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The Year When Everything Started To Fall Apart

The Year When Everything Started To Fall Apart

Authored by Michael Snyder via TheMostImportantNews.com,

It amazes me that so many people…

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The Year When Everything Started To Fall Apart

Authored by Michael Snyder via TheMostImportantNews.com,

It amazes me that so many people still cannot understand what is happening.  2022 was supposedly going to be a year when America entered a new golden age of prosperity, but that didn’t happen.  Instead, it was a complete and utter disaster.  Stock prices fell by the most that we have seen since 2008, the cryptocurrency industry came apart at the seams, inflation soared to absurd heights, and home sales just kept declining all throughout the year.  Without a doubt, 2022 represented a major turning point.  Americans have already collectively lost trillions of dollars, and many experts are telling us that 2023 will be even worse.

We warned over and over again that the party on Wall Street would eventually come to a very bitter end, but most people didn’t want to listen.

Well, the party has now ended, and the stock market losses that we have witnessed over the past 12 months have been absolutely staggering

As of closing time on Friday evening, the Dow Jones Industrial Average fell by nearly 3,500 points since the start of the year, a 9.4 percent drop.

The S&P 500 was also down by 957 points this year, with the tech-heavy index falling by almost 20 percent, capping off a brutal year for the tech industry.

Meanwhile, the Nasdaq sunk by more than 5,600 points, a nearly 34 percent decline in 2022.

More than a third of the entire value of the Nasdaq is already gone.

Just think about that.

Of course some stocks were hit much harder than others.

Tesla is down about 70 percent from the peak, and Elon Musk “has become the first person ever to lose $200 billion from his net worth”

Tesla CEO and Chief Twit Elon Musk has become the first person ever to lose $200 billion from his net worth, according to a Bloomberg report.

Musk, 51, previously became the second person ever to amass a fortune of more than $200 billion in January 2021, after Amazon founder Jeff Bezos. Musk has now seen his wealth drop to $137 billion following a recent drop in Tesla shares.

Musk saw his fortune peak in November 2021, hitting $340 billion, and held the title of the world’s richest person up until last month. Musk was ultimately toppled off the throne by Bernard Arnault, the CEO of French luxury giant LVMH.

You have to give him credit for holding up so well under the circumstances.

200 billion dollars is an amount of money that is so large that it is almost unimaginable.

Facebook also got monkey-hammered over the course of 2022.  At this point, Facebook stock has fallen over 64 percent from where it was last January…

On the last day of trading this year, Meta’s stock was down more than 64 percent compared to January, with prices sinking from over $338-per-share to now $120-per-share.

The company has lost more than $600 billion in valuation as it spend billions to make its controversial leap to virtual reality with its Metaverse, with the efforts continuing to come up short.

Perhaps Facebook shouldn’t have put so much effort into banning and censoring millions of their best users.

What an incredibly stupid thing to do.

When I go on Facebook these days, it just feels so incredibly dead.

There are still a few diehard users hanging around, but overall it is just a pathetic hollow shell of a social media platform at this point.

Speaking of implosions, 2022 was an absolute disaster for the cryptocurrency industry.  The following summary of what we witnessed over the past 12 months comes from Zero Hedge

Among all the chaos and downfall of many crypto exchanges and leading venture capital firms, the biggest losers are crypto investors. If the burn of the bear market was not enough, millions of crypto investors who had their funds on FTX lost their life savings overnight.

Terra was once a $40 billion ecosystem. Its native token, LUNA — now known as Terra Classic (LUNC) — was one of the top five biggest cryptocurrencies by market capitalization. With millions of customers invested in the ecosystem, the collapse brought their investment to zero within hours. After the Terra collapse, crypto investors lost their funds on a series of centralized exchanges and staking platforms like Celsius, BlockFi and Hodlnaut. Crypto investors also lost significantly in the nonfungible token market, with the price of many popular collections down by 70%. Overall, crypto investors are among the biggest losers of the year.

The total value of all cryptocurrencies exceeded 3 trillion dollars at the peak of the market.

Now the total value of all cryptocurrencies has fallen to less than 1 trillion dollars.

Hopefully you got out before the crash happened.

2022 was also a year when we experienced very painful inflation.

Food prices, energy prices and vehicle prices all went completely nuts, and many compared what we were going through to the Jimmy Carter era of the 1970s.

