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The equities rally is welcome but caution advised as markets start to look frothy again

Since its most recent low set in October, the MSCI World index has gained 20%, including around 6% since the beginning of…
The post The equities rally…



Since its most recent low set in October, the MSCI World index has gained 20%, including around 6% since the beginning of the year. The index, which covers a broad selection of mid and large cap stocks covering approximately 85% of the free float-adjusted market capitalization in each country, is designed as a proxy to global stock markets, excluding emerging markets.

MSCI World index

Source: MSCI

In the UK, the FTSE 100 benchmark index is up 2.79% for the year-to-date and up 13.76% since its own January low. Over on Wall Street the broad based S&P 500 is up 6.44% this year and 13.5% since its most recent low on September 30.

It has been an even better beginning of the year for the tech-focused Nasdaq whose heavy growth stocks weighting was hit particularly hard by last year’s bear markets and didn’t record its recent low until December 28. The index is up almost 12% for the year and 13.8% since that late December bottom.

With inflation figures around the world showing signs that price rises are finally slowing down, helped along by lower oil and gas prices, talk has turned to central banks led by the Federal Reserve taking their feet of rate rises. This week saw media speculation that the Fed could halt the rate rises that have taken the base interest rate in the USA from around zero at the beginning of last year to 4.25%-4.5%.

Market sentiment has improved to the point futures markets now show traders see a near-20% chance of rate cuts by the end of the year.

Investors should show caution before flinging themselves back into the market

There were a handful of moments throughout 2022 when the narrative that inflation is cooling and interest rate rises would be pulled back on started to gather pace. On each occasion, it proved overly optimistic.

This time markets have gathered much more of a head of steam than at any other point since the beginning of the current bear market in late 2021. That’s given rise to optimism the worst may already be behind equity investors. However, experienced heads are urging caution.

While there is always a chance of a milder global recession than feared, especially if rate rises are paused or even reversed, there are also still dark clouds on the economic horizon. Market sentiment is still frail and there is a feeling it wouldn’t take much to shatter investor confidence, sending benchmark indices into reverse again.

Is bull market optimism a mirage caused by long years of now unrealistic returns?

Many of today’s money managers, traders and retail investors have spent a huge chunk, if not the majority or entirety of their investment careers in the environment of the longest bull market in history. A period of steady gains, which fuelled by hugely loose monetary policy accelerated on a number of occasions, stretched from 2009 until late 2021.

It was only briefly interrupted twice, by a correction in late 2018 and again in early 2020 when the Covid-19 pandemic hit. On both occasions, the reversals were sharp but very short lived and powerful upwards momentum soon resumed.

The surge in valuations after the Covid crash that lasted until the start of this bear market was particularly intense. In 2020, the Nasdaq plunged almost 30% between mid-February and March 20 but November 19 2021 had gained over 130%.

The surge was fuelled by money pumped into the system by major central banks around the world to keep economies afloat during the lockdown periods that punctuated the pandemic over 2020 and 2021. Growth companies, mainly from the tech sector, yet to make a profit and some barely even making any revenues went public at valuations in the billions.

The same flood of cash catalysed a wave of inflation not seen in 40 years. It was first presumed, and forecast by central banks like the Fed and Bank of England, that this surge in inflation would be short-lived and fade as the global economy and supply chains worked out the kinks they pandemic had caused. Then Russia invaded Ukraine, sending oil and gas prices soaring, pushing inflation rates up further and locking them in for an extended period.

The equity markets meltup that held until late 2021 had shades of the 2000 dotcom bubble, with company valuations completely divorced from fundamentals such as revenues and profits. The consequences were also similar and unprofitable companies saw their valuations wiped out.

Even highly profitable companies like the Big Tech cohort of Apple, Amazon, Alphabet, Meta and Microsoft saw valuations pumped up by previously surging markets devastated. The tech giants saw over a trillion dollars wiped from their combined market capitalisation in just three days last May.

