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Stock Rally Fizzles Amid Growing Reflation Concerns, Rising Dollar

Stock Rally Fizzles Amid Growing Reflation Concerns, Rising Dollar

Global markets were flat, and European stocks and US equity futures unchanged, struggling to eek out a fourth day of gains on Thursday as a rising USD and rising bond yields..

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Stock Rally Fizzles Amid Growing Reflation Concerns, Rising Dollar

Global markets were flat, and European stocks and US equity futures unchanged, struggling to eek out a fourth day of gains on Thursday as a rising USD and rising bond yields refocused attention on inflation and normalising economies. At 7:30 a.m. ET, Dow e-minis were up 4 points, S&P 500 e-minis were up 3.75points, or 0.1%, and Nasdaq 100 e-minis were up 40.5 points, or 0.29%.

With the WallStreetBets/Reddit retail short squeeze tumult having eased this week, markets were back in their comfort zone of corporate earnings, economic data and central bank meetings. US stocks closed slightly higher on Wednesday, with Google shares hitting a record high following strong quarterly results. All the three major indexes have bounced back sharply this week as investors monitored talks over the next round of fiscal stimulus and as a recent buying frenzy driven by social media appeared to stall following a bout of market volatility last week. Meme names rose, with GameStop up 3.9%, while AMC added 2.6% in premarket trading ahead of U.S. Treasury Secretary Janet Yellen’s meeting with financial regulators later in the day to discuss the recent market volatility.

Meanwhile, the bogeyman of rising inflation is back as hopes that the COVID pandemic can be brought to heel by extensive vaccination programmes, combined with expectations of unswerving global economic stimulus, has begun to see bond market focus returning to rising debt and possible inflation. The 10Y US yield rose just shy of 1.15% this morning, as traders renew reflation bets amid signs the economic recovery is gathering pace and the imminent passage of $1.9 trillion of pandemic aid by U.S. lawmakers. Friday’s payroll report may provide fresh impetus after the private sector added more jobs than forecast in January.

“These numbers give investors limited reason to fade rates weakness at this stage,” strategists at Mizuho International Plc including Peter Chatwell wrote in a Thursday report. The “momentum” pushing up rates could take the 10-year Treasury benchmark yield to 1.2% and the long-bond to 2% before stalling, they predicted.

In central bank moves, the pound erased a loss as Bank of England policymakers said inflation is expected to rise sharply, while voting to keep the key rate at 0.1% and the bond-buying target unchanged.

“The BoE will maintain a quite cautious tone,” said Silvia Dall’Angelo, a senior economist at fund management firm Federated Hermes, adding it was likely that the bank would talk about negative rates. “But at this stage there is very little appetite to use this measure.”

European stocks erased an earlier gain amid a mixed bag of company results. Deutsche Bank reversed an earlier gain after the German lender reported its first annual profit in six years, and Unilever slumped after margins missed estimates on restructuring charges.

Markets were also softer in Asia where stocks fell overnight, their first decline this week, weighed down by drops in technology companies. MSCI’s ex-Japan Asian-Pacific index fell 0.6%, led by 1.3% and 0.4% drops in South Korea and China. Japan’s Nikkei lost 1% as it ended a three-day winning streak. Rising Chinese short-term interest rates kept risk appetite low, though analysts also noted position adjustments before the Lunar New Year starting next week are likely to play a role too. Higher interest rates have raised worries that Chinese policymakers may be starting to shift to a tighter stance to rein in share prices and property markets.

“There’s persistent speculation that the Chinese authorities may want to tighten its policy,” said Wang Shenshen, senior strategist at Mizuho Securities.

Asian stocks Samsung Electronics was the biggest contributor to the MSCI Asia Pacific Index’s drop, falling after Qualcomm warned it was struggling to meet rebounding demand for chips. TSMC, SK Hynix and Xiaomi were also among the biggest drags. South Korea led declines among national benchmark gauges. Japanese stocks dropped, with losses in personal-care products maker Kao contributing most after it gave guidance that trailed analyst estimates. Sony shares surged to their highest level since 2000 on positive earnings. India bucked the trend as its benchmark stock gauge extended a rally to a record high after the government unveiled a massive annual spending plan.

With no notable fireworks overnight, markets have calmed in the past few days with the Cboe Volatility index slipping to its lowest levels in over a week. As the retail trading frenzy seen last week faded, stock prices of GameStop and other social media favorites have steadied, although cryptocurrency Ethereum has been on a tear ahead of the introduction of futures contracts next week.

In rates, treasuries were narrowly mixed across the curve, yields within 1bp of Wednesday’s closing levels, after paring declines that pushed 30-year above its March 2020 high. Treasury 10-year yields around 1.14% after nearly reaching 1.15% during Asia session, while 30-year took out the March highs, moves that were pared during European morning. Gilt yields shot higher after BOE rate decision, buoying U.S. yields slightly. Germany’s 30-year government bond yield on Thursday was almost back in positive territory for the first time since September. The gap between two- and 10-year U.S. Treasury yields at more than 100 basis points is now the widest in almost three years.

In FX, the dollar hit a near-three-month high versus the Japanese yen of 105.19. The euro lost 0.4% to $1.1989, having already hit a two-month low overnight below 1.20, failing to capitalize on improved sentiment in Italy after former European Central Bank chief Mario Draghi accepted the task of trying to form a new government in the country. The pound rebounded from the biggest decline in three weeks after the BOE cautioned that much higher inflation may be coming, pouring cold water on expectations for negative rates. The yen fell a seventh day versus the dollar, the longest losing streak since 2016.