But this shouldn’t have been a surprise to any of us.  Starting in 2020, our leaders absolutely flooded the system with new cash and the size of the money supply absolutely exploded.

Increasing the size of the money supply so dramatically was inevitably going to cause prices to go haywire, and anyone that thought otherwise was just not being rational.

In a desperate attempt to fight the inflation monster that they helped to create, officials at the Federal Reserve aggressively raised interest rates throughout much of 2022.

As a result, we now find ourselves in the midst of another horrifying housing crash.  Home values are now steadily receding all over the nation, and home sales have been falling month after month.

Home sales have already fallen by more than a third.

How much lower can they possibly go?

I don’t know, but we are being warned to brace ourselves for more hard times ahead.

In fact, even the IMF is publicly admitting that “the worst is yet to come”

“The worst is yet to come, and for many people 2023 will feel like a recession,” the IMF said in October, noting the slowdown “will be broad-based” and may “reopen economic wounds that were only partially healed post-pandemic.”

If only they knew.

We aren’t just heading into a temporary economic downturn.  Ultimately, the entire system is starting to fall apart all around us, and the years ahead are going to be incredibly challenging.

Our leaders have been making mistake after mistake for decades, and now we get to pay the price.

So buckle up and hold on tight, because 2023 is not going to be pleasant at all.

*  *  *

It is finally here! Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.

Ty Tue, 01/03/2023 - 07:20

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New ways to protect food crops from climate change and other disruptions

“There’s no doubt we can produce enough food for the world’s population – humanity is strategic enough to achieve that. The question is whether…

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“There’s no doubt we can produce enough food for the world’s population – humanity is strategic enough to achieve that. The question is whether – because of war and conflict and corruption and destabilization – we do,” said World Food Programme leader David Beasley in an interview with Time magazine earlier this year.    

Credit: NMBU

“There’s no doubt we can produce enough food for the world’s population – humanity is strategic enough to achieve that. The question is whether – because of war and conflict and corruption and destabilization – we do,” said World Food Programme leader David Beasley in an interview with Time magazine earlier this year.    

Indeed, projections show that we are not on track to achieve Sustainable Development Goal 2 of Zero Hunger by 2030. As climate and security crises continue to destabilise our food sources, researchers are taking a critical look not just at how we produce food – but at the entire systems behind our food supplies. In this case, the systems behind the seeds that produce our food crops.    

“Whilst adapting crops to climate change and conserving their variation is essential for food security, these measures are meaningless if farmers do not have access to the seeds,” says crop scientist and food system expert Ola Westengen. Westengen leads the team of researchers from the Norwegian University of Life Sciences (NMBU) who recently reviewed the state of seed systems for small-holder farmers in low/middle income countries. Their findings are now published in the Proceedings of the National Academy of Sciences (PNAS).   

What are seed systems?    

Seed systems are the provision, management and distribution of seeds. They cover the entire seed chain, from the conservation of their diversity and variety development, to their production and distribution, and the rules that govern these activities.  In short, they are the structures that make seeds available to farmers so that crops can be sown, harvested and end up on our plates.    

Whilst a well-functioning seed system will ensure seed security for all farmers, the researchers say that, in practice, it is rarely the case that seed systems function as well as they might. Seed systems can be disrupted by conflict and disasters, as well as by problems stemming from social inequality, lack of coordination or inappropriate policies.      

What does this study tell us that we don’t already know?   

“There are recent innovations and investments by governments and donors to improve farmers’ access to diverse crop varieties and quality seeds,” explains Teshome Hunduma, a seed governance researcher and co-author of the study. “For example, there are now more flexible policies and regulations that encourage diversity in the seed systems used by farmers, rather than pushing farmers to switch to commercial seed systems that focus on less diverse commodity crops – which is the norm.” Commodity crops are those grown in large volume and high intensity for the purpose of sale, as opposed to those grown by small-holder farmers for direct processing and consumption.   

“The study highlights emerging initiatives that are helping farmers to secure food supplies, such as participatory plant breeding,” says Teshome. Participatory plant breeding is the development and selection of new crop varieties where the farmers are in control. Farmers, who know the needs of their farms best, work with researchers and others to improve crops and develop plant varieties that are in line with their household needs and culture, and that are resilient to environmental and climate challenges.    

“Farmers prefer and need different types of seeds, based on diverse social, cultural and ecological conditions,” adds ethnobotanist and co-author Sarah Paule Dalle.       

