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Week Ahead – An encouraging recovery

Are investors correct to be optimistic? Investors appear remarkably calm at the moment given the level of uncertainty we’re facing this year, from inflation…

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Are investors correct to be optimistic?

Investors appear remarkably calm at the moment given the level of uncertainty we’re facing this year, from inflation to interest rates and even Covid, when you consider China is still embracing lockdowns.

Throw soaring commodity prices into the mix and there’s plenty of reason to be pessimistic. But when you look at financial markets, that isn’t what we’re seeing. Equities aren’t far from record highs in many cases and the yield curve isn’t yet inverted in a way that suggests a recession is coming.

Instead, the Fed is warning of a very aggressive tightening cycle, telling us the labor market is too strong and that inflation will be under control again soon enough. For once, the central bank and markets appear on the same page. Which probably makes me feel more uneasy than it should.

Further evidence of “unhealthy” trend in labor market to come?

EU continues to turn its back on Russia

Evergrande back in the headlines

US

The focus on Wall Street remains on geopolitics, but many traders will pay close attention to the economic readings about the US jobs market, consumer, inflation, and manufacturing activity. The Fed is confident that the economy is on solid footing despite surging inflation, but if the economic data tells a different story, that could change the front-loaded approach of supersized rate hikes.    

The nonfarm payroll report will confirm that the labor market remains strong. The consensus estimate for jobs created in March is 450,000 which would be a decrease from the 678,000 gain in February. The unemployment rate is expected to tick lower to 3.7%, while average hourly earnings could rebound to 0.4%, an improvement from the flat reading seen a month ago.

EU 

It goes without saying that the focus next week will continue to be what’s happening in Eastern Europe and what the EU is doing in order to reduce its reliance on Russian energy and allow it to impose more severe sanctions. The latter is unlikely any time soon but the US LNG deal was a step towards it.

Next week offers an abundance of economic data, with the standout being flash inflation indicators. The eurozone flash CPI on Friday will be the one to watch but we could get hints from individual nations earlier in the week.

Central banks have been forced to back down on their transitory message in recent months and the ECB took a step in that direction a couple of weeks ago. Further unexpected inflation spikes will further pile on the pressure and make comments from President Lagarde and her colleagues all the more interesting.

UK

Mostly tier two and three data from the UK next week, with a speech from BoE Governor Andrew Bailey on Monday the highlight. The MPC last week gave the impression that they were slightly softening their hawkish stance after three consecutive hikes but inflation last month accelerated faster than expected which may force them to persevere for a few more meetings yet. Deputy Governor Ben Broadbent also speaks on Wednesday.

Russia

Against the backdrop of Russia’s illegal invasion of Ukraine, sanctions imposed on it by the West, and the Kremlin’s attempts to hit back – for example, the decision this week to insist on purchases of Russian gas to be made in rubles – there’s going to be little hype about the unemployment and manufacturing data next week.

Negotiations are continuing with Ukraine but appear to be making little progress. Meanwhile, sanctions are continuing to be imposed and the EU is slowly severing energy ties which will be damaging in the long run. In the near future, the economy is expected to fall into a two-year recession, with this year’s contraction being particularly sharp at up to 10%.

South Africa

The SARB raised interest rates by 25 basis points this week but two members (out of five) of the MPC voted for a 50 basis point hike. The tightening cycle looks set to continue with inflation running at the upper end of its 3-6% target range and commodity pressures increasing. 

Turkey

A relatively quiet week is in store for Turkey, with the manufacturing PMI the only notable release. 

China

There is a myriad of forces impacting Chinese markets in the week ahead. Evergrande is back in the headlines with foreign bondholders running out of patience. Covid-19 continues spreading in the mainland, raising the threat of lockdowns impacting manufacturing and logistics. US authorities are less positive about the audits of US-listed China companies than the noise from China. Russian support, tacit or official, is a huge risk point from a sanctions point of view.

China also releases its official and Caixin manufacturing and services PMIs. 

All of this provides downside risk to Chinese equities which have quickly run out of steam after government jawboning to support the market last week. China left its LPRs unchanged, disappointing participants who wanted to see concrete action. 

India

India releases its balance of trade on Friday, which could show the impact of higher oil prices. As a huge net energy importer, and with the central bank continuing its reluctance to hike interest rates, the INR remains near the weak end of its range. A sharp rise in oil prices, or US yields next week, could spark more INR weakness which could also see hot money exit the Sensex.

