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US Dollar Offered Ahead of the Employment Report

Overview: Risk appetites have returned but may be tested by the US jobs report. News of progress with US auditors in China helped lift Hong Kong and Chinese…



Overview: Risk appetites have returned but may be tested by the US jobs report. News of progress with US auditors in China helped lift Hong Kong and Chinese equities. Most of the large bourses in the region also rose. Europe’s Stoxx 600 is up a little more than 1% near midday after shedding 1.3% over the past two sessions. US futures also are trading with an upside bias. Benchmark 10-year yields are mostly a little softer today. The 10-year US Treasury yield is at 4.13%, down slightly. The greenback is softer against all the major currencies and most of the emerging markets as well. The dollar-bloc leads the G10, while Thailand and Hungary lead the emerging market currencies. Softer rates and the US dollar are helping gold recover from the push below $1617 yesterday. It is probing $1645-$1650. December WTI is moving above $90 to reach its best level since October 10. US natgas has been alternating between gains and losses this week. It was off about 4.7% yesterday and is up a little more than 4% today, ostensibly on weaker stocks. Europe’s benchmark is 1.6% lower around 122.1 euros. It finished last week at 110 euros. Iron ore, which snapped a six-session slide on Tuesday, is up for the fourth consecutive session today. It has rallied 11% in this run. December copper is jumping 3.3% and is at its best levels of the week. After falling almost 7% over the past two sessions, December wheat has come back bid and is up nearly 1.2%.

Asia Pacific 

News that the US audit process of Chinese companies, required to prevent delisting has proceeded faster than expected helped lift Chinese stocks. An index of mainland companies that trade in Hong Kong rose nearly 6% today and led the region with an 8.9% gain this week. The Hang Seng rose 5.3% for an 8.6% advance this week, easily the best performer in the region. The CSI 300 gained nearly 3.3% today and 6.4% for the week. There had been some speculation earlier this week that the zero-Covid policy would be abandoned but this was denied.

The PBOC has been raising the dollar's reference rate for six consecutive sessions through today. The dollar is allowed to rise by a maximum of 2% above the fix, so this means that the dollar's cap has been moving higher. At the same time, officials are gradually narrowing the gap between the fix and market expectations. That gap reached 950 pips on October 20 amid the Party Congress and narrowed to slightly less than 600 pips today.

Japan's markets re-opened after yesterday's holiday and played a little catch-up, with the Nikkei losing nearly 1.7%. The final October service and composite PMI were better than the flash readings. The service PMI was revised to 53.2 from 53.0 of the preliminary estimate and 52.2 in September. The composite stands at 51.8, not 51.7, and 51.0 in September. Both are at their best levels since June. Separately, we note that three-month implied yen volatility has slipped to its lowest level in three weeks, a little below 12.3%. The dollar is little changed against the yen this week.

In its monetary policy statement, the Reserve Bank of Australia upgraded its inflation outlook and pared its growth forecasts. Its preferred inflation measure, the trimmed mean is expected to peak at 6.5% at the end of this year (up from 6%) before falling to 3.75% by the end of next year and reaching the top of is 2-3% target in 2024. It shaved this year's growth projection to 3% from 3.25% and sees growth at 1.5% in 2023 and 2024.

The dollar is confined to a JPY147.50-JPY148.50 trading range. We suspect that support is stronger than resistance. Still, the dollar has not traded above JPY149 since October 25, and that was just barely. With a brief but notable exception, since the second week in October, the dollar has been largely confined to a JPY145-JPY150 range. The Australian dollar fell from almost $0.6500 on Wednesday to near $0.6270 yesterday. It has fallen for the past six sessions but has steadied today. It is firm but within yesterday's range today. The $0.6375-$0.6400 offers the nearby cap. The Chinese yuan is trading about 0.5% higher and recouping the losses of the past two sessions. The PBOC set the dollar's reference rate at CNY7.2555 and this ostensibly allows the dollar to trade as high as CNY7.40. It has not traded above CNY7.3120.