The study discusses various disruptions to farmer’s access to seeds. Social inequality is one such disruption. How so?   

“A seed system that only serves a segment of a farming society contributes to seed insecurity,” replies Teshome. “For example, commercial seed systems deliver high-yielding varieties of quality hybrid seeds. Whilst wealthy farmers can afford such seeds, poor farmers can’t.”    

“Similarly, whilst commercial seed systems that focus on commodity crops may benefit men who might primarily be interested in market value, such systems have little to offer women who want crops that provide household nutrition and meet their cultural preferences.”   

“This means poor farmers and women do not have the same access to seeds that meet their needs. The result is seed, and thus food, insecurity due to social and economic inequality.”     

Political-economic factors have driven the globalization of food systems over the last decades, which also includes seed systems. “Seeds have become big business”, say the researchers. According to studies quoted in the article, the four largest multinational companies in seed trade today control about 60% of the ~50 billion USD global commercial seed market. The large private actors have the power not only to shape markets, but also to influence science and innovation agendas and policy frameworks.     

This can be problematic, say the researchers, when private sector research and development typically focuses on the most profitable crops, such as maize and soy. Crops grown and consumed by subsistence farmers are thus largely neglected, and the potential of crop diversity – the foundation of agriculture – remains largely untapped. Technology that could help develop more robust varieties remains hypothetical.   

How does the ownership of crop diversity threaten food supplies and what can be done?      

The term crop diversity refers both to different crops and different varieties of a crop. According to the Global Crop Diversity Trust (one of the world’s primary international organizations on crop diversity conservation), securing and making available the world’s crop diversity is essential for future food and nutrition security.      

“Plant breeders and scientists use crop diversity to develop new, more resilient and productive varieties that consumers want to eat, that are nutritious and tasty, and that are adapted to local preferences, environments and challenges,” explains Benjamin Kilian, a plant genetics expert at the Global Crop Diversity Trust. The Crop Trust, together with the Norwegian University of Life Sciences, implements the major project from which this study emerged: Biodiversity for Opportunities, Livelihoods and Development (BOLD). Coordinated by Kilian, the project supports the conservation and use of crop diversity to strengthen food and nutrition security on a global scale. It builds on the Crop Wild Relatives project and is funded by the Norwegian government.   

“In the BOLD project, researchers work with genebanks, plant breeders and others in the seed value chain to co-develop seed systems that are both resilient to climate stresses and inclusive of small-holder farmers on the frontline of adaptation,” adds Westengen.     

Will access to seeds in the vulnerable areas that you are studying be improved in time to make a difference?   

“We hope so, if we make the right moves to include small-holder farmers in seed system development,” says Dalle. “A well-functioning seed system should also be resilient. That is, it should withstand shocks such as drought or pandemics and breakdowns or disruptions such as war and conflict.”    

“To do this, the system should promote a diversity of seeds, both local varieties and those improved to better adapt to stresses. It should also involve diverse groups of people such as farmer cooperatives/groups, and both public and private companies to increase the choice of seeds and seed sources. During lockdowns in the COVID-19 pandemic, for example, farmers’ own seed systems enabled access to seeds in developing countries when the activities of private companies and agro-dealers were restricted,” explains Dalle.   

Westengen summarizes: “Our study highlights links between the crucial work of the Global Crop Diversity Trust and the farmers on the frontline of adapting our food systems to climate change. It is an argument for co-designing seed system development in full cooperation with farmers and other actors in the seed system. This way, efforts can meet the needs of various groups of farmers in different agroecological contexts. There is no one-size-fits-all; if there is one natural law in biology, it is that diversity is key to future evolution. That also goes for seed systems – and food system development.”   

Navigating towards resilient and inclusive seed systems by Ola T. Westengen, Sarah Paule Dalle and Teshome Hunduma Mulesa was published in Proceedings of the National Academy of Sciences (PNAS) this week. PNAS is widely considered one of the most prestigious and highly cited multidisciplinary research journals.   


About the Norwegian University of Life Sciences (NMBU)  
NMBU’s research and education enables people all over the world to tackle the big, global challenges regarding the environment, sustainable development, how to improve human and animal health, renewable energy sources, food production, and land- and resource management. 