Australia 

The AUD/USD is close to recent highs thanks to the new surge in commodity prices and potentially some haven inflows, although risk sentiment remains better than the previous week. Employment data was strong and the week ahead features retail sales, private sector credit, and manufacturing PMI. AUD and local equities will also be sensitive to the China PMI prints.

There is a lot of good news built into AUD at these levels, helped also by AUD/JPY buying. Weak data, a sharp sentiment swing, or weak China PMIs could cause an abrupt correction lower by AUD, which could also be reflected in equity markets.

New Zealand

The New Zealand Dollar has rebounded sharply on commodity prices and haven inflows as markets prime for a faster RBNZ tightening. There is a lot of good news built into the price like AUD/USD, and that leaves NZD vulnerable to a sharp correction lower.

ANZ business confidence on Tuesday may provide that excuse if confidence slumps due to the Ukraine war and soaring inflation.

Japan

USD/JPY has risen 400 points in the past week as the US/Japan rate differential exploded wider. The BoJ and MoF have tried to talk them down with limited success. Currency markets should now be on alert for more “watching FX closely” comments, which could send USD/JPY sharply lower intraday over the coming weeks.

Japan has a heavy data calendar featuring unemployment, retail sales, and arguably most important industrial production and the Tankan Large Manufacturers Survey. The latter two will give a snapshot into whether the Ukraine disruption and inflation wave are impacting business. Low prints could be a headwind for local equities.

Singapore

Inflation rose this week, setting up a MAS tightening in April. Local markets have been buoyant though as Covid restrictions were dramatically eased. PPI has upside risk this week which could increase the MAS noise and dampen equities. USD/SGD remains content to continue running with the USD/Asia pack, which is moving entirely on Ukraine sentiment swings right now.


Economic Calendar

Sunday, March 27

Economic Data/Events

China industrial profits

Monday, March 28

Economic Data/Events

US wholesale inventories

President Biden to reveal 2023 budget request

South Africa unemployment

Mexico trade

Norway Norges Bank Deputy Governor Borsum speaks to the bank’s regional network

UK Chancellor Sunak appears before Treasury Committee to discuss his Spring Statement

BOE Gov Bailey speaks on the economy at an event organized by European think tank Bruegel

Tuesday, March 29

Economic Data/Events

US consumer confidence

Australian Treasurer Frydenberg presents the annual budget

Philadelphia Fed President Harker discusses the economic outlook at an event hosted by the Center for Financial Stability in New York

Bank of England quarterly bulletin

Japan unemployment

Australia retail sales, consumer confidence

Mexico international reserves

Wednesday, March 30

Economic Data/Events

US Q4 final GDP

Germany CPI

Fed’s Barkin speaks at a conference on investing in rural America hosted by his bank

BOE’s Deputy Governor Broadbent speaks at “The MPC at 25” conference

UK PM Johnson appears before the Liaison Committee

Russia unemployment

Mexico unemployment

New Zealand building permits, business confidence

Thailand rate decision: Expected to keep benchmark interest rate unchanged at 0.50%

Japan retail sales

Eurozone economic confidence, consumer confidence

EIA crude oil inventory report

Thursday, March 31

Economic Data/Events

US consumer income, initial jobless claims

OPEC and non-OPEC ministerial meeting on output

SNB’s Maechler, Moser speak at a money market event in Zurich

Fed’s Williams makes opening remarks at a conference  

Bank of Italy Governor Visco makes an annual address on the state of the economy

France and Italy CPI

UK GDP

Czech Republic GDP

Japan industrial production

South African trade balance

Eurozone and German Unemployment:

China manufacturing PMI, non-manufacturing PMI

Australia job vacancies, building approvals

India fiscal deficit, eight infrastructure industries, BoP

Thailand BoP

Japan housing starts

Singapore money supply

Friday, April 1

Economic Data/Events

US Mar change in nonfarm Payrolls: 450K v 678K prior, construction spending, unemployment,  ISM Manufacturing, vehicle sales

Europe-EU virtual summit with Chinese President Xi and Premier Li Keqiang along with European Council President Michel and European Commission President von der Leyen

