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The Restoration

The focus in the week ahead is squarely on the United States.  The ECB, the BOJ, the Bank of Canada, and Norway’s Norges Bank met last week.  No fresh initiatives were taken, but if there is a takeaway, it is that the vaccine appears to have made policyma

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The focus in the week ahead is squarely on the United States.  The ECB, the BOJ, the Bank of Canada, and Norway's Norges Bank met last week.  No fresh initiatives were taken, but if there is a takeaway, it is that the vaccine appears to have made policymakers, like many of us, more confident about the medium-term outlook, even though more pain and grief are likely first.  Investors see continued open-spigot monetary policy and more fiscal stimulus (e.g., US, EU Recovery Fund).  Coupled with the vaccine's rollout, it will generate a critical mass of more robust economic growth as the year progresses.   The reflation trade has helped lift commodity prices and emerging markets.  The MSCI Emerging Markets Equity Index rose by about 2.5% last week, its fourth consecutive weekly increase.  In fact, going back to the end of September, the benchmark has fallen in only two of the past 17 weeks, during which time it has risen by almost 30% to new record highs.   Since the eve of the election, the CRB Index has risen by nearly a quarter.   

From a high level, it increasingly appears the populist moment has passed. The elites in many high-income countries were challenged beginning with the Great Financial Crisis. We saw it in terms of Karl Polyani's second movement, a popular pushback after a broad liberalization. That broad liberalization we trace to Reagan-Thatcher. 

The AfD in Germany had more nationalist than populist roots, but it is the Green Party that has moved into the vacuum created by the blurring of the Social Democratic Party and the Christian Democratic Union after years of coalition governments.  Ironically, there is speculation about the possibility of a CDU-Green coalition on the federal level, which up to now has been tried only on the state-level, as a possible outcome of the September election.

The Five Star Movement in Italy, for example, is now part of the governing coalition. Its more radical ideas have been tempered by realpolitik.  It appears vulnerable to losing seats in the next parliament, where both chambers will be around a third smaller.   Podemos in Spain serves as the junior partner in the Spanish government. It has lost its earlier momentum and slipped into fourth place.  Co-opting opposition and stealing absorbing their thunder are time-tested techniques.  In Greece, the New Democracy, one of the two main traditional parties, has returned to power and enjoys an outright parliamentary majority.  

In the US, it was not so clear.  Even though Trump was defeated on the national level, his party picked up seats in the House of Representatives and several statehouses and a governorship.  Trump himself drew more than two million more votes last year than in 2016.  However, since the election, particularly the events leading up to and including spectacle in the Capitol on January 6, it seems clearer that the traditional Atlantic bipartisan elite, for want of a better name, has recaptured the mantle of leadership and returned to power. 

This does not mean that stark differences on particular issues no longer exist between the two parties, but rather, the self-immolation of Trumpism appears to have palpably strengthened the traditional American politics do seem particularly fluid.  The Democratic Party since the New Deal has been the party of organized and unorganized workers but, in recent years, has increasingly been dominated by interests and cultural expressions of the professional class. Trump has reportedly threatened to launch a third party, which would ostensibly split off the party's populist-wing that had begun crystallizing with the Tea Party (circa 2009)

The elite is more globalist in outlook and more multilateralist in druthers.  It is a sustained tension between Wilsonian idealism, desiring to recreate the world in its image, and the realpolitik of pragmatic realism.  America will return to its traditional values.  The Chinese relationship is thorny (and seemingly bipartisan), but the relationship with Europe is no walk in the park.  The US has been able to delay it, but the Nordstream 2 pipeline may be completed around the middle of the year.  Europe struck a long-negotiated investment agreement with China a few weeks before Biden took office.  The French oil company Total became the first major to leave the American Petroleum Institute industry lobbyist over disputes about the environment days before President Biden re-joined the Paris Agreement. 

The EC launched a new initiative to bolster the euro's use on President Trump's last day in office. At the same time, the US weaponization of access to the dollar funding market, a key conduit in the circuit of capital, including notably over dealings with Iran, was seen as an infringement on Europe's sovereignty.  Therein lies the real exorbitant privilege of the dollar. It is not about interest rates.  It is how financial power can be levered to influence political outcomes.  Ultimately, that was the sentiment behind d'Estaing's curse, and it is also what chafes American's friends and rivals today.  

The elite has been chastened.  It just had a near-death experience. The pandemic itself strikes the very heart of what it means to be compassionate. There seems to have been a dramatic shift in public sentiment, perhaps illustrated by the redemption of Kaepernick, the football player who took a knee during the National Anthem to protest. If there are no substantial improvements in the conditions that gave rise to the American version of populism, it will return.   Yet, the sympathy expressed by Secretary of State nominee Blinken for the notion that Georgia be granted NATO membership suggests that its dangerous idealism has not been completely exorcised.  Moreover, several countries in Europe, including Germany and France, have been opposed in the past (George Bush had advocated Ukraine and Georgia join NATO in 2008). This could represent another element of divergence if pushed.    