 About the Crop Trust 
The Crop Trust is an international organization working to conserve crop diversity and thus protect global food and nutrition security. At the core of Crop Trust is an endowment fund dedicated to providing guaranteed long-term financial support to key genebanks worldwide. The Crop Trust supports the Svalbard Global Seed Vault and coordinates large-scale projects worldwide to secure crop diversity and make it available for use. The Crop Trust is recognized as an essential element of the funding strategy of the International Treaty on Plant Genetic Resources for Food and Agriculture.  

About the BOLD Project 
BOLD (Biodiversity for Opportunities, Livelihoods, and Development) is a major 10-year project to strengthen food and nutrition security worldwide by supporting the conservation and use of crop diversity. The project works with national genebanks, pre-breeding and seed system partners globally. Funded by the government of Norway, BOLD is led by the Crop Trust in partnership with the Norwegian University of Life Sciences and the International Plant Treaty. 


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A Federal Reserve Pivot is not Bullish

An old saying cautions one to be careful of what one wishes for. Stock investors wishing for the Federal Reserve to pivot may want to rethink their logic…

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An old saying cautions one to be careful of what one wishes for. Stock investors wishing for the Federal Reserve to pivot may want to rethink their logic and review the charts.

The second largest U.S. bank failure and the deeply discounted emergency sale of Credit Suisse have investors betting the Federal Reserve will pivot. They don’t seem to care that inflation is running hot and sticky, and the Fed remains determined to keep rates “higher for longer” despite the evolving crisis.

Like Pavlov’s dogs, investors buy when they hear the pivot bell ringing. Their conditioning may prove harmful if the past proves prescient.

The Bearish History of Rate Cuts

Since 1970, there have been nine instances in which the Fed significantly cut the Fed Funds rate. The average maximum drawdown from the start of each rate reduction period to the market trough was 27.25%.

The three most recent episodes saw larger-than-average drawdowns. Of the six other experiences, only one, 1974-1977, saw a drawdown worse than the average.  

So why are the most recent drawdowns worse than those before 1990? Before 1990, the Fed was more active. As such, they didn’t allow rates to get too far above or below the economy’s natural rate. Indeed, high inflation during the 1970s and early 1980s forced Fed vigilance. Regardless of the reason, higher interest rates helped keep speculative bubbles in check.

During the last 20 years, the Fed has presided over a low-interest rate environment. The graph below shows that real yields, yields less inflation expectations, have been trending lower for 40 years. From the pandemic until the Fed started raising rates in March 2022, the 10-year real yield was often negative.

real yields wicksell

Speculation often blossoms when interest rates are predictably low. As we are learning, such speculative behavior emanating from Fed policy in 2020 and 2021 led to conservative bankers and aggressive hedge funds taking outsized risks. While not coming to their side, what was their alternative? Accepting a negative real return is not good for profits.

We take a quick detour to appreciate how the level of interest rates drives speculation.

Wicksell’s Elegant Model

A few years ago, we shared the logic of famed Swedish economist Knut Wicksell. The nineteenth-century economist’s model states two interest rates help assess economic activity. Per Wicksell’s Elegant Model:

First, there is the “natural rate,” which reflects the structural growth rate of the economy (which is also reflective of the growth rate of corporate earnings). The natural rate is the combined growth of the working-age population and productivity growth. Second, Wicksell holds that there is the “market rate” or the cost of money in the economy as determined by supply and demand.

Wicksell viewed the divergences between the natural and market rates as the mechanism by which the economic cycle is determined. If a divergence between the natural and market rates is abnormally sustained, it causes a severe misallocation of capital.

The bottom line:

Per Wicksell, optimal policy should aim at keeping the natural and market rate as closely aligned as possible to prevent misallocation. But when short-term market rates are below the natural rate, intelligent investors respond appropriately. They borrow heavily at the low rate and buy existing assets with somewhat predictable returns and shorter time horizons. Financial assets skyrocket in value while long-term, cash-flow-driven investments with riskier prospects languish.

The second half of 2020 and 2021 provide evidence of Wicksell’s theory. Despite brisk economic activity and rising inflation, the Fed kept interest rates at zero and added more to its balance sheet (QE) than during the Financial Crisis. The speculation resulting from keeping rates well below the natural rate was palpable.

What Percentage Drawdown Should We Expect This Time?

Since the market experienced a decent drawdown during the rate hike cycle starting in March 2022, might a good chunk of the rate drawdown associated with a rate cut have already occurred?