In commodities, oil continued its ascent with OPEC+ saying it will keep pushing to quickly clear the surplus left behind by the pandemic. Brent approached $60 a barrel after OPEC and its allies extended production cuts. Silver settled further into a calmer trading pattern after the wild ride inspired in part by a retail-investor buying frenzy, while gold headed for the lowest close in two months. Gold fell 1% to $1,810 per ounce.

“OPEC have come in and said they are looking to remove the supply but the main driver is markets are starting to price in demand recovery, especially from emerging markets,” said Legal & General Investment Management’s Justin Onuekwusi.

Meanwhile earnings season is still in its prime, with U.S. companies on track to post earnings growth for the fourth quarter of 2020, data from Refinitiv showed on Wednesday, which would defy expectations for profits to drop 10% due to the pandemic.

Looking at the day ahead, central bank speakers include the ECB’s Hernandez de Cos, along with the Fed’s Kaplan and Daly. On the data front, we’ll get the weekly initial jobless claims and December factory orders. Finally, earnings releases include Gilead, Merck & Co., T-Mobile US, Bristol Myers Squibb, Philip Morris International and Ford.

Market Snapshot

  • S&P 500 futures up 0.1% to 3,825.75
  • Stoxx Europe 600 little changed
  • MXAP down 0.6% to 210.99
  • MXAPJ down 0.6% to 712.38
  • Nikkei down 1.1% to 28,341.95
  • Topix down 0.3% to 1,865.12
  • Hang Seng Index down 0.7% to 29,113.50
  • Shanghai Composite down 0.4% to 3,501.86
  • Sensex up 0.8% to 50,678.05
  • Australia S&P/ASX 200 down 0.9% to 6,765.50
  • Kospi down 1.3% to 3,087.55
  • Brent futures up 0.4% to $58.71/bbl
  • Gold spot down 1.1% to $1,814.77
  • U.S. Dollar Index up 0.3% to 91.44
  • German 10Y yield fell 0.6 bps to -0.467%
  • Euro down 0.4% to $1.1988

Top Overnight News from Bloomberg

  • Of the five countries leading the fight against Covid-19, all but one saw their currencies gain versus the dollar in January, according to a Bloomberg study of the 15 biggest economies with publicly available vaccination and infection data
  • The U.K. has passed the peak of its latest wave of the coronavirus pandemic, officials said, as the country reached the milestone of vaccinating 10 million people, about 15% of the population
  • Treasury Secretary Janet Yellen’s plan to oversee a snap meeting of top regulators to discuss recent market volatility signaled the new administration’s focus on consumer financial protection after years of emphasis on deregulation
  • Deutsche Bank AG closed out a bumper year for trading with a result that beat most Wall Street peers, handing Chief Executive Officer Christian Sewing the first annual profit in six years as he leans increasingly on the investment bank

A quick look at global markets courtesy of Newsquawk

Asian equity markets were mostly lower following a flat lead from the US where participants were tentative amid mixed earnings and as focus remained on stimulus plans with some expectations tempered regarding the stimulus amount after President Biden suggested he is willing to limit the eligibility for stimulus checks but won't budge on the size of payments at USD 1,400 and there were also comments from a Biden adviser who speculated that the final stimulus size could be USD 1.3tln. ASX 200 (-0.9%) was dragged lower by underperformance in defensive sectors and with the mood also soured after fresh COVID-19 measures were announced in Victoria state following 3 new infection cases, while mixed trade data showed a decline in Imports which suggested weaker domestic demand. Nikkei 225 (-1.1%) succumbed to negative mood which overshadowed encouraging blue-chip earnings that lifted Hitachi, Nomura Holdings and Sony shares after they all registered profit growth. Hang Seng (-0.8%) and Shanghai Comp. (-0.4%) were choppy after the PBoC opted for 14-day reverse repos in its open market operation for the first time this year ahead of next week’s Lunar New Year holidays, although this still amounted to a net neutral position on the day. Tensions between US and China also lingered after the US State Department noted it is deeply disturbed by allegations of rape and sexual abuse against women at the Uighur camps in Xinjiang and called for China to allow independent investigations, while there were also comments from Commerce Secretary nominee Raimondo that she sees no reason why Chinese companies including Huawei and ZTE should not remain on the blacklist. Nonetheless, there were a few bright spots with Ping An Insurance the biggest gainer in Hong Kong after it topped earnings forecasts and with Alibaba kept afloat after Ant Financial Services reached an agreement with Chinese regulators on a restructuring plan to become a financial holding company, and large oil names were also boosted following recent upside in the underlying commodity price. Finally, 10yr JGBs were subdued after the continued bear-steepening in USTs but with downside stemmed amid losses in stocks, with JGBs also not helped by mixed results at the MOF 30yr auction which registered a larger b/c due to a decline in accepted prices.

Top Asian News

  • Ant and China Banks Are Reining In Joint Loans to Consumers
  • Kuaishou Surges 181% in Hong Kong Gray Market Trading
  • KAZ Minerals Buyout Offer Increased After Investor Pressure

