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Understanding the Stock Market Sell-Off

Entering the Second Quarter, it’s been nothing short of a stock market sell-off in 2022. The question is, why?
The post Understanding the Stock Market…



If you’ve been following financial news this year, you know that the stock market has encountered turbulence. Markets peaked in January and, despite a rally at the end of March, have trended down at a steady pace all year long. Entering the Second Quarter, it’s been nothing short of a stock market sell-off in 2022. The question is, why?

Financial pundits and analysts have cited several reasons for the poor performance of markets in 2022. Some of the biggest catalysts include rising interest rates, inflationary concerns and a market that’s simply overvalued in many aspects. Geopolitical struggles, supply chains, and the Great Resignation even have their roles to play.

Let’s probe some of the biggest reasons behind the stock market sell-off in 2022, to better-understand why many portfolios are struggling mightily this year.

Rising Interest Rates Affect Corporate Outlooks

The big news in financial markets in early May has been the Federal Reserve’s increasingly aggressive policy surrounding interest rates. As the government seeks to combat historic levels of inflation, it’s pushing the biggest rate hike in more than two decades: half a percent. The resulting response has sent stock markets plunging.

Markets dropped following the news, with the S&P 500 sliding ~7% and the Dow Jones Industrial Average tumbling ~5.5% over the course of the week. As investors worry about the rising cost of capital, corporations have rushed to shore up balance sheets in an attempt to maintain investor sentiment. Nevertheless, the effects of a rate hike will trickle down.

The federal funds rate will reach 0.75%-1% by the end of the year. This will send prime rates to 2.75%-3% for institutional borrowers. While daunting in and of itself, Federal Reserve Chair Jerome Powell has also hinted at additional rate hikes in the near future. Forward-looking investors are taking this language as their cue to exit positions before they fall further.

Inflation is Pushing Economic Strife

Pervasive inflation is the reason behind rising interest rates. It’s also one of the contributing factors to broad economic strife that’s driving a stock market sell-off in 2022. While defensive energy stocks and insurance companies have soared, inflation has left many industries battered, including big tech.

Stalwarts like Apple (NASDAQ: AAPL) and Microsoft (NASDAQ: MSFT) are down more than 15% apiece, and once-beloved growth stocks like Netflix (NASDAQ: NFLX) and Meta Platforms (NASDAQ: FB) have seen their market caps decimated on slowing growth. Consumer cyclical has also suffered massive setbacks due to inflationary concerns, including retail giant Amazon (NASDAQ: AMZN), which is down more than 30% year-to-date.

Between supply chain constraints, COVID-19 variants and material scarcity, companies have struggled to maintain operational efficiency in 2022, and the results are leaking through into the markets.

The Market is Overvalued, According to Many

One of the prevailing theories behind the stock market sell-off in 2022 is simply a correction. Relative valuation of companies has reached unsustainable levels. And investors have turned bearish on the market’s ability to fulfill such lofty valuations.

Based on broad industry benchmarks like the CAPE ratio, the market reached critical mass in 2021. While the historical P/E for the S&P 500 is 16.94, markets reached upwards of 35 last year. Many companies traded at egregious values, notably companies like Shopify (NYSE: SHOP) at 273 times earnings and Block (NYSE: SQ) at 277 times earnings. Even for growth stocks, these values were indefensible.

If investors needed any additional proof that the market was overvalued, the “Buffett Indicator” is signaling a lack of value. The indicator, which divides the total stock market by the United States GDP, measures an alarming ~170%. Anything over 120-130% is widely viewed as overvalued.

Other Factors Driving a Stock Market Sell-Off in 2022

2022 has turned into something of a perfect storm for the stock market. In addition to the factors mentioned above, the Great Resignation and geopolitical tensions have also contributed to its volatility.