The graph below shows the maximum drawdown from the beginning of rate hiking cycles. The average drawdown during rate hiking cycles is 11.50%. The S&P 500 experienced a nearly 25% drawdown during the current cycle.

rate hikes and drawdowns

There are two other considerations in formulating expectations for what the next Federal Reserve pivot has in store for stocks.

First, the graph below shows the maximum drawdowns during rate-cutting periods and the one-year returns following the final rate cut. From May 2020 to May 2021, the one-year period following the last rate cut, the S&P 500 rose over 50%. Such is three times the 16% average of the prior eight episodes. Therefore, it’s not surprising the maximum drawdown during the current rate hike cycle was larger than average.

rate cuts and drawdowns

Second, valuations help explain why recent drawdowns during Federal Reserve pivots are worse than those before the dot-com bubble crash. The graph below shows the last three rate cuts started when CAPE10 valuations were above the historical average. The prior instances all occurred at below-average valuations.

cape 10 valuations

The current CAPE valuation is not as extended as in late 2021 but is about 50% above average. While the market has already corrected some, the valuation may still return to average or below it, as it did in 2003 and 2009.

It’s tough to draw conclusions about the 2020 drawdown. Unprecedented fiscal and monetary policies played a prominent role in boosting animal spirits and elevating stocks. Given inflation and political discord, we don’t think Fed members or politicians will be likely to gun the fiscal and monetary engines in the event of a more significant market decline.

Summary

The Federal Reserve is outspoken about its desire to get inflation to its 2% target. If they were to pivot by as much and as soon as the market predicts, something has broken. Currently, it would take a severe negative turn to the banking crisis or a rapidly deteriorating economy to justify a pivot, the likes of which markets imply. Mind you, something breaking, be it a crisis or recession, does not bode well for corporate earnings and stock prices.

There is one more point worth considering regarding a Federal Reserve pivot. If the Fed cuts Fed Funds, the yield curve will likely un-invert and return to a normal positive slope. Historically yield curve inversions, as we have, are only recession warnings. The un-inversion of yield curves has traditionally signaled that a recession is imminent. 

The graph below shows two well-followed Treasury yield curves. The steepening of both curves, shown in all four cases and other instances before 1990, accompanied a recession.

Over the past two weeks, the two-year- ten-year UST yield curve has steepened by 60 bps!

yield curves rate cuts and recessions

The post A Federal Reserve Pivot is not Bullish appeared first on RIA.

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COVID-19 impacted smoking assessment rates in community health centers, necessitating a closer examination on how procedures can be adapted

COVID-19 Impacted  Smoking Assessment Rates in Community Health Centers, Necessitating a Closer Examination on How Procedures Can be Adapted Credit: Annals…

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COVID-19 Impacted  Smoking Assessment Rates in Community Health Centers, Necessitating a Closer Examination on How Procedures Can be Adapted

Credit: Annals of Family Medicine

COVID-19 Impacted  Smoking Assessment Rates in Community Health Centers, Necessitating a Closer Examination on How Procedures Can be Adapted

Researchers from Oregon Health & Science University and OCHIN,  a large nonprofit network of community health centers, extracted electronic health record data from 217 primary care clinics between January 2019 through the end of July 2021, which included telehealth and in-person visits for 759,138 adult patients aged 18 and older years to determine how monthly rates of tobacco assessment had been affected by the COVID-19 pandemic. The team calculated the rates per 1,000 patients. The team found that between March and May 2020, tobacco assessment monthly rates declined from 155.7 per 1,000 patients down to 77.7 per 1,000 patients, a 50% decline. There was a subsequent increase in tobacco assessment between June 2020 and May 2021. However, assessments remained 33.5% lower than pre-pandemic levels. These findings are significant given the fact that tobacco use can increase the severity of COVID-19 symptoms.

What is Known on This Topic: While there is plentiful evidence on the impact that COVID-19 has had on primary health care seeking and delivery, little is known about how the pandemic affected tobacco use assessments and cessation programs.

What This Study Adds: The decline in the rate of tobacco assessments during the onset of the COVID-19 pandemic was substantial and rates have yet to return to pre-pandemic levels. Given that tobacco use can exacerbate COVID-19 symptoms, researchers recommend careful examination of procedural changes to adapt care delivery to support community health centers, specifically tobacco cessation efforts.

.Impact of COVID-19 Pandemic on Assessing Tobacco Status in Community Health Centers

Susan A. Flocke, PhD, et al,
Department of Family Medicine, Oregon Health & Science University, Portland, Oregon
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