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Over-Exposed?

Over-Exposed?

Published

3 years ago

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Over-Exposed? Tyler Durden Sun, 10/04/2020 - 12:30

Authored by Sven Henrich via NorthmanTrader.com,

While this weekend’s headlines are dominated by who got exposed to and infected by Coronavirus from the President on down I want to make sure other key news items are not lost in the shuffle, specifically those that expose a system that has corrupted itself and is desperately trying to keep the balls in the air while causing ever more long lasting damage to our global economy.

Let’s face it: This week’s market action was dominated by dozens of stimulus headlines. Stimulus progress and markets rip higher, stimulus disagreements and markets dropped lower exposing markets again to be a toy thing of the liquidity game.

Will they or won’t they is the question on everyone’s mind and many bets are placed that they will, for likely they must as the jobs growth picture is slowing dramatically from the summer sugar recovery high and keeping markets and consumer confidence high into the election is a political imperative.

And don’t think for a second that they are not political imperatives. Market levels are as much a national security imperative as is having a strong military. For the last few years Larry Kudlow’s curiously timed TV appearances have become a fodder of Twitter jokes and yours truly has been at the forefront on Twitter of mocking the ever so obvious attempts to manipulate markets higher at every corner and opportunity.

Oh you’re just a conspiracist. No, I just try to cut to the truth and reality of markets.

And sometimes that truth slips out:

“When we needed markets to go up”.

And there it is. Markets going up exposed as a necessity for political purposes.

And cue the drum roll:

And don’t think it’s just the current administration that is playing these games.
What? You think it’s an accident that on Friday when futures were down hard that Nancy Pelosi came out with this headline 5 minutes after market open immediately putting a floor under the market:

Sometimes it’s hard to avoid getting the impression that the 2 parties are not in fact one in the same putting on a show of choice. They both are living off a market structure they can’t ill afford to lose in trajectory. As George Carlin once opined: “You don’t have a choice. You have owners. It’s a big club”.

Do you really think it’s an accident that the only people placed in charge of the country’s monetary policies are doves? People of the perma intervention kind. It is after all the same Congress comprised of these very two parties that approves all the nominations. Bernanke was a dove, Yellen was a dove, Powell now the perma-dove with interest rates at zero forever and ever amen.

There is no diversity of opinion, there’s no diversity of thinking, and critical viewpoints are either not considered or outright dismissed and mocked.

Indeed central bank career path day appears structured on the notion one must show positive effects of QE on growth whether it’s true or not. Critics don’t get considered for promotion in the ranks apparently:

“A new academic paper casts fresh doubt over the case for QE. Lubos Pastor, an economist at the University of Chicago, and three colleagues have parsed about 50 studies looking at the effect of asset purchases on growth and inflation. They found that researchers working in central banks tend to find a larger impact than academics and conclude that central bankers have incentives (such as possible promotions) to be too kind toward QE. Papers written entirely by central bankers found an impact on growth at the peak of QE that was more than 0.7 percentage points higher than the effect estimated in papers written entirely by academics. The authors then investigate the reason for these discrepancies. They suggest that career concerns may have played a role and provide some evidence that central bank researchers who found the largest impact of QE had a better chance of receiving a promotion.”

You can’t make this stuff up. And it is this very institutional group stink that leads to statements of self delusion such as this:

This from the President of the Minneapolis Fed who, while denying QE’s impact on asset prices, proceeded to dismiss yours truly as a QE conspiracist and “swashbuckling pirate”:

It’s all fun and giggles while markets go up but the dismissive conspiracist voices fell notably silent during the 35% market crash in Q1 2020. Since then we again see the original criticism confirmed as markets rallied to new all time highs despite the largest economic crisis in our lifetimes. Amazing things can happen when you expand your balance sheet by $3 trillion in just 4 months. It’s called market distortion.

And no, that’s not my opinion, it’s a fact confirmed by another nugget of truth that crossed the headlines this week courtesy Dallas Fed president Kaplan:

“My concern about asset purchases is they can distort markets,” Kaplan told the Wall Street Interview in a webcast interview. “It’s a tool that I’d want to be careful with.”

I guess now that we ballooned the balance sheet to a historic $7 trillion and continuing to buy assets at a clip of $120B per month ($1.44 trillion annualized) NOW we want to be careful as it might distort markets.

Give me a break. Markets are already grossly distorted. After all:

There’s little doubt a renewed stimulus package would be beneficial to asset prices again in the short term, no matter the valuations.

The question for all of us is how long the valuation disconnect jig so constantly danced by monetary and government authorities can be maintained in the face of its ever more self evident failure:

While career focused central bankers are keen on promoting the fantasy that QE promotes growth the ever more frantic interventions from cycle to cycle amid ever slowing growth cycles ever more dependent on expanding debt strongly suggest otherwise.

Indeed this week’s frantic market action chasing every single stimulus headline not only again highlights how utterly dependent markets are on artificial stimulus to maintain lofty valuations, but how fragile the underlying economic construct really is.

For after 11 years of nonstop interventions, the building of a $7 trillion Fed balance sheet (and ever growing larger), zero rates, a US debt now exceeding $27 trillion (a $17 trillion increase since just 2007) and heading toward $30 trillion, it takes ever more to support this market valuation construct:

And still, with all this, over half of Americans may retire poor.