In 2021, nearly 48 million workers quit their jobs at a rate of almost four million per month. And in March 2022, that figure rose as an estimated four-and-a-half million workers gave notice. The inability to staff not only skilled positions, but also entry level staff, put companies in a bind. Many companies that missed earnings expectations or turned in weaker-than-expected figures cited labor shortages among the challenges having the biggest impact on the bottom line.

Abroad, Russia’s attempted invasion of Ukraine has disrupted supply chains and global trade. While energy stocks have stepped into a booming market of demand, other industries have suffered. Companies like LVMH Moët Hennessy Louis Vuitton (OTC: LVMUY) have lost access to a major market, while giant brands like McDonalds (NYSE: MCD) and Starbucks (NASDAQ: SBUX) have halted operations.

As these factors continue to drive other catalysts like inflation, the stock market sell off in 2022 will likely continue.

How Can Investors Cope With the Sell-Off?

The best thing investors can do right now is to act with purpose and precision. Remember, selling in a down market only locks in your losses. If you’re going to sell, exit positions for legitimate reasons: because they no longer fit your thesis, to take profits, to offset capital gains, etc. It’s also important to rebalance into safe haven assets and to reevaluate some of your riskier or overweight positions.

Look at the stock market sell-off in 2022 as a learning experience. Subscribe to an investment newsletter to learn more about what’s happening in real-time, and to get insight from experts about how to manage the turbulence. Keep a level head and remember a core investing tenant: “An investment in knowledge pays the best interest.”

The post Understanding the Stock Market Sell-Off appeared first on Investment U.

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Repeated COVID-19 Vaccination Weakens Immune System: Study

Repeated COVID-19 Vaccination Weakens Immune System: Study

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

Repeated COVID-19…



Repeated COVID-19 Vaccination Weakens Immune System: Study

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

Repeated COVID-19 vaccination weakens the immune system, potentially making people susceptible to life-threatening conditions such as cancer, according to a new study.

A man is given a COVID-19 vaccine in Chelsea, Mass., on Feb. 16, 2021. (Joseph Prezioso/AFP via Getty Images)

Multiple doses of the Pfizer or Moderna COVID-19 vaccines lead to higher levels of antibodies called IgG4, which can provide a protective effect. But a growing body of evidence indicates that the “abnormally high levels” of the immunoglobulin subclass actually make the immune system more susceptible to the COVID-19 spike protein in the vaccines, researchers said in the paper.

They pointed to experiments performed on mice that found multiple boosters on top of the initial COVID-19 vaccination “significantly decreased” protection against both the Delta and Omicron virus variants and testing that found a spike in IgG4 levels after repeat Pfizer vaccination, suggesting immune exhaustion.

Studies have detected higher levels of IgG4 in people who died with COVID-19 when compared to those who recovered and linked the levels with another known determinant of COVID-19-related mortality, the researchers also noted.

A review of the literature also showed that vaccines against HIV, malaria, and pertussis also induce the production of IgG4.

“In sum, COVID-19 epidemiological studies cited in our work plus the failure of HIV, Malaria, and Pertussis vaccines constitute irrefutable evidence demonstrating that an increase in IgG4 levels impairs immune responses,” Alberto Rubio Casillas, a researcher with the biology laboratory at the University of Guadalajara in Mexico and one of the authors of the new paper, told The Epoch Times via email.

The paper was published by the journal Vaccines in May.

Pfizer and Moderna officials didn’t respond to requests for comment.

Both companies utilize messenger RNA (mRNA) technology in their vaccines.

Dr. Robert Malone, who helped invent the technology, said the paper illustrates why he’s been warning about the negative effects of repeated vaccination.

“I warned that more jabs can result in what’s called high zone tolerance, of which the switch to IgG4 is one of the mechanisms. And now we have data that clearly demonstrate that’s occurring in the case of this as well as some other vaccines,” Malone, who wasn’t involved with the study, told The Epoch Times.

So it’s basically validating that this rush to administer and re-administer without having solid data to back those decisions was highly counterproductive and appears to have resulted in a cohort of people that are actually more susceptible to the disease.”

