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Week Ahead – Virus Watch, China data to rebound while the world braces for pain, and why the dollar looks so vulnerable

Week Ahead – Virus Watch, China data to rebound while the world braces for pain, and why the dollar looks so vulnerable

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Thanks to swift action worldwide by central banks, global equities avoided a disastrous place, a possible combination of a 1930’s like depression and the 2008 financial crisis.  In just a matter of weeks, massive monetary and fiscal stimulus was injected into the global economy, showing financial markets central banks and government leaders were not taking any chances with the shock that was about to hit consumption and production, also providing key relief to funding markets.

The unprecedented actions by the Fed has put a tentative top for the dollar, however the flight to safety could return if the duration and severity of the economical and financial disruptions worsen over the next couple weeks.

The focus next week will remain on the spread of the virus in Europe and the US.  Unfortunately, it seems that stringent mitigation measures have not helped the curve as much as many have hoped for in the US, Italy and Spain.

A good amount of attention will also fall on the US labor market.  Following the meteoric rise in last week’s jobless claims, traders will look to see if the number of unemployment filings continues to surge.  Friday’s non-farm payroll report will also be closely watched as the US economy is about to have its first negative reading since October 2010.

US Politics

Congress got the job done getting a $2 trillion stimulus package and now markets will try to figure out all the details.  The calls for the fourth phase of stimulus will start to pick up as the virus spread intensifies across the US, but the passing of the massive economic support package has bought Congress some time for now.

The next few months will be key for the Presidential election and if the virus starts to test the healthcare systems of several red states, expectations could shift for a Biden upset in November.

UK

The UK is in lockdown, unfortunately the measures weren’t implemented in time to save the Prime Minister and his Health Secretary, both of whom have tested positive. If only there was something they could have done. The pound fell 1% on the news – for some reason – but has since rebounded to trade 2% higher on the day. I’m not sure that’s even particularly irregular in these bizarre times.

The number of cases and fatalities is rapidly rising in the UK now and the hospitals are already overwhelmed, with emergency facilities now being set up in various cities and former NHS staff coming out of retirement to assist with the crisis. This is likely to get much worse before it gets better but now that the country is in lockdown and taking it seriously, the peak may not be too far away.

Italy

This was looking like a turnaround week for Italy until Friday when the country recorded 919 more deaths, taking the total to 9,134. There were positive signs this week though but the fear is that the virus has taken hold in the south – with many of the cases until now in the north – which is poorer and potentially less able to deal with the spread. This could be a very worrying phase two for Italy which has already suffered considerably.

Spain

Spain is still some way behind Italy in terms of fatalities but the numbers are rising at an alarming rate. The country reported 769 deaths on Friday, taking the total to 4,858. Spain has the fourth highest number of cases and has threatened to become the European epicentre but recent efforts may bear fruit.

Eurozone

Once again, the eurozone is showing why it’s years away from being anything resembling the United States of Europe. In times of need, rather than being decisive, countries are squabbling over whether to collectively raise funds to support the regions economy with “coronabonds”, as other countries are doing, or use a bailout mechanism which typically imposes strict conditions on a country. This is not going to help any anti-euro feeling within these countries as the block shows that, once again, in times of desperation, it can’t be relied upon.

China

While the rest of the world grapples with the spread of the coronavirus, China is looking to see signs that their economy is bouncing back.  On Tuesday, China’s March official PMI reading could rebound strongly as many parts of the economy in March have resumed production.

The yuan will closely be watched following its worst week against a basket of its major trading partners since August.  The PBOC may remain active in defending the yuan in order to keep markets calm.

Hong Kong

The focus in Hong Kong will primarily remain on the coronavirus and the increased efforts on thwarting its spread.  While Mainland China is having much progress with the virus, Hong Kong just saw its biggest daily increase.  On Tuesday, Hong Kong’s February retail sales readings will show how bad of a hit tourism and domestic demand had due to the coronavirus. February and March data are expected to be terrible for Hong Kong and most of that is already priced in.

Singapore

On Monday, the Monetary Authority of Singapore is widely expected to act aggressively and ease poliy further by both re-centering and reducing the slope of its currency band.

India

India could not wait to cut rates and boost liquidity.  In what is becoming a recurring theme for central banks, the RBI acted on Friday, a full week in advance of their regularly scheduled policy meeting.  The RBI is making sure markets know that they are being aggressive and that they still have tools they can use if the outlook deteriorates further.

India’s current lockdown measures will likely see the data get terrible in April, with hopes that a rebound will start in May.     

Australia

Australia is in wait-and-see mode.  They are preparing for several months of social distancing and anticipate further fiscal and monetary stimulus will be needed shortly.  Traders may not put much weight with the upcoming retail trade and housing prices data.  On Wednesday, some focus will fall on the minutes to the RBA’s emergency meeting.