Germany's services and composite PMI were revised but still show the economy struggling. The service PMI is at 46.5, up from the preliminary 44.9 and above September's 45.0. The final composite is at 45.1. The flash reading was 44.1 and it was at 45.7 in September. Separately, September factory orders were dismal, falling 4%, compared with expectations for a 0.5% decline after a revised 2% fall in August (initially a 2.4% fall). The French PMI was also revised up, but both the services and composite PMI was softer than September. Still, they both held above the 50 boom/bust level. The service PMI is at 51.7 (51.3 flash and 52.9 in September) and the composite is at 50.2 (from 50.0 flash and 51.2 previously). France also reported declines in September industrial output (-0.8%), and manufacturing (-0.4%). Italy's PMIs fell more than expected. The services PMI fell to 46.4 from 48.8, and the composite is at 45.8 from 47.6. Note that Prime Minister Meloni will present her budget today. Spain's service PMI rose to 49.7 from 48.5, but the composite slipped to 48.0 from 48.4. It reported that September industrial production fell 0.3% after rising by the same amount in August. The aggregate services PMI stands at 48.6, up from 48.2 of the initial estimate but still down slightly from September's 48.8. The composite is at 47.3, slightly better than the flash reading of 47.1, but down from 48.1. The composite has fallen since April's peak at 55.8.

The Bank of England delivered the 75 bp rate but warned that the terminal rate would likely be lower than the markets were discounting. BOE Governor Bailey said the markets saw a terminal rate of 5.25% next year. That may have been the case for recently, but the swaps market has implied a policy rate peak slightly below 4.70% on the eve of the BOE meeting. The BOE warned that the economy may have contracted by 0.5% in Q3 as the UK enters a several quarter recession. The first estimate is due at the end of next week. The BOE sees the CPI peak at 10.9% later this year. This down from a previous forecast of 13%. The BOE's forecasts do not take into account the budget that will presented November 17. Former Minneapolis Fed president, Kocherlakota had written an op-ed piece recently arguing that the BOE's regulatory lapse toward pension funds and its limited support for the Gilt market led to Truss's down fall. Bailey defended himself yesterday in an interview, claiming that it would have created a moral hazard. That seems to be a rather weak defense, no matter what one thinks about Truss's fiscal intentions. Can it be demonstrated that having the emergency program fully in place through the budget statement been a significantly greater moral hazard?  Bailey also sidestepped the question about the regulatory approach to the pension funds, and how does that relate to moral hazard?  

The euro initially rallied to $0.9975 on the initial dovish reading of the FOMC statement and reversed, falling to a low yesterday of about $0.9730. It has steadied today and has been confined about a half-of-a-cent range below $0.9800. There are options there for 1.7 bln euros that expire Monday and another billion euros that expire Tuesday. The recent price action has weakened the technical tone of the euro and the five-day moving average is slipped back below the 20-day moving average for the first time in about three weeks. Yesterday's high was near $0.9840, and a close above there were begin repairing some of the technical damage. Sterling's high this week was recorded on Monday by $1.1615 and it fell to $1.1150 after the BOE meeting. Yesterday's 2% loss was the most since the turmoil in late September. It is making session highs in the European morning almost a cent higher. Initial resistance is likely in the $1.1300-10 area. Sterling has risen for the past three weeks for almost 4.8%. At $1.1240, it is off about 3.25% this week, making its easily the poorest performer in among the G10 currencies. The euro is second with about a 1.8% loss.