European equities kicked off the session mostly firmer (Eurostoxx 50 +0.1%) in what has been a busy morning of corporate updates across the region. From a macro perspective, focus remains on the progress of vaccinations and subsequent impact on reopening efforts, whilst US stimulus talks have taken an increased focus in recent sessions as the euphoria surrounding last week’s WallStreetBets short squeeze dissipates. Focus for stimulus will in the large-part centre around the overall price tag of the legislation, however, a more nuanced view of the matter will consider what concessions the Biden camp is willing to make (e.g eligibility criteria for stimulus checks) in order to navigate Congressional obstacles presented by the GOP and from within certain parts of his own party. Back to Europe, the modest divergences in the performance of regional indices is largely attributable to corporate updates with the AEX (-0.3%) softer on account of disappointing earnings from Unilever (-4.6%) who sit at the foot of the Stoxx 600 and has prompted underperformance in the Personal & Household Goods sector. Elsewhere, from a sectoral standpoint, telecom names are also lagging peers amid post-earnings losses from Nokia (-2.0%) with the Co. unable to counter some of the retail-led swings in its share price despite a relatively positive report. Additionally for the sector, opening gains in BT (now flat) shares proved to be short-lived. Deutsche Bank (-1.6%) also staged a turnaround despite opening higher to the tune of 3.5% after reporting its first profit since 2014. Further pressure for the banking sector has also been presented by losses in Commerzbank (-2.8%) after the Co. reported a FY20 net loss of EUR 2.9bln and finalised plans for a reduction in 10k full time jobs. Elsewhere in Germany, Bayer (+5.1%) have lent a helping hand to the DAX after striking a USD 2bln agreement to resolve future legal claims over future Roundup cancer claims. Shell (-1.3%) shares are modestly lower on the session after announcing a 71% decline in profits for 2020 as the impact of the pandemic sapped global energy demand.

Top European News

  • Shell Deepens Big Oil’s Disappointment With Earnings Miss
  • Nokia Sees Revenue Drop in 2021 in Fight for Market Share
  • SoftBank- Backed Auto1 Soars in Debut After $2.2 Billion IPO
  • Deutsche Bank’s DWS Rakes in Most Client Cash Since Listing

In FX, The broader Dollar and index continues to gain ground above 91.000 in early European trade after experiencing defensive inflows overnight, whilst notching the current peak just shy of 91.500 as EUR/USD dipped under the 1.2000 mark for the first time this year before trundling lower. Fundamental news-flow has been scarce in the European morning thus far. On the State-side stimulus front, as expected the House voted to pass the budget plan in a bid to fast-tracks President Biden's stimulus proposal, but some see a more moderate final package. Looking ahead for the Dollar, barring any major fundamental catalysts, the BOE is likely to take centre stage in the run-up to the weekly IJCs – although these metrics could be overlooked as it falls outside the survey period for tomorrow’s jobs report. From a technical standpoint, upside levels include the psychological 91.500 mark ahead of the 100 DMA at 91.852, whilst to downside levels see yesterday’s 90.988 low alongside the 21 and 50 DMAs at 90.491 and 90.478 respectively. Over to the single currency, EUR/USD ebbs further sub-1.2000 after earlier tripping some stops below the figure as it inches closer towards the 100 DMA (1.1965) as eyes remain on the Italian political limbo, whilst some also note of increased demand for EUR/USD downside protection via shorted-dated put strikes, with many reportedly at 1.1900. Note, the pair eyes some EUR 1bln in OpEx between 1.2000-05 alongside EUR 2.7bln between 1.2035-50.

  • GBP - Sterling succumbs to the Buck in the run up to the BoE policy announcement (full preview available on the Newsquawk Research Suite) where eyes will be fixated on commentary on the feasibility of NIRP for the banking sector if required, although the immediacy of such policy is likely to be downplayed by the MPC. Meanwhile, markets currently pencil in incremental negative rates for August. Cable has descended from its 1.3683 high, through its 21 DMA (1.3645) to trade sub-1.3600 as keeps its 50 DMA (1.3540) on the radar.
  • AUD, NZD, CAD - The non-US Dollars portray varying degrees of resilience vs the Dollar amid possible impetus/cushioning stemming from the commodities complex. AUD/USD outpaces its peers despite lacklustre trade data overnight, with some also citing a retracement of the RBA-induced downside earlier in the week, although firmer copper and iron ore prices could be underpinning the currency. AUD/USD resides just above 0.7600 after finding mild support at its 50 DMA (0.7614), with clean air seen on either side aside from the psychological figures. The Loonie has dipped probes 1.2800 but the Dollar headwinds have been diminished as crude prices remain elevated. The Kiwi straddles around 0.7200 as the AUD/NZD cross hovers around 1.0600. Technicians will be eyeing the a couple of downside DMAs in the NZD/USD including the 21 DMA (0.7185) and the 50 DMA (0.7140).
  • CHF, JPY - Again another Dollar story with USD/JPY edging further above 105.00 after surpassing this week’s prior high of 105.17 with the 200 DMA 105.57 up ahead. For reference, the pair sees around USD 1.4bln in OpEx at strike 105.00 heading into today’s NY cut. Subsequently, USD/CHF has reclaimed a 0.9000+ handle and topped the 100 DMA (0.9013)

In commodities, WTI and Brent front month futures remain somewhat uneventful as the complex takes a breather following its recent run higher as vaccine hopes and OPEC+ proactivity keep prices elevated. On the OPEC front, the meeting and outcome were as planned and no decision was made for next month's output. The key date to watch would be the March 3-4th confabs as producers re-diagnose the crude market and decide on the next step – although, this risks forming another rift among the producers as higher prices tempt more output whilst the near-term outlook remains clouded. WTI and Brent both reside in tight ranges around USD 56/bbl and USD 58.75/bbl respectively. Elsewhere, spot gold and silver continue to see losses as the firmer Dollar weighs on precious metals. Spot gold hovers just above USD 1800/oz (vs high USD 1834/oz) whilst spot silver trades sub-26.50/oz (vs high. 26.92/oz). Turning to base metals, copper prices were firmer overnight amid US stimulus hopes, with Shanghai copper closing higher by some 1.2%. However, LME copper waned off best levels as the firmer Dollar and indecisive risk tone hampered upside. Meanwhile, Dalian iron ore futures soared around 5% amid tailwinds from Brazil’s Vale stating its 2020 output was subdued.

