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One Bank Predicts $3 Trillion In Quantitative Tightening Coming

One Bank Predicts $3 Trillion In Quantitative Tightening Coming

Wall Street has officially jumped the shark: with the economy set to slow this year – even as supply-driven inflation refuses to relent – consensus now expects 3-4 rate hikes…

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One Bank Predicts $3 Trillion In Quantitative Tightening Coming

Wall Street has officially jumped the shark: with the economy set to slow this year - even as supply-driven inflation refuses to relent - consensus now expects 3-4 rate hikes this year (with Jamie Dimon predicting as many as "6 or 7") - some are going so far as to predict how much shrinkage the Fed's balance sheet will see in the coming years once it begins any time between March and June.

Enter Deutsche Bank, which forecasts that once QT begins, the Fed's balance sheet will shrink from $9 trillion currently to $6 trillion.

As DB's Jim Reid notes overnight, citing the bank's economist Matt Luzzetti and rate strategist Steven Zeng, project that the Fed balance sheet would peak just under $9tn after QE completes in March, before falling back to eventually approach 20% of GDP from over 35% today, and around a third smaller than this peak, at which point it will be around $6 trillion.

That, according to Kostin, is a level more consistent with the pre-covid experience and a potential target highlighted by Governor Waller. Under this projection, the balance sheet would reduce by $560bn this year and $1tn in 2023, and the balance in outer years.

As an aside, there zero chance of that happening as by then the US will be in a recession and the Fed will be scrambling to ease as even the market now expects, projecting the next rate cut will take place between 2 and 3 years from today.

There is another reason why this will never happen: the market will implode long before the $3 trillion in QT is completed.

For context, Reid notes that between October 2017 and August 2019, QT reduced the balance sheet by around $700bn from c.$4.47tn to $3.76tn, at which point banks realized they dont have nearly enough reserves and we had the infamous repo crisis which ushered in "NOT QE."

The DB report approximates that a $650-700bn drawdown equates to around a 25bps hike so out to end 2023 they think the reduction will be equal to c.2.5 hikes.

Of course, this is all purely theoretical, and as even Reid notes, his personal view is that "the balance sheet will have to grow substantially again in the years ahead as the authorities are forced to use financial repression in order to make the growing public debt burden sustainable." We agree with this 100%. The only question is what crisis will catalyze the next explosion of the Fed's balance sheet.

Even so, the Fed is increasingly trapped because while it may have no choice but to pivot dovish soon, in 2018 the Fed had the luxury of a dovish pivot as inflation trended back down towards and below 2%. Or as Reid concludes, "will they have the option to be as flexible this time?"

Well, of course: all the Fed needs to do is inspire another global crash a la Lehman and reset the inflationary score. And this time a global pandemic won't cut it.

Tyler Durden Fri, 01/14/2022 - 14:10

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International

A-levels: A grades are up compared to pre-pandemic results

The pandemic has has a serious impact on school pupils – but a record number have applied to university.

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Fewer students are getting their first choice of university than in 2021. Monkey Business Images/Shutterstock

The 2022 A-level results are in, and the number of students receiving A or A* grades has fallen – down by 8.4% on 2021.

For the first time since 2019, A-level results are being decided by formal exams. Students were warned that grades were likely to be lower than in 2020 and 2021, when cancelled exams and teacher assessments in A-levels led to record high results. Nevertheless, the proportion of students receiving A grades is up from pre-pandemic levels in 2019.

A busy end to the admissions round is under way for universities and students, and the next steps for students still living with the impact of the pandemic are becoming clearer.

In 2021, some universities were over subscribed and had to offer significant incentives for students to defer their places. While the number of students in 2022 accepted on a UK university course – 425,830 – is higher than in 2019 and the second highest on record, it is 2% lower than in 2021. Just a few days before the results were out, thousands of students did not yet hold an offer of an university place.

Over the past two years, students studying qualifications, whether BTEC, T-level or A-level, have had to cope with the consequences of the pandemic for a significant proportion of their course. This has included school closures and remote lessons, social isolation, illness and increased levels of mental stress.

Highest number of applications

Nevertheless, 2022 has seen the highest ever numbers of applications to higher education, with 44% of 18 year olds applying. This number includes record numbers of students from areas of the country with historically low participation in higher education. It demonstrates that many young people believe higher education can make a difference to their future opportunities.

For the lucky ones who get the grades to gain a place at their first choice of university, planning for their degree course starts right away. A record number of Scottish students have already been accepted to their first choice of university.

The best advice for those students who don’t receive confirmation that they have been accepted by their first choice university is to ring the university, who will have staff on hand to explore their options.

For students who haven’t got a university place, it is still possible to explore options though clearing – which allows students without offers to find places on university courses that haven’t been fully subscribed. Students in this position should try to keep calm, write down their options and avoid quick decisions.

For those young people who do go to university, there will be challenges. With the cost of living for all rising rapidly, people on a lower income – as many students are – will feel the pinch of higher bills for food or rent.

Support from universities

The pandemic saw a serious and concerning rise in mental health issues affecting young people. Universities need to be ready to give holistic support to students as they transition into university and settle into undergraduate life. This means support for academic transition needs to be delivered in the context of good available support for mental health and wellbeing.

However, Universities UK, an advocacy groups for universities, has recently pointed out the wide range of benefits for those who study for a degree, including the £9,500 more per year on average graduates in England earn compared with non-graduates. It also draws attention to the value of degrees to improve the life chances of young people, to build skills and to contribute to society.

For many young people, getting a degree gives them access to a vocation such as teaching or working as a health professional. For others it is a path to travel and adventure. For many, the university journey is a place where young people find their tribe and begin to understand their identity.