Eurozone Manufacturing PMI, CPI

Eurozone ECB’s Schnabel and Knot speak at an event in Cernobbio, Italy

Poland CPI

Germany manufacturing PMI

UK Manufacturing PMI 

New Zealand house prices, consumer confidence

Japan vehicle sales, PMI

Singapore home prices

Australia home loans value, house prices

China Caixin PMI

Thailand PMI, foreign reserves, business sentiment index

Sovereign Rating Updates

– Poland (S&P)

– Turkey (S&P) 

– Italy (Moody’s)

– South Africa(Moody’s)

– France (DBRS)

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Spread & Containment

Many CDC Blunders Exaggerated Severity Of COVID-19: Study

Many CDC Blunders Exaggerated Severity Of COVID-19: Study

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

The U.S. Centers…

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Many CDC Blunders Exaggerated Severity Of COVID-19: Study

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

The U.S. Centers for Disease Control and Prevention (CDC) made at least 25 statistical or numerical errors during the COVID-19 pandemic, and the overwhelming majority exaggerated the severity of the pandemic, according to a new study.

Researchers who have been tracking CDC errors compiled 25 instances where the agency offered demonstrably false information. For each instance, they analyzed whether the error exaggerated or downplayed the severity of COVID-19.

Of the 25 instances, 20 exaggerated the severity, the researchers reported in the study, which was published ahead of peer review on March 23.

The CDC has expressed significant concern about COVID-19 misinformation. In order for the CDC to be a credible source of information, they must improve the accuracy of the data they provide,” the authors wrote.

The CDC did not respond to a request for comment.

Most Errors Involved Children

Most of the errors were about COVID-19’s impact on children.

In mid-2021, for instance, the CDC claimed that 4 percent of the deaths attributed to COVID-19 were kids. The actual percentage was 0.04 percent. The CDC eventually corrected the misinformation, months after being alerted to the issue.

CDC Director Dr. Rochelle Walensky falsely told a White House press briefing in October 2021 that there had been 745 COVID-19 deaths in children, but the actual number, based on CDC death certificate analysis, was 558.

Walensky and other CDC officials also falsely said in 2022 that COVID-19 was a top five cause of death for children, citing a study that gathered CDC data instead of looking at the data directly. The officials have not corrected the false claims.

Other errors include the CDC claiming in 2022 that pediatric COVID-19 hospitalizations were “increasing again” when they’d actually peaked two weeks earlier; CDC officials in 2023 including deaths among infants younger than 6 months old when reporting COVID-19 deaths among children; and Walensky on Feb. 9, 2023, exaggerating the pediatric death toll before Congress.

“These errors suggest the CDC consistently exaggerates the impact of COVID-19 on children,” the authors of the study said.

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Tyler Durden Fri, 03/24/2023 - 20:20

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Government

NIH awards researchers $7.5 million to create data support center for opioid use disorder and pain management research

WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant…

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WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant from the National Institutes of Health (NIH) Helping End Addiction Long-term (HEAL) initiative.

Credit: Wake Forest University School of Medicine

WINSTON-SALEM, N.C. – March 24, 2023 – Researchers at Wake Forest University School of Medicine have been awarded a five-year, $7.5 million grant from the National Institutes of Health (NIH) Helping End Addiction Long-term (HEAL) initiative.

The NIH HEAL initiative, which launched in 2018, was created to find scientific solutions to stem the national opioid and pain public health crises. The funding is part of the HEAL Data 2 Action (HD2A) program, designed to use real-time data to guide actions and change processes toward reducing overdoses and improving opioid use disorder treatment and pain management.

With the support of the grant, researchers will create a data infrastructure support center to assist HD2A innovation projects at other institutions across the country. These innovation projects are designed to address gaps in four areas—prevention, harm reduction, treatment of opioid use disorder and recovery support.

“Our center’s goal is to remove barriers so that solutions can be more streamlined and rapidly distributed,” said Meredith C.B. Adams, M.D., associate professor of anesthesiology, biomedical informatics, physiology and pharmacology, and public health sciences at Wake Forest University School of Medicine.

By monitoring opioid overdoses in real time, researchers will be able to identify trends and gaps in resources in local communities where services are most needed.

“We will collect and analyze data that will inform prevention and treatment services,” Adams said. “We’re shifting chronic pain and opioid care in communities to quickly offer solutions.”