Possible Problems

The weakened immune systems brought about by repeated vaccination could lead to serious problems, including cancer, the researchers said.

Read more here...

Tyler Durden Sat, 06/03/2023 - 22:30

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Study Falsely Linking Hydroxychloroquine To Increased Deaths Frequently Cited Even After Retraction

Study Falsely Linking Hydroxychloroquine To Increased Deaths Frequently Cited Even After Retraction

Authored by Jessie Zhang via Thje Epoch…



Study Falsely Linking Hydroxychloroquine To Increased Deaths Frequently Cited Even After Retraction

Authored by Jessie Zhang via Thje Epoch Times (emphasis ours),

An Australian and Swedish investigation has found that among the hundreds of COVID-19 research papers that have been withdrawn, a retracted study linking the drug hydroxychloroquine to increased mortality was the most cited paper.

Hydroxychloroquine sulphate tablets. (Memories Over Mocha/Shutterstock)

With 1,360 citations at the time of data extraction, researchers in the field were still referring to the paper “Hydroxychloroquine or chloroquine with or without a macrolide for treatment of COVID-19: a multinational registry analysis” long after it was retracted.

Authors of the analysis involving the University of Wollongong, Linköping University, and Western Sydney Local Health District wrote (pdf) that “most researchers who cite retracted research do not identify that the paper is retracted, even when submitting long after the paper has been withdrawn.”

“This has serious implications for the reliability of published research and the academic literature, which need to be addressed,” they said.

Retraction is the final safeguard against academic error and misconduct, and thus a cornerstone of the entire process of knowledge generation.”

Scientists Question Findings

Over 100 medical professionals wrote an open letter, raising ten major issues with the paper.

These included the fact that there was “no ethics review” and “unusually small reported variances in baseline variables, interventions and outcomes,” as well as “no mention of the countries or hospitals that contributed to the data source and no acknowledgments to their contributions.”

A bottle of Hydroxychloroquine at the Medicine Shoppe in Wilkes-Barre, Pa on March 31, 2020. Some politicians and doctors were sparring over whether to use hydroxychloroquine against the new coronavirus, with many scientists saying the evidence is too thin to recommend it yet. (Mark Moran/The Citizens’ Voice via AP)

Other concerns were that the average daily doses of hydroxychloroquine were higher than the FDA-recommended amounts, which would present skewed results.

They also found that the data that was reportedly from Australian patients did not seem to match data from the Australian government.

Eventually, the study led the World Health Organization to temporarily suspend the trial of hydroxychloroquine on COVID-19 patients and to the UK regulatory body, MHRA, requesting the temporary pause of recruitment into all hydroxychloroquine trials in the UK.

France also changed its national recommendation of the drug in COVID-19 treatments and halted all trials.

Currently, a total of 337 research papers on COVID-19 have been retracted, according to Retraction Watch.

Further retractions are expected as the investigation of proceeds.

Tyler Durden Sat, 06/03/2023 - 17:30

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Complying, Not Defying: Twitter And The EU Censorship Code

Complying, Not Defying: Twitter And The EU Censorship Code

Authored by ‘Robert Kogon’ via The Brownstone Institute,

So, word has it that…



Complying, Not Defying: Twitter And The EU Censorship Code

Authored by 'Robert Kogon' via The Brownstone Institute,

So, word has it that Twitter has withdrawn from the EU’s Code of Practice on Disinformation, a fact that appears only to be known thanks to a couple of pissy tweets from EU officials. I cannot help but wonder if this is not finally Elon Musk’s response to the question I asked in my article here several weeks ago: namely, how can a self-styled “free-speech absolutist” be part of a “Permanent Task-Force on Disinformation” that is precisely a creation of the EU’s Code?

But does it matter? The answer is no. The withdrawal of Twitter’s signature from the Code is a highly theatrical, but essentially empty gesture, which will undoubtedly serve to shore up Musk’s free speech bad-boy bona fides, but has virtually no practical consequences. 

