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Week Ahead – All eyes on the Fed

The week we’ve all been waiting for Next week is action-packed including rate decisions from the US, Japan, UK, South Africa, Turkey, Switzerland, Norway and Sweden. The Federal Reserve is the obvious standout among these, with investors seemingly uneasy.

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The week we’ve all been waiting for

Next week is action-packed including rate decisions from the US, Japan, UK, South Africa, Turkey, Switzerland, Norway and Sweden.

The Federal Reserve is the obvious standout among these, with investors seemingly uneasy at the prospect of the central bank tapering asset purchases at a time when the recovery is slowing and Covid is spreading rapidly. Markets will be very sensitive to the communication, especially if the underlying message remains that the central bank still intends to pare back asset purchases this year.

A lot of focus remains on China as the crackdown on various sectors continues, the latest of which being Casinos. Evergrande is also looking likely to reach a conclusion soon, one way or another.

The Russian parliamentary election also takes place this weekend, starting today and lasting three days. The United Russia party is expected to remain in control but its supermajority is at stake.

Is the Fed preparing a dovish taper warning?

Evergrande nearing a conclusion?

Russia heads to the polls


Country

US

The main event of the trading week is the FOMC policy decision, but traders should closely watch the developments on Capitol Hill. The most important economic release of the week will be the September preliminary PMI readings, which could show further signs the economy has stabilized from the delta variant hit. 

The two-day FOMC policy meeting will likely be a reiteration that they are poised to taper before the end of the year.  Economists will fixate on the updated dot plot forecast to see if any members brought forward a rate hike into the end of 2022. 

The Fed will not rush a tightening cycle and expectations should remain firm that 2023 is when the first rate hike will be delivered.  Fed Chair Powell may provide hints that tapering won’t be quick, possibly indicating it won’t finish until next winter.  The economy appears to have survived the delta variant hit, which should suggest further stabilizing economic releases will pave the way for a November taper announcement.    

With monetary and fiscal stimulus starting to wane, clarity on the size of the next economic package will enter a crucial phase. President Biden was unable to convince conservative democrats of a $3.5 trillion budget and talks will likely lead to a final price tag between $1.5 -2.0 trillion. Some traders will pay close attention to the upcoming tax increases and whether they are retroactive from earlier in the year or September could be just as important in determining the major move with risk appetite.

EU 

It’s a relatively quiet week in Europe, with flash PMIs on Thursday and German Ifo on Friday the only notable economic events. 

The German election is where all the attention will be, with the final Chancellor debates taking place on Thursday ahead of the election on Sunday 26th September. The polls currently have the Social Democrats in the lead by four points but with coalitions always required, that will just be the start of the negotiations. 

UK

How many interest rate hikes next year is the question on everyone’s lips. The market is currently positioned for two, one 15 basis point in March or May and another 25 basis points at the end of 2022, taking the base rate to 0.5%. 

This seems a stretch for a central bank that’s not yet completed its asset purchases. Not to mention a country that has seen a slowdown in consumer spending and is facing numerous headwinds over the next 12 months including the end of the furlough scheme and Universal Credit boost, income tax threshold freeze, 1.25% increase in national insurance contributions and higher energy prices. 

Emerging Markets

Russia

Russia goes to the polls this weekend in a vote lasting three days, with the ruling United Russia party expected to win, despite support waning following an apparent crackdown on critics and political opponents, something the Kremlin denies. At stake is the party’s supermajority.

Apple and Google were forced to remove a tactical voting app from their stores this week following pressure from the Kremlin. The app was set up by Alexei Navalny, a jailed critic of Vladimir Putin.

South Africa

The SARB is expected to leave interest rates unchanged next week, with hikes on hold until early next year. Inflation will be released a day before the decision and is expected to rise to 4.8%, which the central bank is comfortable with. The economy is expected to contract this quarter following the riots so the SARB can afford to be patient.

Turkey

It seems Governor Şahap Kavcıoğlu is going to go back on his word to keep interest rates above inflation, after CPI earlier this month rose to 19.25%, above the 19% policy rate. He has previously stressed that inflation is expected to fall again later this year and is clearly in no mood to risk his job just to keep his word. 

Some are even expecting the Governor to cut rates next week by 50 basis points, although under the circumstances, it’s more likely that will be left until later in the year when inflation is falling once more. It’s one thing not to keep your word, it’s another altogether to do the complete opposite.

Asia Pacific

China

The government squeeze on the private sector continued this week, this time it was the Macau casino industry’s turn. Casino stocks listed in Hong Kong plunged. The week is dominated by holidays amongst Asia’s heavyweights. Mainland China is on holiday Monday and Tuesday with Hong Kong on Wednesday. South Korea is also away.

The holiday schedule next week will substantially reduce market liquidity in Asia. Readers should watch for further weekend developments regarding Evergrande, which appears to be on the final strait of collapse or liquidation or debt/equity swap. Negative developments over the weekend could cause a severe risk aversion move on Monday in Asia, into a low liquidity day.

The only data from China this week is the 1-year and 5-year Loan Prime Rate decisions. It would be a huge surprise if China blinked and cut them with an October RRR cut far more likely. Nevertheless, a surprise cut would see Asian equities rally strongly in the short term.

USD/CNY remains range-bound with no sign that the PBOC is looking to engineer a weaker currency to stimulate the economy, yet.

