. The IRS budget would be increased to strengthen its tax collections.

The White House said in a statement of administrative policy on Aug. 6 that it “strongly supports passage” of the bill.

“This legislation would lower health care, prescription drug, and energy costs, invest in energy security, and make our tax code fairer—all while fighting inflation and reducing the deficit,” the statement reads.

“This historic legislation would help tackle today’s most pressing economic challenges, make our economy stronger for decades to come, and position the United States to be the world’s leader in clean energy.”

Republicans say the legislation is simply an alternate, dwindled version to the Democrat’s earlier Build Back Better bill—a multitrillion-dollar social spending package that was a major agenda of President Joe Biden—that Democrats have now dubbed the “Inflation Reduction Act of 2022.”

Senate Minority Leader Mitch McConnell (R-Ky.) said Democrats “are misreading the American people’s outrage as a mandate for yet another reckless taxing and spending spree.” He said Democrats “have already robbed American families once through inflation and now their solution is to rob American families yet a second time.”

“There is no working family in America whose top priorities are doubling the size of the IRS and giving rich people money to buy $80,000 electric cars,” McConnell said in a separate statement on Twitter.

“Americans want Washington to address inflation, crime, and the border—not another reckless liberal taxing and spending spree.”

Democrats have said the measure would “address record inflation by paying down our national debt, lowering energy costs, and lowering healthcare costs,” but Republicans have criticized the measure as having no potential other than to make matters worse, nicknaming the legislation “Build Back Broke,” in part because the bill would fulfill many parts of Biden’s Build Back Better agenda.

“The time is now to move forward with a big, bold package for the American people,” said Senate Majority Leader Chuck Schumer (D-N.Y.).

“This historic bill will reduce inflation, lower costs, fight climate change. It’s time to move this nation forward.”

But not every Democrat is buying what Chuck is selling...

As John Solomon reports at JustTheNews.com, Sen. Bernie Sanders, the former presidential candidate and proud socialist, on Saturday attacked President Joe Biden‘s Inflation Reduction Act for failing to live up to its name, after the non-partisan Congressional Budget Office declared it would have a minimal impact on surging prices.

“I want to take a moment to say a few words about the so-called Inflation Reduction Act that we are debating this evening," Sanders said just after voting with Democrats to advance the bill to debate on the Senate floor.

"I say so-called because according to the CBO and other economic organizations that have studied this bill, it will in fact have a minimal impact on inflation."

CBO declared this week that the $740 billion piece of legislation would only affect inflation by 0.1% in either direction.

"I don't find myself saying this very often. But on that point, I agree with Bernie," Sen. John Thune, R-S.D., told Insider.

Overall, economic analysts are divided on the measure, with some having predicted that the bill will worsen inflation and lead to stagnation in growth.

As Will Cain explained in an excellent monologue reality check, "look at the name of the bill, whatever it is, you can be sure the legislation will do the opposite."

Finally, as Goldman details in a new notes, the net fiscal impact of these policies continues to look very modest, likely less than 0.1% of GDP for the next several years...

While the final outcome may still yet differ in details, the fiscal impact is likely to be similar.

Tyler Durden Sun, 08/07/2022 - 15:32

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