For the class of 22, making it to university might mean life-changing opportunities. Given the challenges and restrictions of the last few years, this has never been more important.

Helena Gillespie receives funding from the European Union.

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Government

Pfizer Inc (NYSE: PFE) To Acquire Global Blood Therapeutics For $5 Billion

According to sources familiar with the matter, the Wall Street Journal reported that Pfizer Inc (NYSE: PFE) was in advanced discussions to acquire pharmaceutical…

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According to sources familiar with the matter, the Wall Street Journal reported that Pfizer Inc (NYSE: PFE) was in advanced discussions to acquire pharmaceutical company Global Blood Therapeutics (NASDAQ: GBT) for $5 billion.

Pfizer, too, acquired Global Blood Therapeutics 

Pfizer wants to close a deal soon, but there are still other interested parties, according to the article.

Global Blood Therapeutics, which manufactures Oxbryta, the blood disorder medication, saw its shares jump 44%  on Friday afternoon to a two-year high. As of Thursday’s closing, the company’s market cap was $3.12 billion.

A spokesman for Global Blood stated the company does not “comment on market rumors or speculation,” while Pfizer declined to respond on the matter.

With plenty of cash left over after selling its COVID-19 vaccine, New York-based Pfizer is searching for deals that may generate billions of dollars annual sales by 2030.

Its $11.6 billion acquisition of migraine medication manufacturer Biohaven Pharmaceutical Holding (NASDAQ: BHVN) in May was the most recent in a series of purchases that also included Trillium Therapeutics and Arena Pharmaceuticals in recent years.

Oxbryta received approval last year for sickle cell disease management 

In 2019, the US government approved Global Blood’s Oxbryta to manage sickle cell disease in individuals aged 12 and over. The oral medication was approved in December 2021 to treat the illness in younger children. The drug’s sales increased by almost 50% to $194.7 million in 2021.

After a gloomy start to the calendar year, when a lack of significant purchases and clinical-stage treatment failures lowered investor morale and restricted funding, the biotech dealmaking pace has recently picked up again.

Also, Amgen Inc (NASDAQ: AMGN) also decided to purchase ChemoCentryx Inc on Thursday for $3.7 billion to obtain access to a possible breakthrough medication for inflammatory illnesses. AstraZeneca’s $39 billion acquisition of Alexion Pharmaceuticals in 2020 has put the realm of immune diseases in the limelight. The deal, which was announced before trading opened, will also give the corporation control of at least two investigational immune disorders medicines.

Please make sure to read and completely understand our disclaimer at https://www.wallstreetpr.com/disclaimer. While reading this article one must assume that we may be compensated for posting this content on our website.

The post Pfizer Inc (NYSE: PFE) To Acquire Global Blood Therapeutics For $5 Billion appeared first on Wall Street PR.

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Spread & Containment

German Official Trashes Cost Of Living Protesters As “Enemies Of The State”

German Official Trashes Cost Of Living Protesters As "Enemies Of The State"

Authored by Paul Joseph Watson via Summit News,

A top German…

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German Official Trashes Cost Of Living Protesters As "Enemies Of The State"

Authored by Paul Joseph Watson via Summit News,

A top German official has trashed people who may be planning to protest against energy blackouts as “enemies of the state” and “extremists” who want to overthrow the government.

The interior minister of the German state of North Rhine-Westphalia (NRW), Herbert Reul (CDU), says that anti-mandatory vaxx and anti-lockdown demonstrators have found a new cause – the energy crisis.

In an interview with German news outlet NT, Reul revealed that German security services were keeping an eye on “extremists” who plan to infiltrate the protests and stage violence, with the unrest being planned via the Telegram messenger app, which German authorities have previously tried to ban.

“You can already tell from those who are out there,” said Reul. “The protesters no longer talk about coronavirus or vaccination. But they are now misusing people’s worries and fears in other fields. (…) It’s almost something like new enemies of the state that are establishing themselves.”

Despite the very real threat of potential blackouts, power grid failures and gas shortages, Reul claimed such issues were feeding “conspiracy theory narratives.”

However, it’s no “conspiracy theory” that Germans across the country have been panic buying stoves, firewood and electric heaters as the government tells them thermostats will be limited to 19C in public buildings and that sports arenas and exhibition halls will be used as ‘warm up spaces’ this winter to help freezing citizens who are unable to afford skyrocketing energy bills.

As Remix News reports, blaming right-wing conspiracy theorists for a crisis caused by Germany’s sanctions on Russia and is suicidal dependence on green energy is pretty rich.

“Reul, like the country’s federal interior minister, Nancy Faeser, is attempting to tie right-wing ideology and protests against Covid-19 policies to any potential protests in the winter.”

“While some on the right, such as the Alternative for Germany (AfD), have stressed that the government’s sanctions against Russia are the primary factor driving the current energy crisis, they have not advocated an “overthrow” of the government. Instead, they have stressed the need to restart the Nord Stream 2 pipeline, end energy sanctions against Russia, and push for a peaceful solution to end the war.”

Indeed, energy shortages and the cost of living crisis are issues that are of major concern to everyone, no matter where they are on the political spectrum.

To claim that people worried about heating their homes and putting food on the table this winter are all “enemies of the state” is an utter outrage.

As we highlighted last week, the president of the Thuringian Office for the Protection of the Constitution, Stephan Kramer, said energy crisis riots would make anti-lockdown unrest look like a “children’s birthday party.”

“Mass protests and riots are just as conceivable as concrete acts of violence against things and people, as well as classic terrorism to overthrow it,” Kramer told ZDF.

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Tyler Durden Thu, 08/18/2022 - 03:30

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