US Event Calendar

  • 8:30am: Jan. Initial Jobless Claims, est. 830,000, prior 847,000; Continuing Claims, est. 4.7m, prior 4.77m;
  • 8:30am: 4Q Nonfarm Productivity, est. -3.0%, prior 4.6%; Unit Labor Costs, est. 4.0%, prior -6.6%
  • 10am: Dec. Cap Goods Orders Nondef Ex Air, est. 0.6%, prior 0.6%; Cap Goods Ship Nondef Ex Air, prior 0.5%
  • 10am: Dec. Durable Goods Orders, est. 0.2%, prior 0.2%
  • 10am: Dec. Factory Orders Ex Trans, prior 0.8%; Dec. Factory Orders, est. 0.7%, prior 1.0%

DB's Jim Reid concludes the overnight wrap

Following an incredibly strong start to the week, the global rally in risk assets showed signs of waning yesterday, with the S&P 500 ending the session up just +0.10%. However under the surface there was a return of the pro-cyclical trade, which coincided with steepening yield curves, as Energy (+4.27%) and Bank (+1.73%) stocks were among the best performing industries. Even the Reddit stocks seemed to calm down with GameStop moving just +2.68%, after not having a single-digit percentage price move in over a week. While some trades like AMC (+14.2%) still saw outsized moves, others such as Nokia (+3.75%), Blackberry (+3.90%) and Silver (+0.79%) also calmed down. It was a similar story of moderate moves in the other major indices, with the NASDAQ broadly unchanged (-0.02%) and Europe’s STOXX 600 (+0.33%). Oil prices did rise to their highest level since the pandemic started though as Brent crude rose +1.74% to $58.46 and WTI rose +1.70% to $55.69 – which is its highest closing price in just over a year. This came on the back of a communique from the OPEC+ which said that it will keep pushing to quickly clear the oil surplus left behind by the pandemic.

Similar to oil, Italian assets surged after former ECB President Mario Draghi accepted a mandate from President Matteralla to form the next Italian government, an outcome that investors have taken extremely well. By the close, the FTSE MIB had risen +2.09% to far outpace the other European bourses, and the spread of 10yr Italian yields over bunds tightened by -8.9bps to their narrowest level in nearly 5 years. Indeed, that’s the biggest one-day decline in spreads since June, back when the ECB announced a €600bn expansion of their asset purchases. The task now for Draghi will be to win support from enough lawmakers to form a new government, since a government requires a positive vote of confidence in parliament. But according to our European economists (link here) the pressure on politicians to compromise is extremely high following the President’s message, and it would be quite difficult for the parties in the outgoing government to say no to a Draghi government. As a result, they think it’s more likely than not that Draghi is able to get majority support. How long such a government lasts is another question our economists try to answer in their note.

It was a different story outside of southern Europe however, as sovereign bond yields continued to move higher on both sides of the Atlantic, with those on 10yr bunds up +2.5bps to their highest level in nearly 6 months. In the US, Treasury yields also climbed further, with those on 10yr debt rising +4.1bps to 1.137%, as 30yr yields reached their highest level since the pandemic began, at 1.93%. The moves came as President Biden told House Democrats yesterday that he was more concerned that too little would be spent rather than too much when it came to economic relief. Democrats voted to open budget reconciliation measures in both chambers of Congress yesterday, with party leaders again asking for Republican support while signalling that they are willing to pass the majority of the stimulus measures through a party line vote if necessary.

Against this backdrop, the 2s10s yield curve, which is one of our favourite cyclical indicators, steepened further, reaching a 3-year high of 102bps, whilst the 5s20s curve reached its highest level in almost 5 years and the 5s30s steepened to levels last seen in October 2016. Over the past few months when US yields climb near pandemic highs, the question of yield curve control always seems to be raised. Fed Governor Bullard this time fielded the question and responded that the current policy is “in good shape” and that there is no need to adjust, while also saying there was quite a way to go before curtailing asset purchases as well.

Overnight the recent equity rally has unwound a little with the Nikkei (-1.02%), Hang Seng (-1.57%), Shanghai Comp (-1.26%), Kospi (-1.89%) and Asx (-0.87%) all down. Futures on the S&P 500 are down -0.26% as we type while the US dollar index is up +0.11%. Weighing on sentiment a touch are hawkish comments from the US Commerce Secretary nominee Gina Raimondo on restricted Chinese companies. She said that she knows of “no reason” why Huawei, ZTE and other Chinese companies shouldn’t remain on a restricted trade list thus suggesting that the new administration will likely continue with a hard-line stance on China. In other overnight news, the meeting between Treasury Secretary Yellen and US financial regulators will take place today on the recent bout of volatility in the markets.

Data yesterday showed that inflation in the Euro Area in January rose by more than expected, with the flash estimate showing prices were up +0.9% on the previous year (vs +0.6% expected), bringing to an end 5 successive months in which the Euro Area had been in deflationary territory. Core inflation also saw a similarly sharp rise, climbing to +1.4% (vs. +0.9% expected), albeit these jumps were driven by a number of one-off factors like the end of the temporary VAT cut in Germany. That said, in spite of these temporary factors, there were further signs that market expectations of longer-term inflation were also moving higher, with the 5y5y forward inflation swaps for the Euro Area up +6.1bps to 1.38%, their highest level in over a year. On top of this, both German and Italian 10yr breakevens were at a fresh 2-year high.