India

No significant data or event risk this week. EM will be dominated by central banks globally and the FOMC outcome on Thursday, Asian time.

Australia & New Zealand

The Australian and New Zealand Dollars continue to bounce around on daily shifts in international risk sentiment, rather than domestic developments. Half of Australia and Auckland in New Zealand remain under virus lockdowns. Given that New Zealand’s outbreak appears contained to Auckland where daily cases are approaching single digits, any news that suggests the virus has escaped Auckland will provoke an aggressive sell-off in the New Zealand Dollar.

New Zealand releases Services PSI and Balance of Trade, while Australia releases the RBA Minutes and Markit Services, which will show the Covid-19 outbreak. Any reactions in local markets will be subsumed by low Asia liquidity and the focus on the US FOMC outcome.

Japan

Japan’s Bank of Japan releases its latest policy decision on Wednesday with no change expected to its stimulus plans. Inflation is released on Friday but will have a low market impact post FOMC. It should be a quiet week for Japan with national holidays on Monday and Thursday. With Greater China and South Korea also having national holidays next week, Asia will suffer from lower than usual liquidity, exacerbating reactions to headline risks.

Equity investors remain myopically focused on Japan’s next Prime Minister, who will be selected at the end of the month and should see Japan markets, when open, continue outperforming.  Markets are expecting the new PM to push through a new fiscal stimulus ahead of an election due in November at the latest, giving a boost to the economy and equity prices.

USD/JPY remains a pure rate differential play between the US 10-year and Japan JGBs. Follow that for directions and bring a good book to read in between. 


Key Economic Events

 Sunday, Sept. 19

Conclusion of Russian three-day parliamentary election.

Monday, Sept. 20

– Canada Federal Election

– International Atomic Energy Agency’s 65th general conference is held in Vienna.   

– ECB Executive Board Member Schnabel speaks

Economic Data/Events

Hong Kong CPI

Tuesday, Sept. 21

– United Nations 76th General Assembly begins

– Iraq’s oil minister speaks at the Gastech conference in Dubai

– The OECD updates its global economic forecasts

Economic Data/Events

US housing starts, building permits, current account balance

New Zealand credit card spending

Australia RBA minutes of September policy meeting

Japan machine tool orders

Mexico international reserves

Sweden central bank (Riksbank) rate decision: Expected to keep Interest Rate unchanged at 0.00%, hotter-than-expected inflation could allow some members to raise the rate path.  

Wednesday, Sept. 22

– Reserve Bank of Australia’s Assistant Governor Bullock speaks at the Bloomberg Inside Track online event.

Economic Data/Events

FOMC Rate Decision: Expected to keep interest rates unchanged, possibly inching closer to paring bond purchases

BOJ Rate Decision: Expected to keep BOJ Policy Balance Rate and 10-year target unchanged, possibly lowering their outlook

BOJ Gov Kuroda press conference

US existing home sales

Eurozone consumer confidence

Australia Westpac leading index

China loan prime rates 

Russia industrial production

South Africa CPI

EIA Crude Oil Inventory Report

Thursday, Sept. 23

– Final debate for German chancellor candidates.  Election day is September 26th

-Hungary Central Bank Governor Matolcsy and CEE deputy governors speak. 

Economic Data/Events

US Sept Prelim Manufacturing PMI: 60.5e v 61.1 prior; Services PMI: 55.0e v 55.1 prior, initial jobless claims, leading index

European Flash PMIs: Eurozone, France, Germany, U.K.

BOE Rate decision: No changes expected to Bank Rate, Corporate bond target, and Gilt purchase target, likely to expected to tone down the hawkish rhetoric

Norges Rate decision: Possibly ready to begin the tightening cycle

South Africa central bank (SARB) rate decision: Expected to keep interest rates unchanged at 3.50%

Swiss National Bank (SNB) rate decision: Expected to keep policy rate unchanged at -0.75%

Turkey central bank (CBRT) rate decision: Expected to keep One-Week Repo Rate unchanged at 19.0%

ECB Economic Bulletin

Australia preliminary PMIs

Singapore CPI

Mexico CPI

Thailand trade

China SWIFT global payments

Spain GDP

Friday, Sept. 24

– President Joe Biden hosts prime ministers Morrison of Australia, Modi of India, and Suga of Japan at the White House for the inaugural Quad Leaders’ Summit.

– Cleveland Fed President Mester discusses the economic outlook at a virtual event hosted by the Ohio Bankers League; Kansas City Fed President George speaks at an American Enterprise Institute event. 

– Fed Chair Powell delivers opening remarks and Fed Governor Bowman and Vice Chairman Clarida moderate a discussion at “Fed Listens: Perspective on the Pandemic Recovery.” 

– Norges Bank Deputy Governor Bache speaks

Economic Data/Events

US new home sales

Germany IFO business climate

Japan CPI

New Zealand trade

Japan PMIs, supermarket/department store sales

Singapore industrial production

Thailand foreign reserves, forward contracts

Mexico retail sales

Sovereign Rating Updates

– Belgium (Fitch)

– Iceland (Fitch)

– Germany (S&P)

– Saudi Arabia (S&P)

– Hungary (Moody’s)

– Sweden (Moody’s)

– EU (DBRS)

– Finland (DBRS).

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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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