I suggest this is not a record of success but of systemic failure that has left the country poorer, and long term growth prospects weaker as the forces of deflation and demographics will be with us for years to come. Indeed the monetary and government cheerleaders of ever higher asset prices find their narratives confronted with a brutal long term reality:

“If you’re worried about the short-term economic outlook, I have bad news: the long-term outlook is worse. That’s what emerges from the latest long-term budget outlook released by the Congressional Budget Office last week. It contained this sobering number: the agency expects annual economic growth to average just 1.6% over the next three decades—down by about a quarter of a point from its forecast a year ago—and just 1.5% by the 2040s. The U.S. hasn’t had trend growth that low since the 1930s.”

I submit that to approach this structural reality with record indebtedness and the highest market valuations in history is a math equation that does not solve itself with a positive outcome.

But for now the rallying cry is for more stimulus again:

Where is the rallying cry for structural solutions? It doesn’t exist. Instead the rallying cry is to cheerlead markets higher at every opportunity, to convince of policy success when there isn’t any, to maintain confidence at all cost. Wall Street wants more Fed stimulus. The Fed wants more fiscal stimulus. Everybody wants more and more so not to risk the great unwind that is staring us all in the face.

We can’t know when and how the unwind will present itself, but at least we know when Larry Kudlow will go on TV. “When we need markets to go up”.

Looks like we will see Larry on TV a lot more, especially if there’s no stimulus deal. But hey, maybe they’ll get one done after all for without there is nothing but hope for another Fed bailout following the December Fed meeting:

Stimulus. Fed injections. No solutions.

*  *  *

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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…

Published

10 hours ago

on

March 9, 2024

By

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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Walmart joins Costco in sharing key pricing news

The massive retailers have both shared information that some retailers keep very close to the vest.

Published

13 hours ago

on

March 9, 2024

By

As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters. 

The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.

The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.

Related: Popular mall retailer shuts down abruptly after bankruptcy filing

It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.

You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.

Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.

However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.

Walmart has seen inflation drop in many key areas.

Image source: Joe Raedle/Getty Images

Walmart sees lower prices

McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.

During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.

"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.

He was specific about where the chain has seen prices go down.

"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."

McMillon said that in other areas prices were still up but have been falling.

"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.

Costco sees almost no inflation impact

McMillon avoided the word inflation in his comments. Costco  (COST)  Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.

The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.

"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.

Galanti made clear that inflation (and even deflation) varied by category.

"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.

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Government

Walmart has really good news for shoppers (and Joe Biden)

The giant retailer joins Costco in making a statement that has political overtones, even if that’s not the intent.

Published

14 hours ago

on

March 9, 2024

By

As we head toward a presidential election, the presumed candidates for both parties will look for issues that rally undecided voters. 

The economy will be a key issue, with Democrats pointing to job creation and lowering prices while Republicans will cite the layoffs at Big Tech companies, high housing prices, and of course, sticky inflation.

The covid pandemic created a perfect storm for inflation and higher prices. It became harder to get many items because people getting sick slowed down, or even stopped, production at some factories.

Related: Popular mall retailer shuts down abruptly after bankruptcy filing

It was also a period where demand increased while shipping, trucking and delivery systems were all strained or thrown out of whack. The combination led to product shortages and higher prices.

You might have gone to the grocery store and not been able to buy your favorite paper towel brand or find toilet paper at all. That happened partly because of the supply chain and partly due to increased demand, but at the end of the day, it led to higher prices, which some consumers blamed on President Joe Biden's administration.

Biden, of course, was blamed for the price increases, but as inflation has dropped and grocery prices have fallen, few companies have been up front about it. That's probably not a political choice in most cases. Instead, some companies have chosen to lower prices more slowly than they raised them.

However, two major retailers, Walmart (WMT) and Costco, have been very honest about inflation. Walmart Chief Executive Doug McMillon's most recent comments validate what Biden's administration has been saying about the state of the economy. And they contrast with the economic picture being painted by Republicans who support their presumptive nominee, Donald Trump.

Walmart has seen inflation drop in many key areas.

Image source: Joe Raedle/Getty Images

Walmart sees lower prices

McMillon does not talk about lower prices to make a political statement. He's communicating with customers and potential customers through the analysts who cover the company's quarterly-earnings calls.

During Walmart's fiscal-fourth-quarter-earnings call, McMillon was clear that prices are going down.

"I'm excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that's resilient but looking for value. As always, we're working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3," he said.

He was specific about where the chain has seen prices go down.

"Our general merchandise prices are lower than a year ago and even two years ago in some categories, which means our customers are finding value in areas like apparel and hard lines," he said. "In food, prices are lower than a year ago in places like eggs, apples, and deli snacks, but higher in other places like asparagus and blackberries."

McMillon said that in other areas prices were still up but have been falling.

"Dry grocery and consumables categories like paper goods and cleaning supplies are up mid-single digits versus last year and high teens versus two years ago. Private-brand penetration is up in many of the countries where we operate, including the United States," he said.

Costco sees almost no inflation impact

McMillon avoided the word inflation in his comments. Costco  (COST)  Chief Financial Officer Richard Galanti, who steps down on March 15, has been very transparent on the topic.

The CFO commented on inflation during his company's fiscal-first-quarter-earnings call.

"Most recently, in the last fourth-quarter discussion, we had estimated that year-over-year inflation was in the 1% to 2% range. Our estimate for the quarter just ended, that inflation was in the 0% to 1% range," he said.

Galanti made clear that inflation (and even deflation) varied by category.

"A bigger deflation in some big and bulky items like furniture sets due to lower freight costs year over year, as well as on things like domestics, bulky lower-priced items, again, where the freight cost is significant. Some deflationary items were as much as 20% to 30% and, again, mostly freight-related," he added.

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