But despite the recent carnage and bleak macro-economic, many investors seem convinced a return to a bull market would again be relatively quick. With the most overvalued new market entrants knocked back down to size, or wiped out, optimism has abounded the froth has been taken out of markets and profitable companies oversold.

But some of the world’s biggest investors think optimism has returned far too quickly because investors have become too accustomed to quick recoveries from stock market downturns.

Why the recent stock market recovery could be wishful thinking

Quoted by the Financial Times, Nicolai Tangen, head of Norway’s $1.3 trillion state oil fund believes there is a high chance the Fed has not finished with its rate rises yet. He thinks that it and other major central banks such as the ECB and Bank of England will accept the consequences of a recession, even a harsh one, before risking allowing inflation to take a grip again.

He suspects we may well be in the process of transitioning from one long economic cycle of high returns in place for 40 years and into a new one of much lower returns investors will have to get used to. A period of years of inflation volatility could, he warns, lie ahead and interest rates will be used to keep it under control.

Late last year, central banks being willing to squash a market recovery with more aggressive rate rises was seen as unlikely and a relatively low risk. The big hitters are now taking that prospect much more seriously. That’s something for retail investors to consider before returning to the market with too much enthusiasm after a strong start to the year. By spring that optimism could be melting away with the last of the snow.

The post The equities rally is welcome but caution advised as markets start to look frothy again first appeared on Trading and Investment News.

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G7 Vs BRICS – Off To The Races

G7 Vs BRICS – Off To The Races

Authored by Scott Ritter via,

An economist digging below the surface of an IMF report has…



G7 Vs BRICS - Off To The Races

Authored by Scott Ritter via,

An economist digging below the surface of an IMF report has found something that should shock the Western bloc out of any false confidence in its unsurpassed global economic clout...

G7 leaders meeting on June 28, 2022, at Schloss Elmau in Krün, Germany. (White House/Adam Schultz)

Last summer, the Group of 7 (G7), a self-anointed forum of nations that view themselves as the most influential economies in the world, gathered at Schloss Elmau, near Garmisch-Partenkirchen, Germany, to hold their annual meeting. Their focus was punishing Russia through additional sanctions, further arming of Ukraine and the containment of China.

At the same time, China hosted, through video conference, a gathering of the BRICS economic forum. Comprised of Brazil, Russia, India, China and South Africa, this collection of nations relegated to the status of so-called developing economies focused on strengthening economic bonds, international economic development and how to address what they collectively deemed the counter-productive policies of the G7.

In early 2020, Russian Deputy Foreign Minister Sergei Ryabkov had predicted that, based upon purchasing power parity, or PPP, calculations projected by the International Monetary Fund, BRICS would overtake the G7 sometime later that year in terms of percentage of the global total.

(A nation’s gross domestic product at purchasing power parity, or PPP, exchange rates is the sum value of all goods and services produced in the country valued at prices prevailing in the United States and is a more accurate reflection of comparative economic strength than simple GDP calculations.)

Then the pandemic hit and the global economic reset that followed made the IMF projections moot. The world became singularly focused on recovering from the pandemic and, later, managing the fallout from the West’s massive sanctioning of Russia following that nation’s invasion of Ukraine in February 2022.

The G7 failed to heed the economic challenge from BRICS, and instead focused on solidifying its defense of the “rules based international order” that had become the mantra of the administration of U.S. President Joe Biden.


Since the Russian invasion of Ukraine, an ideological divide that has gripped the world, with one side (led by the G7) condemning the invasion and seeking to punish Russia economically, and the other (led by BRICS) taking a more nuanced stance by neither supporting the Russian action nor joining in on the sanctions. This has created a intellectual vacuum when it comes to assessing the true state of play in global economic affairs.

U.S. President Joe Biden in virtual call with G7 leaders and Ukrainian President Volodymyr Zelenskyy, Feb. 24. (White House/Adam Schultz)

It is now widely accepted that the U.S. and its G7 partners miscalculated both the impact sanctions would have on the Russian economy, as well as the blowback that would hit the West.