Speaking of inflation, our chart of the day yesterday (link here ) looked at the massive rise in shipping rates over recent months, with the Shanghai Containerized Freight index at more than triple its levels in May last year, and other freight indices are showing much the same picture. There are a number of reasons why this has happened, from Covid-related disruption, a more rapid bounceback in economic growth, along with the 3 major shipping alliances becoming far more disciplined around capacity. The big question will be whether this portends a larger rise in inflation this year as pent-up demand and excess savings are released. One thing I learnt in compiling the note is that commercial airlines are used for a lot of freight. So if economies increasingly re-open but commercial travel is restricted on fears of virus mutations being imported, then we could have more supply chain issues and more upward pressures on prices.

In terms of the latest on the pandemic, the World Economic Forum announced that they would be moving their annual meeting to August, which had previously been scheduled for late May. Meanwhile in the UK, it was confirmed that the number of people who’d received a first dose of the vaccine had now surpassed 10 million, while the 7-day case average fell to a 7-week low yesterday of 22,395. Israel, who already lead the world in vaccinations per capita, announced they will be widening availability to all people over the age of 16 starting today. Meanwhile in the US, New York City announced that taxi drivers and restaurant workers are now eligible for the jab. This comes just ahead of limited indoor dining reopening later this month. Meanwhile other states in the North-eastern US continue to loosen restrictions with New Jersey expanding their own indoor dining quotas and allowing restaurants to remain open longer as the Governor cited improving hospitalisations and case count data as the reason for the changes.

Moving onto vaccines, AstraZeneca and the University of Oxford said overnight that they have started looking at how to re-engineer their coronavirus vaccine to defeat new mutations. The University of Oxford is also undertaking another trial that will combine vaccines from Pizer/BioNTech and AstraZeneca to see whether two shots of different vaccines produce better or worse results than two doses of the same product. The university will begin recruiting 820 participants over 50 years of age across eight UK sites this week. A successful outcome from the study will help manage supplies better.

Staying on the UK, one of the highlights later today will be the first BoE policy decision of 2021 at 12:00 London time. In terms of what to expect, our UK economists (link here) write that the MPC is likely to deliver a dovish message, and they see the Bank formally including negative rates in its toolkit, which should lower the bar for further rate cuts. However, no policy changes are expected at this stage, with a unanimous vote from the MPC to keep rates unchanged. Beyond this meeting, their base case is that the MPC will stay on hold for the rest of this year, though risks remain from a longer-than-expected lockdown or a disappointing recovery.

Finally on the data front, the final Euro Area composite PMI for January was revised up slightly from the flash reading to 47.8 (vs flash 47.5), while the UK also saw an upward revision to 41.2 (vs. flash 40.6). Over in the US, the ISM services index for January rose to a stronger-than-expected 58.7 (vs. 56.7 expected), which is its strongest level since February 2019. Separately, ahead of tomorrow’s jobs report, the ADP’s report of private payrolls also rose by a much stronger-than-expected +174k in January (vs. +70k expected).

To the day ahead now, and the aforementioned Bank of England decision will be one of the highlights, while the ECB will also be publishing their Economic Bulletin. Other central bank speakers include the ECB’s Hernandez de Cos, along with the Fed’s Kaplan and Daly. Data highlights include the January construction PMIs from the UK and Germany, along with Euro Area retail sales for December. Meanwhile in the US, we’ll get the weekly initial jobless claims and December factory orders. Finally, earnings releases include Gilead, Merck & Co., T-Mobile US, Bristol Myers Squibb, Philip Morris International and Ford.

Tyler Durden Thu, 02/04/2021 - 08:00

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Mistakes Were Made

Mistakes Were Made

Authored by C.J.Hopkins via The Consent Factory,

Make fun of the Germans all you want, and I’ve certainly done that…

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Mistakes Were Made

Authored by C.J.Hopkins via The Consent Factory,

Make fun of the Germans all you want, and I’ve certainly done that a bit during these past few years, but, if there’s one thing they’re exceptionally good at, it’s taking responsibility for their mistakes. Seriously, when it comes to acknowledging one’s mistakes, and not rationalizing, or minimizing, or attempting to deny them, and any discomfort they may have allegedly caused, no one does it quite like the Germans.

Take this Covid mess, for example. Just last week, the German authorities confessed that they made a few minor mistakes during their management of the “Covid pandemic.” According to Karl Lauterbach, the Minister of Health, “we were sometimes too strict with the children and probably started easing the restrictions a little too late.” Horst Seehofer, the former Interior Minister, admitted that he would no longer agree to some of the Covid restrictions today, for example, nationwide nighttime curfews. “One must be very careful with calls for compulsory vaccination,” he added. Helge Braun, Head of the Chancellery and Minister for Special Affairs under Merkel, agreed that there had been “misjudgments,” for example, “overestimating the effectiveness of the vaccines.”

This display of the German authorities’ unwavering commitment to transparency and honesty, and the principle of personal honor that guides the German authorities in all their affairs, and that is deeply ingrained in the German character, was published in a piece called “The Divisive Virus” in Der Spiegel, and immediately widely disseminated by the rest of the German state and corporate media in a totally organic manner which did not in any way resemble one enormous Goebbelsian keyboard instrument pumping out official propaganda in perfect synchronization, or anything creepy and fascistic like that.

Germany, after all, is “an extremely democratic state,” with freedom of speech and the press and all that, not some kind of totalitarian country where the masses are inundated with official propaganda and critics of the government are dragged into criminal court and prosecuted on trumped-up “hate crime” charges.