The center will also develop data related resources, education and training related to substance use, pain management and the reduction of opioid overdoses.

According to the CDC, there was a 29% increase in drug overdose deaths in the U.S.  in 2020, and nearly 75% of those deaths involved an opioid.

“Given the scope of the opioid crises, which was only exacerbated by the COVID-19 pandemic, it’s imperative that we improve and create new prevention strategies,” Adams said. “The funding will create the infrastructure for rapid intervention.”


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International

How They Convinced Trump To Lock Down

How They Convinced Trump To Lock Down

Authored by Jeffrey A. Tucker via Brownstone Institute,

An enduring mystery for three years is how…

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How They Convinced Trump To Lock Down

Authored by Jeffrey A. Tucker via Brownstone Institute,

An enduring mystery for three years is how Donald Trump came to be the president who shut down American society for what turned out to be a manageable respiratory virus, setting off an unspeakable crisis with waves of destructive fallout that continue to this day. 

Let’s review the timeline and offer some well-founded speculations about what happened. 

On March 9, 2020, Trump was still of the opinion that the virus could be handled by normal means. 

Two days later, he changed his tune. He was ready to use the full power of the federal government in a war on the virus. 

What changed? Deborah Birx reports in her book that Trump had a friend die in a New York hospital and this is what shifted his opinion. Jared Kushner reports that he simply listened to reason. Mike Pence says he was persuaded that his staff would respect him more. No question (and based on all existing reports) that he found himself surrounded by “trusted advisors” amounting to about 5 or so people (including Mike Pence and Pfizer board member Scott Gottlieb)

It was only a week later when Trump issued the edict to close all “indoor and outdoor venues where people congregate,” initiating the biggest regime change in US history that flew in the face of all rights and liberties Americans had previously taken for granted. It was the ultimate in political triangulation: as John F. Kennedy cut taxes, Nixon opened China, and Clinton reformed welfare, Trump shut down the economy he promised to revive. This action confounded critics on all sides. 

A month later, Trump said his decision to have “turned off” the economy saved millions of lives, later even claiming to have saved billions. He has yet to admit error. 

Even as late as June 23rd of that year, Trump was demanding credit for having followed all of Fauci’s recommendations. Why do they love him and hate me, he wanted to know. 

Something about this story has never really added up. How could one person have been so persuaded by a handful of others such as Fauci, Birx, Pence, and Kushner and his friends? He surely had other sources of information – some other scenario or intelligence – that fed into his disastrous decision. 

In one version of events, his advisors simply pointed to the supposed success of Xi Jinping in enacting lockdowns in Wuhan, which the World Health Organization claimed had stopped infections and brought the virus under control. Perhaps his advisors flattered Trump with the observation that he is at least as great as the president of China so he should be bold and enact the same policies here. 

One problem with this scenario is timing. The Oval Office meetings that preceded his March 16, 2020, edict took place the weekend of the 14th and 15th, Friday and Saturday. It was already clear by the 11th that Trump was ready for lockdowns. This was the same day as Fauci’s deliberately misleading testimony to the House Oversight Committee in which he rattled the room with predictions of Hollywood-style carnage. 

On the 12th, Trump shut all travel from Europe, the UK, and Australia, causing huge human pile-ups at international airports. On the 13th, the Department of Health and Human Services issued a classified document that transferred control of pandemic policy from the CDC to the National Security Council and eventually the Department of Homeland Security. By the time that Trump met with Fauci and Birx in that legendary weekend, the country was already under quasi-martial law. 

Isolating the date in the trajectory here, it is apparent that whatever happened to change Trump occurred on March 10, 2020, the day after his Tweet saying there should be no shutdowns and one day before Fauci’s testimony. 

That something very likely revolves around the most substantial discovery we’ve made in three years of investigations. It was Debbie Lerman who first cracked the code: Covid policy was forged not by the public-health bureaucracies but by the national-security sector of the administrative state. She has further explained that this occurred because of two critical features of the response: 1) the belief that this virus came from a lab leak, and 2) the vaccine was the biosecurity countermeasure pushed by the same people as the fix. 

Knowing this, we gain greater insight into 1) why Trump changed his mind, 2) why he has never explained this momentous decision and otherwise completely avoids the topic, and 3) why it has been so unbearably difficult to find out any information about these mysterious few days other than the pablum served up in books designed to earn royalties for authors like Birx, Pence, and Kushner. 