Angus King, the Independent senator from Maine, recently observed that he remembers

“when this started a year ago, all the talk was the sanctions are going to cripple Russia. They’re going to be just out of business and riots in the street absolutely hasn’t worked …[w]ere they the wrong sanctions? Were they not applied well? Did we underestimate the Russian capacity to circumvent them? Why have the sanctions regime not played a bigger part in this conflict?”

It should be noted that the IMF calculated that the Russian economy, as a result of these sanctions, would contract by at least 8 percent. The real number was 2 percent and the Russian economy — despite sanctions — is expected to grow in 2023 and beyond.

This kind of miscalculation has permeated Western thinking about the global economy and the respective roles played by the G7 and BRICS. In October 2022, the IMF published its annual World Economic Outlook (WEO), with a focus on traditional GDP calculations. Mainstream economic analysts, accordingly, were comforted that — despite the political challenge put forward by BRICS in the summer of 2022 — the IMF was calculating that the G7 still held strong as the leading global economic bloc.

In January 2023 the IMF published an update to the October 2022 WEO,  reinforcing the strong position of the G7.  According to Pierre-Olivier Gourinchas, the IMF’s chief economist, the “balance of risks to the outlook remains tilted to the downside but is less skewed toward adverse outcomes than in the October WEO.”

This positive hint prevented mainstream Western economic analysts from digging deeper into the data contained in the update. I can personally attest to the reluctance of conservative editors trying to draw current relevance from “old data.”

Fortunately, there are other economic analysts, such as Richard Dias of Acorn Macro Consulting, a self-described “boutique macroeconomic research firm employing a top-down approach to the analysis of the global economy and financial markets.”

Rather than accept the IMF’s rosy outlook as gospel, Dias did what analysts are supposed to do — dig through the data and extract relevant conclusions.

After rooting through the IMF’s World Economic Outlook Data Base, Dias conducted a comparative analysis of the percentage of global GDP adjusted for PPP between the G7 and BRICS, and made a surprising discovery: BRICS had surpassed the G7.

This was not a projection, but rather a statement of accomplished fact:

BRICS was responsible for 31.5 percent of the PPP-adjusted global GDP, while the G7 provided 30.7 percent.

Making matters worse for the G7, the trends projected showed that the gap between the two economic blocs would only widen going forward.

The reasons for this accelerated accumulation of global economic clout on the part of BRICS can be linked to three primary factors:

  • residual fallout from the Covid-19 pandemic,

  • blowback from the sanctioning of Russia by the G7 nations in the aftermath of the Russian invasion of Ukraine and a growing resentment among the developing economies of the world to G7 economic policies and

  • priorities which are perceived as being rooted more in post-colonial arrogance than a genuine desire to assist in helping nations grow their own economic potential. 

Growth Disparities

It is true that BRICS and G7 economic clout is heavily influenced by the economies of China and the U.S., respectively. But one cannot discount the relative economic trajectories of the other member states of these economic forums. While the economic outlook for most of the BRICS countries points to strong growth in the coming years, the G7 nations, in a large part because of the self-inflicted wound that is the current sanctioning of Russia, are seeing slow growth or, in the case of the U.K., negative growth, with little prospect of reversing this trend.

Moreover, while G7 membership remains static, BRICS is growing, with Argentina and Iran having submitted applications, and other major regional economic powers, such as Saudi Arabia, Turkey and Egypt, expressing an interest in joining. Making this potential expansion even more explosive is the recent Chinese diplomatic achievement in normalizing relations between Iran and Saudia Arabia.

Diminishing prospects for the continued global domination by the U.S. dollar, combined with the economic potential of the trans-Eurasian economic union being promoted by Russia and China, put the G7 and BRICS on opposing trajectories. BRICS should overtake the G7 in terms of actual GDP, and not just PPP, in the coming years.

But don’t hold your breath waiting for mainstream economic analysts to reach this conclusion. Thankfully, there are outliers such as Richard Dias and Acorn Macro Consulting who seek to find new meaning from old data. 