OK, sure, in a non-democratic totalitarian system, such public “admissions of mistakes” — and the synchronized dissemination thereof by the media — would just be a part of the process of whitewashing the authorities’ fascistic behavior during some particularly totalitarian phase of transforming society into whatever totalitarian dystopia they were trying to transform it into (for example, a three-year-long “state of emergency,” which they declared to keep the masses terrorized and cooperative while they stripped them of their democratic rights, i.e., the ones they hadn’t already stripped them of, and conditioned them to mindlessly follow orders, and robotically repeat nonsensical official slogans, and vent their impotent hatred and fear at the new “Untermenschen” or “counter-revolutionaries”), but that is obviously not the case here.

No, this is definitely not the German authorities staging a public “accountability” spectacle in order to memory-hole what happened during 2020-2023 and enshrine the official narrative in history. There’s going to be a formal “Inquiry Commission” — conducted by the same German authorities that managed the “crisis” — which will get to the bottom of all the regrettable but completely understandable “mistakes” that were made in the heat of the heroic battle against The Divisive Virus!

OK, calm down, all you “conspiracy theorists,” “Covid deniers,” and “anti-vaxxers.” This isn’t going to be like the Nuremberg Trials. No one is going to get taken out and hanged. It’s about identifying and acknowledging mistakes, and learning from them, so that the authorities can manage everything better during the next “pandemic,” or “climate emergency,” or “terrorist attack,” or “insurrection,” or whatever.

For example, the Inquiry Commission will want to look into how the government accidentally declared a Nationwide State of Pandemic Emergency and revised the Infection Protection Act, suspending the German constitution and granting the government the power to rule by decree, on account of a respiratory virus that clearly posed no threat to society at large, and then unleashed police goon squads on the thousands of people who gathered outside the Reichstag to protest the revocation of their constitutional rights.

Once they do, I’m sure they’ll find that that “mistake” bears absolutely no resemblance to the Enabling Act of 1933, which suspended the German constitution and granted the government the power to rule by decree, after the Nazis declared a nationwide “state of emergency.”

Another thing the Commission will probably want to look into is how the German authorities accidentally banned any further demonstrations against their arbitrary decrees, and ordered the police to brutalize anyone participating in such “illegal demonstrations.”

And, while the Commission is inquiring into the possibly slightly inappropriate behavior of their law enforcement officials, they might want to also take a look at the behavior of their unofficial goon squads, like Antifa, which they accidentally encouraged to attack the “anti-vaxxers,” the “Covid deniers,” and anyone brandishing a copy of the German constitution.

Come to think of it, the Inquiry Commission might also want to look into how the German authorities, and the overwhelming majority of the state and corporate media, accidentally systematically fomented mass hatred of anyone who dared to question the government’s arbitrary and nonsensical decrees or who refused to submit to “vaccination,” and publicly demonized us as “Corona deniers,” “conspiracy theorists,” “anti-vaxxers,” “far-right anti-Semites,” etc., to the point where mainstream German celebrities like Sarah Bosetti were literally describing us as the inessential “appendix” in the body of the nation, quoting an infamous Nazi almost verbatim.

And then there’s the whole “vaccination” business. The Commission will certainly want to inquire into that. They will probably want to start their inquiry with Karl Lauterbach, and determine exactly how he accidentally lied to the public, over and over, and over again …

And whipped people up into a mass hysteria over “KILLER VARIANTS” …

And “LONG COVID BRAIN ATTACKS” …

And how “THE UNVACCINATED ARE HOLDING THE WHOLE COUNTRY HOSTAGE, SO WE NEED TO FORCIBLY VACCINATE EVERYONE!”

And so on. I could go on with this all day, but it will be much easier to just refer you, and the Commission, to this documentary film by Aya Velázquez. Non-German readers may want to skip to the second half, unless they’re interested in the German “Corona Expert Council” …

Look, the point is, everybody makes “mistakes,” especially during a “state of emergency,” or a war, or some other type of global “crisis.” At least we can always count on the Germans to step up and take responsibility for theirs, and not claim that they didn’t know what was happening, or that they were “just following orders,” or that “the science changed.”

Plus, all this Covid stuff is ancient history, and, as Olaf, an editor at Der Spiegel, reminds us, it’s time to put the “The Divisive Pandemic” behind us …

… and click heels, and heil the New Normal Democracy!

Tyler Durden Sat, 03/16/2024 - 23:20

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Harvard Medical School Professor Was Fired Over Not Getting COVID Vaccine

Harvard Medical School Professor Was Fired Over Not Getting COVID Vaccine

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A…

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Harvard Medical School Professor Was Fired Over Not Getting COVID Vaccine

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A Harvard Medical School professor who refused to get a COVID-19 vaccine has been terminated, according to documents reviewed by The Epoch Times.

Martin Kulldorff, epidemiologist and statistician, at his home in Ashford, Conn., on Feb. 11, 2022. (Samira Bouaou/The Epoch Times)

Martin Kulldorff, an epidemiologist, was fired by Mass General Brigham in November 2021 over noncompliance with the hospital’s COVID-19 vaccine mandate after his requests for exemptions from the mandate were denied, according to one document. Mr. Kulldorff was also placed on leave by Harvard Medical School (HMS) because his appointment as professor of medicine there “depends upon” holding a position at the hospital, another document stated.

Mr. Kulldorff asked HMS in late 2023 how he could return to his position and was told he was being fired.

You would need to hold an eligible appointment with a Harvard-affiliated institution for your HMS academic appointment to continue,” Dr. Grace Huang, dean for faculty affairs, told the epidemiologist and biostatistician.

She said the lack of an appointment, combined with college rules that cap leaves of absence at two years, meant he was being terminated.

Mr. Kulldorff disclosed the firing for the first time this month.

“While I can’t comment on the specifics due to employment confidentiality protections that preclude us from doing so, I can confirm that his employment agreement was terminated November 10, 2021,” a spokesperson for Brigham and Women’s Hospital told The Epoch Times via email.