Based on a number of second-hand reports, all available clues we have assembled, and the context of the times, the following scenario seems most likely. On March 10, and in response to Trump’s dismissive tweet the day before, some trusted sources within and around the National Security Council (Matthew Pottinger and Michael Callahan, for example), and probably involving some from military command and others, came to Trump to let him know a highly classified secret. 

Imagine a scene from Get Smart with the Cone of Silence, for example. These are the events in the life of statecraft that infuse powerful people with a sense of their personal awesomeness. The fate of all of society rests on their shoulders and the decisions they make at this point. Of course they are sworn to intense secrecy following the great reveal. 

The revelation was that the virus was not a textbook virus but something far more threatening and terrible. It came from a research lab in Wuhan. It might in fact be a bioweapon. This is why Xi had to do extreme things to protect his people. The US should do the same, they said, and there is a fix available too and it is being carefully guarded by the military. 

It seems that the virus had already been mapped in order to make a vaccine to protect the population. Thanks to 20 years of research on mRNA platforms, they told him,  this vaccine can be rolled out in months, not years. That means that Trump can lock down and distribute vaccines to save everyone from the China virus, all in time for the election. Doing this would not only assure his reelection but guarantee that he would go down in history as one of the greatest US presidents of all time. 

This meeting might only have lasted an hour or two – and might have included a parade of people with the highest-level security clearances – but it was enough to convince Trump. After all, he had battled China for two previous years, imposing tariffs and making all sorts of threats. It was easy to believe at that point that China might have initiated biological warfare as retaliation. That’s why he made the decision to use all the power of the presidency to push a lockdown under emergency rule. 

To be sure, the Constitution does not allow him to override the discretion of the states but with the weight of the office complete with enough funding and persuasion, he could make it happen. And thus did he make the fateful decision that not only wrecked his presidency but the country too, imposing harms that will last a generation. 

It only took a few weeks for Trump to become suspicious about what happened. For weeks and months, he toggled between believing that he was tricked and believing that he did the right thing. He had already approved another 30 days of lockdowns and even inveighed against Georgia and later Florida for opening. He went so far as to claim that no state could open without his approval. 

He did not fully change his mind until August, when Scott Atlas revealed the whole con to him. 

There is another fascinating feature to this entirely plausible scenario. Even as Trump’s advisors were telling him that this could be a bioweapon leaked from the lab in China, we had Anthony Fauci and his cronies going to great lengths to deny it was a lab leak (even if they believed that it was). This created an interesting situation. The NIH and those surrounding Fauci were publicly insisting that the virus was of zoonotic origin, even as Trump’s circle was telling the president that it should be regarded as a bioweapon. 

Fauci belonged to both camps, which suggests that Trump very likely knew of Fauci’s deception all along: the “noble lie” to protect the public from knowing the truth. Trump had to be fine with that. 

Gradually following the lockdown edicts and the takeover by the Department of Homeland Security, in cooperation with a very hostile CDC, Trump lost power and influence over his own government, which is why his later Tweets urging a reopening fell on deaf ears. To top it off, the vaccine failed to arrive in time for the election. This is because Fauci himself delayed the rollout until after the election, claiming that the trials were not racially diverse enough. Thus Trump’s gambit completely failed, despite all the promises of those around him that it was a guaranteed way to win reelection.

To be sure, this scenario cannot be proven because the entire event – certainly the most dramatic political move in at least a generation and one with unspeakable costs for the country – remains cloaked in secrecy. Not even Senator Rand Paul can get the information he needs because it remains classified. If anyone thinks the Biden approval of releasing documents will show what we need, that person is naive. Still, the above scenario fits all available facts and it is confirmed by second-hand reports from inside the White House. 

It’s enough for a great movie or a play of Shakespearean levels of tragedy. And to this day, none of the main players are speaking openly about it. 

Jeffrey A. Tucker is Founder and President of the Brownstone Institute. He is also Senior Economics Columnist for Epoch Times, author of 10 books, including Liberty or Lockdown, and thousands of articles in the scholarly and popular press. He speaks widely on topics of economics, technology, social philosophy, and culture.

Tyler Durden Fri, 03/24/2023 - 17:40

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