New Zealand

The spotlight for New Zealand will primarily remain on the spread of coronavirus cases.  The country has raised their lockdown level to four and incremental updates on the escalation of cases will likely be met with calls for further action by the RBNZ.

On Tuesday, the ANZ Bank New Zealand will release the business confidence index that will show a sharp decline in confidence and with the outlook.

Japan

Now that the Olympics have finally been postponed, investors are going to anticipate that the upcoming economic data and surveys will be a very high baseline that are not yet reflecting the coronavirus impact and minimal boost the Olympic games were to provide the economy.

The release of the BOJ Q1 Tankan Survey and February industrial production data will probably not move the needle. 

Market

Oil

This week has provided some welcome reprieve for oil prices, although even now they’re not trading too far off the lows. Even stabilization is welcome after an extraordinary period, with the impending global recession being compounded by the oil price war to smash prices to bits. The sell-off may have slowed but there’s still a lot of vulnerability to the downside and while $20 may have provided support so far for WTI, I wonder whether that will continue to be the case in the coming weeks.

Gold

Gold is holding onto its recent gains after rebounding strongly earlier this week as the Federal Reserve announced its unlimited, open-ended, quantitative easing program. That, combined with other measures, eased the upside pressure on the dollar and saw it pull back around 4%, aiding the rally in gold back to levels you would expect to see in times like this. It’s still seeing resistance around $1,640 but as long as we don’t see any more sharp shocks in equity markets, this will likely come under much more pressure.

Bitcoin

Not a lot has changed as far as bitcoin is concerned over the last few days. It is continuing to trend higher but momentum has been dropping as it faces difficulty around $7,000. The improvement in general sentiment in the market appears to be supporting moves in cryptos but that may change. A break of $7,000 could be the catalyst for more sharp rallies but it could still see some resistance around $7,500.

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International

Beloved mall retailer files Chapter 7 bankruptcy, will liquidate

The struggling chain has given up the fight and will close hundreds of stores around the world.

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It has been a brutal period for several popular retailers. The fallout from the covid pandemic and a challenging economic environment have pushed numerous chains into bankruptcy with Tuesday Morning, Christmas Tree Shops, and Bed Bath & Beyond all moving from Chapter 11 to Chapter 7 bankruptcy liquidation.

In all three of those cases, the companies faced clear financial pressures that led to inventory problems and vendors demanding faster, or even upfront payment. That creates a sort of inevitability.

Related: Beloved retailer finds life after bankruptcy, new famous owner

When a retailer faces financial pressure it sets off a cycle where vendors become wary of selling them items. That leads to barren shelves and no ability for the chain to sell its way out of its financial problems. 

Once that happens bankruptcy generally becomes the only option. Sometimes that means a Chapter 11 filing which gives the company a chance to negotiate with its creditors. In some cases, deals can be worked out where vendors extend longer terms or even forgive some debts, and banks offer an extension of loan terms.

In other cases, new funding can be secured which assuages vendor concerns or the company might be taken over by its vendors. Sometimes, as was the case with David's Bridal, a new owner steps in, adds new money, and makes deals with creditors in order to give the company a new lease on life.

It's rare that a retailer moves directly into Chapter 7 bankruptcy and decides to liquidate without trying to find a new source of funding.

Mall traffic has varied depending upon the type of mall.

Image source: Getty Images

The Body Shop has bad news for customers  

The Body Shop has been in a very public fight for survival. Fears began when the company closed half of its locations in the United Kingdom. That was followed by a bankruptcy-style filing in Canada and an abrupt closure of its U.S. stores on March 4.

"The Canadian subsidiary of the global beauty and cosmetics brand announced it has started restructuring proceedings by filing a Notice of Intention (NOI) to Make a Proposal pursuant to the Bankruptcy and Insolvency Act (Canada). In the same release, the company said that, as of March 1, 2024, The Body Shop US Limited has ceased operations," Chain Store Age reported.

A message on the company's U.S. website shared a simple message that does not appear to be the entire story.

"We're currently undergoing planned maintenance, but don't worry we're due to be back online soon."

That same message is still on the company's website, but a new filing makes it clear that the site is not down for maintenance, it's down for good.

The Body Shop files for Chapter 7 bankruptcy

While the future appeared bleak for The Body Shop, fans of the brand held out hope that a savior would step in. That's not going to be the case. 

The Body Shop filed for Chapter 7 bankruptcy in the United States.

"The US arm of the ethical cosmetics group has ceased trading at its 50 outlets. On Saturday (March 9), it filed for Chapter 7 insolvency, under which assets are sold off to clear debts, putting about 400 jobs at risk including those in a distribution center that still holds millions of dollars worth of stock," The Guardian reported.

After its closure in the United States, the survival of the brand remains very much in doubt. About half of the chain's stores in the United Kingdom remain open along with its Australian stores. 

The future of those stores remains very much in doubt and the chain has shared that it needs new funding in order for them to continue operating.

The Body Shop did not respond to a request for comment from TheStreet.   

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Government

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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Government

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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