Tyler Durden Sat, 03/25/2023 - 07:00

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Many CDC Blunders Exaggerated Severity Of COVID-19: Study

Many CDC Blunders Exaggerated Severity Of COVID-19: Study

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

The U.S. Centers…



Many CDC Blunders Exaggerated Severity Of COVID-19: Study

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

The U.S. Centers for Disease Control and Prevention (CDC) made at least 25 statistical or numerical errors during the COVID-19 pandemic, and the overwhelming majority exaggerated the severity of the pandemic, according to a new study.

Researchers who have been tracking CDC errors compiled 25 instances where the agency offered demonstrably false information. For each instance, they analyzed whether the error exaggerated or downplayed the severity of COVID-19.

Of the 25 instances, 20 exaggerated the severity, the researchers reported in the study, which was published ahead of peer review on March 23.

The CDC has expressed significant concern about COVID-19 misinformation. In order for the CDC to be a credible source of information, they must improve the accuracy of the data they provide,” the authors wrote.

The CDC did not respond to a request for comment.

Most Errors Involved Children

Most of the errors were about COVID-19’s impact on children.

In mid-2021, for instance, the CDC claimed that 4 percent of the deaths attributed to COVID-19 were kids. The actual percentage was 0.04 percent. The CDC eventually corrected the misinformation, months after being alerted to the issue.

CDC Director Dr. Rochelle Walensky falsely told a White House press briefing in October 2021 that there had been 745 COVID-19 deaths in children, but the actual number, based on CDC death certificate analysis, was 558.

Walensky and other CDC officials also falsely said in 2022 that COVID-19 was a top five cause of death for children, citing a study that gathered CDC data instead of looking at the data directly. The officials have not corrected the false claims.

Other errors include the CDC claiming in 2022 that pediatric COVID-19 hospitalizations were “increasing again” when they’d actually peaked two weeks earlier; CDC officials in 2023 including deaths among infants younger than 6 months old when reporting COVID-19 deaths among children; and Walensky on Feb. 9, 2023, exaggerating the pediatric death toll before Congress.

“These errors suggest the CDC consistently exaggerates the impact of COVID-19 on children,” the authors of the study said.

Read more here...

Tyler Durden Fri, 03/24/2023 - 20:20

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NIH awards researchers $7.5 million to create data support center for opioid use disorder and pain management research

WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant…



WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant from the National Institutes of Health (NIH) Helping End Addiction Long-term (HEAL) initiative.

Credit: Wake Forest University School of Medicine

WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant from the National Institutes of Health (NIH) Helping End Addiction Long-term (HEAL) initiative.

The NIH HEAL initiative, which launched in 2018, was created to find scientific solutions to stem the national opioid and pain public health crises. The funding is part of the HEAL Data 2 Action (HD2A) program, designed to use real-time data to guide actions and change processes toward reducing overdoses and improving opioid use disorder treatment and pain management.

With the support of the grant, researchers will create a data infrastructure support center to assist HD2A innovation projects at other institutions across the country. These innovation projects are designed to address gaps in four areas—prevention, harm reduction, treatment of opioid use disorder and recovery support.

“Our center’s goal is to remove barriers so that solutions can be more streamlined and rapidly distributed,” said Meredith C.B. Adams, M.D., associate professor of anesthesiology, biomedical informatics, physiology and pharmacology, and public health sciences at Wake Forest University School of Medicine.

By monitoring opioid overdoses in real time, researchers will be able to identify trends and gaps in resources in local communities where services are most needed.

“We will collect and analyze data that will inform prevention and treatment services,” Adams said. “We’re shifting chronic pain and opioid care in communities to quickly offer solutions.”

The center will also develop data related resources, education and training related to substance use, pain management and the reduction of opioid overdoses.

According to the CDC, there was a 29% increase in drug overdose deaths in the U.S.  in 2020, and nearly 75% of those deaths involved an opioid.

“Given the scope of the opioid crises, which was only exacerbated by the COVID-19 pandemic, it’s imperative that we improve and create new prevention strategies,” Adams said. “The funding will create the infrastructure for rapid intervention.”

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