Mass General Brigham granted just 234 exemption requests out of 2,402 received, according to court filings in an ongoing case that alleges discrimination.

The hospital said previously, “We received a number of exemption requests, and each request was carefully considered by a knowledgeable team of reviewers.

A lot of other people received exemptions, but I did not,” Mr. Kulldorff told The Epoch Times.

Mr. Kulldorff was originally hired by HMS but switched departments in 2015 to work at the Department of Medicine at Brigham and Women’s Hospital, which is part of Mass General Brigham and affiliated with HMS.

Harvard Medical School has affiliation agreements with several Boston hospitals which it neither owns nor operationally controls,” an HMS spokesperson told The Epoch Times in an email. “Hospital-based faculty, such as Mr. Kulldorff, are employed by one of the affiliates, not by HMS, and require an active hospital appointment to maintain an academic appointment at Harvard Medical School.”

HMS confirmed that some faculty, who are tenured or on the tenure track, do not require hospital appointments.

Natural Immunity

Before the COVID-19 vaccines became available, Mr. Kulldorff contracted COVID-19. He was hospitalized but eventually recovered.

That gave him a form of protection known as natural immunity. According to a number of studies, including papers from the U.S. Centers for Disease Control and Prevention, natural immunity is better than the protection bestowed by vaccines.

Other studies have found that people with natural immunity face a higher risk of problems after vaccination.

Mr. Kulldorff expressed his concerns about receiving a vaccine in his request for a medical exemption, pointing out a lack of data for vaccinating people who suffer from the same issue he does.

I already had superior infection-acquired immunity; and it was risky to vaccinate me without proper efficacy and safety studies on patients with my type of immune deficiency,” Mr. Kulldorff wrote in an essay.

In his request for a religious exemption, he highlighted an Israel study that was among the first to compare protection after infection to protection after vaccination. Researchers found that the vaccinated had less protection than the naturally immune.

“Having had COVID disease, I have stronger longer lasting immunity than those vaccinated (Gazit et al). Lacking scientific rationale, vaccine mandates are religious dogma, and I request a religious exemption from COVID vaccination,” he wrote.

Both requests were denied.

Mr. Kulldorff is still unvaccinated.

“I had COVID. I had it badly. So I have infection-acquired immunity. So I don’t need the vaccine,” he told The Epoch Times.

Dissenting Voice

Mr. Kulldorff has been a prominent dissenting voice during the COVID-19 pandemic, countering messaging from the government and many doctors that the COVID-19 vaccines were needed, regardless of prior infection.

He spoke out in an op-ed in April 2021, for instance, against requiring people to provide proof of vaccination to attend shows, go to school, and visit restaurants.

The idea that everybody needs to be vaccinated is as scientifically baseless as the idea that nobody does. Covid vaccines are essential for older, high-risk people and their caretakers and advisable for many others. But those who’ve been infected are already immune,” he wrote at the time.

Mr. Kulldorff later co-authored the Great Barrington Declaration, which called for focused protection of people at high risk while removing restrictions for younger, healthy people.

Harsh restrictions such as school closures “will cause irreparable damage” if not lifted, the declaration stated.

The declaration drew criticism from Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, and Dr. Rochelle Walensky, who became the head of the CDC, among others.

In a competing document, Dr. Walensky and others said that “relying upon immunity from natural infections for COVID-19 is flawed” and that “uncontrolled transmission in younger people risks significant morbidity(3) and mortality across the whole population.”

“Those who are pushing these vaccine mandates and vaccine passports—vaccine fanatics, I would call them—to me they have done much more damage during this one year than the anti-vaxxers have done in two decades,” Mr. Kulldorff later said in an EpochTV interview. “I would even say that these vaccine fanatics, they are the biggest anti-vaxxers that we have right now. They’re doing so much more damage to vaccine confidence than anybody else.

Surveys indicate that people have less trust now in the CDC and other health institutions than before the pandemic, and data from the CDC and elsewhere show that fewer people are receiving the new COVID-19 vaccines and other shots.

Support

The disclosure that Mr. Kulldorff was fired drew criticism of Harvard and support for Mr. Kulldorff.

The termination “is a massive and incomprehensible injustice,” Dr. Aaron Kheriaty, an ethics expert who was fired from the University of California–Irvine School of Medicine for not getting a COVID-19 vaccine because he had natural immunity, said on X.

The academy is full of people who declined vaccines—mostly with dubious exemptions—and yet Harvard fires the one professor who happens to speak out against government policies.” Dr. Vinay Prasad, an epidemiologist at the University of California–San Francisco, wrote in a blog post. “It looks like Harvard has weaponized its policies and selectively enforces them.”

A petition to reinstate Mr. Kulldorff has garnered more than 1,800 signatures.

Some other doctors said the decision to let Mr. Kulldorff go was correct.

“Actions have consequence,” Dr. Alastair McAlpine, a Canadian doctor, wrote on X. He said Mr. Kulldorff had “publicly undermine[d] public health.”

Tyler Durden Sat, 03/16/2024 - 21:00

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Correcting the Washington Post’s 11 Charts That Are Supposed to Tell Us How the Economy Changed Since Covid

The Washington Post made some serious errors or omissions in its 11 charts that are supposed to tell us how Covid changed the economy. Wages Starting with…

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The Washington Post made some serious errors or omissions in its 11 charts that are supposed to tell us how Covid changed the economy.

Wages

Starting with its second chart, the article gives us an index of average weekly wages since 2019. The index shows a big jump in 2020, which then falls off in 2021 and 2022, before rising again in 2023.