This is because: (1) as I have discussed in various articles (for instance, here and here), the effect of the EU’s Digital Services Act (DSA) is to render the hitherto ostensibly voluntary commitments undertaken in the Code obligatory for all so-called Very Large Online Platforms (VLOPs) and (2) as discussed here, the European Commission just designated a whole series of entities as VLOPs that were never signatories of the Code.

Twitter is thus in no different a position than Amazon, Apple and Wikipedia, none of which were ever signatories of the Code, but all of which will be expected by the EU to comply with its censorship requirements on the pain of ruinous fines. 

As EU officials like to put it, the DSA transformed the “code of practice” into a code of conduct: i.e. you had better do it or else.

Compliance is thus not a matter of a signature. The proof of the pudding is in the eating. And the fact of the matter is that Musk and Twitter are complying with the EU’s censorship requirements. Much of the programming that has gone into the Twitter algorithm is obviously designed for this very purpose.

What, for instance, are the below lines of code?

They are “safety labels” that have been included in the algorithm to restrict the visibility of alleged “misinformation.” Furthermore – leaving aside the handy “generic misinfo” catch-all – the general categories of “misinformation” used exactly mirror the main areas of concern targeted by the EU in its efforts to “regulate” online speech: “medical misinfo” in the context of the COVID-19 pandemic, “civic misinfo” in the context of issues of electoral integrity, and “crisis misinfo” in the context of the war in Ukraine.

Indeed, as Elon Musk and his lawyers certainly know, the final version of the DSA includes a “crisis response mechanism,” (Art. 36) which is clearly modeled on the European Commission’s initially ad hoc response to the Ukraine crisis and which requires platforms to take special measures to mitigate crisis-related “misinformation.” 

In its January submission to the EU (see reports archive here), in the section devoted precisely to its efforts to combat Ukraine-war-related “misinformation,” Twitter writes (pp. 70-71): 

“We … use a combination of technology and human review to proactively identify misleading information. More than 65% of violative content is surfaced by our automated systems, and the majority of remaining content we enforce on is surfaced through regular monitoring by our internal teams and our work with trusted partners.”

How is this not compliance? Or at least a very vigorous effort to achieve it? And the methodology outlined is presumably used to “enforce on” other types of “mis-“ or “disinformation” as well.

Finally, what is the below notice, which many Twitter users recently received informing them that they are not eligible to participate in Twitter Ads because their account as such has been labeled “organic misinformation?”

Why in the world would Twitter turn away advertising business? The answer is simple and straightforward: because none other than the EU’s Code of Practice on Disinformation requires it to do so in connection with the so-called “demonetization of disinformation.” 

Thus, section II(d-f) of the Code reads:

(d) The Signatories recognise the need to combat the dissemination of harmful Disinformation via advertising messages and services.

(e) Relevant Signatories recognise the need to take granular and tailored action to address Disinformation risks linked to the distribution of online advertising. Actions will be applicable to all online advertising.

(f) Relevant Signatories recognise the importance of implementing policies and processes not to accept remuneration from Disinformation actors, or otherwise promote such accounts and websites.

So, in short, vis-à-vis the EU and its Code, Twitter is complying, not defying. Removing Twitter’s signature from the Code when its signature is no longer required on the Code anyway is not defiance. Among other things, not labeling content and/or users as “misinformation,” not restricting the visibility of content and/or users so labeled, and accepting advertising from whomever has the money to pay would be defiance.

But the EU’s response to such defiance would undoubtedly be something more than tweets. It would be the mobilization of the entire punitive arsenal contained in the DSA and, in particular, the threat or application of the DSA fines of 6 percent of the company’s global turnover.

It is not enough to (symbolically) withdraw from the Code of Practice to defy the EU. Defying the EU would require Twitter to withdraw from the EU altogether.

Tyler Durden Sat, 06/03/2023 - 10:30

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