Today's US employment report is sandwiched between the FOMC meeting and next week's October CPI. The market looks for around a 200k increase in nonfarm payrolls. This is a smaller increase that the US has been reporting but would be a solid number. The monthly average in 2018 and 2019 was 150k. Contrary to some claims, the Fed is well aware of its two mandates of price stability and full employment. The unemployment rate was at 3.5% in September, matching the pre-pandemic low. Whatever full employment means, the Fed is closer to achieving that than reaching its inflation objective, hence the focus. That said, one dimension that is problematic because of the implication for potential growth is the participation rate. It stood at 62.3% in September. It first reached that in February after hitting a Covid-low of 60.2% in April 2020. However, before the pandemic struck the participation rate was 63.3%-63.4%. It never fully recovered from the Great Financial Crisis when the participation rate hovered around 66%. The Fed and many private sector economists had expected that higher wages would pull people back into the labor market, but we are more than homo economicus, and there appear to be some large social forces at work. 

In any event, as Fed Chair Powell has pointed out on numerous occasions, there is no one number that does for the labor market was the PCE deflator does for inflation. Powell continues to put stock in the job openings as a sign of tightness of the labor market. Weekly jobless claims can be noisy, and a four-week moving average smooths it out. In late 2019, the four-week moving average was 230-340k. It has held below 220k for the past seven weeks. Continuing claims have been gradually rising. At 1.485 mln in the week through October 21, it is the highest since March, but is still in its trough after bottoming in May near 1.306 mln. Before Covid, continuing claims were considerably higher. It was slightly below 1.9 mln at the end of 2019. Given the heightened sensitive to inflation, the average hourly earnings may be important. A 0.3% increase in October, matching the pace seen in August and September, would see the year-over-year rate ease to 4.7%, slowest since August 2021. Recall average hourly earnings rose 2.9% year-over-year in December 2019, and this was seen as insufficient. At his press conference, Powell, explained, "I don't think wages are the principal story of why prices are going up. I don't think we see a wage-price spiral. But, once you see it, you're in trouble."

Canada also reports October employment data today. Canada's job creation has stalled. The number of full-time positions has fallen in three of past four months. It has created an average of 16k full-time positions a month this year. The average in the first half was around 38.5k. Counting part-time positions, Canada has averaged an increase of 19k a month. The median forecast in Bloomberg's survey looks for a 10k increase in jobs last month, half of the pace seen in September. Canada's labor force participation rate reached its pre-Covid level (65.5%) in September 2021 and has gradually pulled back to 64.7%-64.8% for the past three months. Still, despite the widening of policy rates, and the widening of the two-year US premium to near three-year highs, the exchange rate appears to be more a function of the general risk environment (S&P 500 as proxy) and the general direction of the US dollar. The 60-day rolling correlation of changes in the Dollar Index and the Canadian dollar is the highest it has been in six years. Separately, Canada announced a 2% tax on share buybacks (the US Inflation Reduction Act has a 1% tax) and it will launch a C$6.7 bln (~$5 bln) five-year tax credit program to clean energy projects. Lastly, we note that the government is now projecting a C$36.4 bln fiscal deficit. In April, it anticipated a C$52.6 bln shortfall.

The dollar-bloc is leading the move against the dollar among the major currencies ahead of the employment report. The Canadian dollar's 0.8% gain trails the Antipodeans, which are up slightly more than 1%. The greenback briefly traded above CAD1.38 yesterday and is near CAD1.3630 in Europe. The week's low was set Tuesday around CAD1.3530. We identified the CAD1.35 area as a key to the medium-term technical outlook. A convincing break would bolster the chances that the CAD1.40 level approached in late September was a significant higher. Some of the US dollar selling may be related to expiring options. At CAD1.37, there were options for $545 mln that expire today and another set for $500 mln at CAD1.3630. Yesterday's price action saw old USD support at MXN19.80 act as resistance. That area capped the greenback's bounce and it reversed to close below MXN19.65. It is fraying the MXN19.60 area in Europe. It reached a five-month low near MXN19.5065 on Wednesday. The low for the year was set on May 30 around MXN19.4150. The peso is the third best performing EM currency this week. Brazil is the best with a 3.5% gain coming into today, and the Thai baht is in second place with almost a 1.1% gain. The peso is slightly more than 1% higher this week ahead of today's local session. 




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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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