It tells readers:

“Many Americans got large pay increases after the pandemic, when employers were having to one-up each other to find and keep workers. For a while, those wage gains were wiped out by decade-high inflation: Workers were getting larger paychecks, but it wasn’t enough to keep up with rising prices.”

That actually is not what its chart shows. The big rise in average weekly wages at the start of the pandemic was not the result of workers getting pay increases, it was the result of low-paid workers in sectors like hotels and restaurants losing their jobs.

The number of people employed in the low-paying leisure and hospitality sector fell by more than 8 million at the start of the pandemic. Even at the start of 2021 it was still down by over 4 million.

Laying off low-paid workers raises average wages in the same way that getting the short people to leave raises the average height of the people in the room. The Washington Post might try to tell us that the remaining people grew taller, but that is not what happened.

The other problem with this chart is that it is giving us weekly wages. The length of the average workweek jumped at the start of the pandemic as employers decided to work the workers they had longer hours rather than hire more workers. In January of 2021 the average workweek was 34.9 hours, compared to 34.4 hours in 2019 and 34.3 hours in February.

This increase in hours, by itself, would raise weekly pay by 2.0 percent. As hours returned to normal in 2022, this measure would misleadingly imply that wages were falling.

It is also worth noting that the fastest wage gains since the pandemic have been at the bottom end of the wage distribution and the Black/white wage gap has fallen to its lowest level on record.

Saving Rates

The third chart shows the saving rate since 2019. It shows a big spike at the start of the pandemic, as people stopped spending on things like restaurants and travel and they got pandemic checks from the government. It then falls sharply in 2022 and is lower in the most recent quarters than in 2019.

The piece tells readers:

“But as the world reopened — and people resumed spending on dining out, travel, concerts and other things that were previously off-limits — savings rates have leveled off. Americans are also increasingly dip into rainy-day funds to pay more for necessities, including groceries, housing, education and health care. In fact, Americans are now generally saving less of their incomes than they were before the pandemic.

This is an incomplete picture due to a somewhat technical issue. As I explained in a blogpost a few months ago, there is an unusually large gap between GDP as measured on the output side and GDP measured on the income side. In principle, these two numbers should be the same, but they never come out exactly equal.

In recent quarters, the gap has been 2.5 percent of GDP. This is extraordinarily large, but it also is unusual in that the output side is higher than the income side, the opposite of the standard pattern over the last quarter century.

It is standard for economists to assume that the true number for GDP is somewhere between the two measures. If we make that assumption about the data for 2023, it would imply that income is somewhat higher than the data now show and consumption somewhat lower.

In that story, as I showed in the blogpost, the saving rate for 2023 would be 6.8 percent of disposable income, roughly the same as the average for the three years before the pandemic. This would mean that people are not dipping into their rainy-day funds as the Post tells us. They are spending pretty much as they did before the pandemic.

 

Credit Card Debt

The next graph shows that credit card debt is rising again, after sinking in the pandemic. The piece tells readers:

“But now, debt loads are swinging higher again as families try to keep up with rising prices. Total household debt reached a record $17.5 trillion at the end of 2023, according to the Federal Reserve Bank of New York. And, in a worrisome sign for the economy, delinquency rates on mortgages, car loans and credit cards are all rising, too.”

There are several points worth noting here. Credit card debt is rising, but measured relative to income it is still below where it was before the pandemic. It was 6.7 percent of disposable income at the end of 2019, compared to 6.5 percent at the end of last year.

The second point is that a major reason for the recent surge in credit card debt is that people are no longer refinancing mortgages. There was a massive surge in mortgage refinancing with the low interest rates in 2020-2021.

Many of the people who refinanced took additional money out, taking advantage of the increased equity in their home. This channel of credit was cut off when mortgage rates jumped in 2022 and virtually ended mortgage refinancing. This means that to a large extent the surge in credit card borrowing is simply a shift from mortgage debt to credit card debt.

The point about total household debt hitting a record can be said in most months. Except in the period immediately following the collapse of the housing bubble, total debt is almost always rising.

And the rise in delinquencies simply reflects the fact that they had been at very low levels in 2021 and 2022. For the most part, delinquency rates are just getting back to their pre-pandemic levels, which were historically low.  

 

Grocery Prices and Gas Prices

The next two charts show the patterns in grocery prices and gas prices since the pandemic. It would have been worth mentioning that every major economy in the world saw similar run-ups in prices in these two areas. In other words, there was nothing specific to U.S. policy that led to a surge in inflation here.

 

The Missing Charts

There are several areas where it would have been interesting to see charts which the Post did not include. It would have been useful to have a chart on job quitters, the number of people who voluntarily quit their jobs during the pandemic. In the tight labor markets of 2021 and 2022 the number of workers who left jobs they didn’t like soared to record levels, as shown below.

 

The vast majority of these workers took other jobs that they liked better. This likely explains another item that could appear as a graph, the record level of job satisfaction.

In a similar vein there has been an explosion in the number of people who work from home at least part-time. This has increased by more than 17 million during the pandemic. These workers are saving themselves thousands of dollars a year on commuting costs and related expenses, as well as hundreds of hours spent commuting.

Finally, there has been an explosion in the use of telemedicine since the pandemic. At the peak, nearly one in four visits with a health care professional was a remote consultation. This saved many people with serious health issues the time and inconvenience associated with a trip to a hospital or doctor’s office. The increased use of telemedicine is likely to be a lasting gain from the pandemic.

 

The World Has Changed

The pandemic will likely have a lasting impact on the economy and society. The Washington Post’s charts captured part of this story, but in some cases misrepr

The post Correcting the Washington Post’s 11 Charts That Are Supposed to Tell Us How the Economy Changed Since Covid appeared first on Center for Economic and Policy Research.

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