High-frequency US economic data have mostly disappointed, and the pandemic has gotten worse since the FOMC met last in mid-December. The US lost jobs in December (140k) for the first time since April, though the net job gains over the previous two months were revised higher (135k) by almost the same amount.  Weekly initial jobless claims jumped to over 900k in mid-January, the most since August.  But the largest disappointment was in retail sales, which fell for the third consecutive month in December.  The Bloomberg survey's median forecast was for a flat reading, and instead, it fell by 0.7%, and November's decline of 1.1% was revised to -1.4%.  More telling, consider the core measure that excludes food services, auto dealers, gas stations, and building materials, that is used in GDP models, fell by 1.9% (the median forecast was for a 0.1% gain), and the November drop was revised to -1.1% from -0.5%.  

As an aside, along with inflation worries (see here), another common element in many 2021 investment outlooks is the sense that the pandemic has dramatically accelerated e-commerce.  Many declare "e-everything" as consumers purchase a wider range of goods, including groceries and clothing.  Some report an increase in web services, including medical, tax, and legal assistance.  While some earnings reports, like Amazon, may lend credence to such arguments, but the enthusiasm seems to be running ahead of the facts.  In Q2 last year, the peak of the US lockdowns, online sales accounted for not quite a sixth of retail sales, and Q3 20, online sales slipped around a seventh of overall retail sales. Some of the increase in e-commerce may prove temporary in nature.   

The Federal Reserve's two-day meeting concludes on Wednesday, January 27.  The Fed's position is clear.  It will continue to buy $80 bln a month of Treasuries and $40 bln a month in Agency mortgage-backed securities. It will do so until "substantial" progress is made to the policy objectives of full employment and price stability, redefined as an average rate of inflation (headline PCE deflator) of 2%.  

The statement issued after the meeting is formulaic.  The first three paragraphs and the fifth paragraphs of the five-paragraph statement were unchanged in December from November.  The fourth paragraph was adjusted as the FOMC fine-tuned its guidance on its asset purchases.  It could make a couple of adjustments to its economic assessment at the upcoming meeting,  but these will likely be minor.  Its forward guidance and purchase plans can simply be copied.  It appears that the Fed may have downgraded the use of the statement with the now regular press conference as a more important channel.  

Previously, it had appeared more likely that the Federal Reserve would have introduced yield curve control or, at the very least, shifted its buying to the longer-end of the curve.  What has changed?  The Federal Reserve seems to welcome an increase in long-term rates if it is for the right reasons.  In this context, the right reasons have to do with inflation and inflation expectations.  A year ago, the 10-year yield was around 1.75%.  It is now hovering around 1.10%.  The 10-year break-even, the difference between the conventional yield and the one offered by the 10-year inflation-protected security, was near 1.80% a year ago and is now a little above 2.10%.  

A day after the FOMC's decision, the preliminary estimate of Q4 GDP will be reported.  In a Bloomberg survey conducted from January 8th to the 14th, the median forecast was 4.2% down from 4.5% previously.  Three regional Federal Reserve's have GDP-trackers: The NY Fed puts Q4 GDP at 2.6%. The St. Louis Fed sees it at 3.2%, and the Atlanta Fed is at 7.5%. The average is about 4.4%, in line with the median from the private sector. We suspect the risk on the downside. Still, the contrast with Europe will be highlighted the following day when Germany is expected to report its economy, the fourth-largest in the world, stagnated in the final three months of 2020.  The median forecast expects the French economy to contract in Q4 but nearly around as much as the US is projected to expand.  

The NY Fed's model puts the current quarter's growth at what seems to be an optimistic 6.6%. The Bloomberg survey's median forecast puts  Q1 21 growth at 2.3%, down from 2.5% previously. 

The December personal income and household consumption figures will be embedded in the Q4 20 GDP report.  However, given the market's (hyper?) sensitivity to inflation, the PCE deflator, which the Fed targets, will draw attention the following day.  It is expected to have risen by 0.3%, the most since August.  However, since in December 2019, the PCE deflator also rose by 0.3%, the year-over-year rate should not change much from the 1.1% pace seen in November.  Of note, the deflator fell by 0.3% in March 2020 and by 0.5% in April.  These will drop out and be replaced with a higher number, which will lift the year-over-year rate.  The comparisons are more difficult in June and July, and the inflation scare may ease.  It will return, though, in October and November when flat prices in 2020 are dropped. 

The same pattern holds true for the core PCE deflator, which Fed officials talk about but do not target.  As the pandemic struck, the core PCE deflator fell by 0.1% in March and by 0.43% in April. These will drop out and boost the year-over-year pace. The core deflator jumped by a little more than 0.3% on average in the June-August period last year. When these are replaced, the year-over-year pace will likely ease, only to rise again in Q4 21, when low prints (less than 0.1% on average drop out).       


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Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

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Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

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

The…

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

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

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

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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…

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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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