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Week Ahead – Volatility to remain

Omicron and central banks to dominate The past week has been dominated by Omicron news as we all try to piece together the limited information we have and determine what it all means for the coming months. So much is still unknown and so the volatility…



Omicron and central banks to dominate

The past week has been dominated by Omicron news as we all try to piece together the limited information we have and determine what it all means for the coming months. So much is still unknown and so the volatility and seesaw action we’ve seen this week may continue until we get a better idea of the threat posed by the new variant.

The RBA and BoC both hold meetings next week and will likely be armed with little more information than OPEC+ had on Thursday, which makes the job of providing reliable guidance extremely challenging. Even the Fed, ECB and BoE the week after will find life difficult and two of them were expected to announce tightening measures prior to the news of the Omicron variant.

And this is at a time when central banks have an incredibly tough job on their hands. They’re already being forced to tighten monetary policy before they would like to and may soon have to make much tougher choices if the Omicron news isn’t good.

Fed eyes Omicron developments after NFP miss

Lira continues to slide despite desperate CBRT attempts to support the currency

Chinese property sector facing a big week


The US economy is adding jobs at a slower pace as employers are starting to have success luring people back to the labor force. If wages continue to rise, that will be the key for companies to reach their hiring targets. 

The November employment report showed US employers added 210,000 jobs, a miss of the 550,000 consensus estimate and well below the upwardly revised prior reading of 546,000 jobs.  A headline miss with the nonfarm payroll report may be mostly attributed to seasonal factors. The underlying components make this a solid labor market report as people are coming back to the labor force, with the participation rate improving from 61.6% to 61.8%.   

Wage pressures may be slowing as average hourly earnings dipped in November from 0.4% to 0.3%, but some of that could be attributed to the weakness in lower-paying hospitality jobs. 

The Fed may view this as a positive employment report as minority unemployment improved significantly and the participation rate is now only 1.5 percentage points lower than in February 2020. Fed rate hike expectations are settling around two rate hikes next year. The headline jobs miss takes away momentum from accelerated tapering but allows them to increase the taper pace by $5-10billion. 


A relatively quiet week ahead for the euro area, with much of the headline data being revisions and ZEW figures the only notable releases. The focus is on the ECB the week after, although that will be heavily influenced by the scientific data on the new Omicron strain which will determine how the next six months will look.


Much like in Europe, the UK next week sees a number of low-level economic data releases, with GDP numbers on Friday the only outlier. Meanwhile, Deputy Governor of the Bank of England, Ben Broadbent, will appear on Monday. The BoE meeting the week after is still a live one although the odds of a rate hike have slipped significantly as a result of the Omicron variant.


Russian data next week is a little thin, with CPI on Wednesday the only release. 

The focus will remain on the buildup of forces on the border, with tensions rising in recent weeks and a resolution not looking close. Talks between Biden and Putin could take place in the coming weeks although no date has been set.

South Africa

Omicron cases are rising rapidly, with the rate of transmission believed to be faster than that of Delta. Early evidence appears to suggest that symptoms are mild although the sample size is small and contains a lot of younger people that reportedly make up a large number of the countries unvaccinated. Time will tell whether that trend continues.

On the economy, we have a few notable releases next week including GDP data for the third quarter on Tuesday.


Coming off the back of another eventful week that’s seen the Finance Minister – a vocal opponent of recent rate cuts – replaced and multiple unsuccessful FX interventions by the CBRT, there should be plenty to look forward to. Currency markets are far from stable, with the lira hitting fresh lows at the end of the week and remaining under severe pressure. Next week offers unemployment data on Friday, although this will naturally fall well down the pecking order below the rants of President Erdogan and the actions of the central bank. More volatility in the FX markets and intervention to stabilise them appear likely.


China releases its trade balance, CPI, and PPI inflation data this week. Of the three, the market focus will be on exports and PPI for evidence of slowing growth and/or rising inflationary pressures.

Data aside, it is China’s property sector that poses the most risk in the coming week. Both Kaisa and Evergrande face final payment deadlines and in the case of Kaisa, an official default is increasingly likely. Hong Kong equities are particularly vulnerable in this case, and will likely continue to face delisting nerves in the US from dual-listed Chinese giants.


A firm Non-Farm Payrolls number would have turned up the heat on emerging market currencies in the week ahead as monetary policy remains out of sync with the US. The Reserve Bank of India can alleviate some of that stress in the future by finally indicating that tighter monetary policy is on the way in 2022, even if it does not move at its policy meeting on Wednesday. India releases manufacturing, industrial production, and inflation data on Friday. A high inflation print will elevate the return of stagflationary pressures if the RBI is dovish mid-week, leaving the currency and equities vulnerable.


The Australian dollar is wallowing at 2021 lows as Fed taper nerves and omicron concerns sap risk sentiment of which the AUD is a major barometer.

The Reserve Bank of Australia has its policy meeting on Tuesday with its ultra-dovish mantra suffering credibility issues. No change in tone from the statement will deepen pressure on the currency, although local equities will continue chasing their tails in line with Wall Street volatility.

New Zealand

The NZD/USD, a risk sentiment barometer for global markets like AUD/USD, is also testing 2021 lows and remains vulnerable to stronger US data increasing Fed-taper nerves, as well as risk aversion flows via NZD/JPY on omicron. 

Friday’s Business PMI could negatively impact the currency if it is higher than forecast, increasing the noise that the RBNZ is falling further behind New Zealand’s rapidly escalating inflation problem. 

New Zealand’s government has eased Covid-19 restrictions in Auckland and brought in a new system of freedoms/restrictions across the country. A large spike in delta cases (the prevailing variant) could negatively impact the currency and stock market.


The Japanese Yen has rallied 250 points this week versus the US Dollar on omicron haven flows, also recording impressive gains via the Yen crosses. Yen’s rally is entirely based on omicron, and an easing of those tensions and firmer US data could see USD/JPY’s rally resume. 

Japanese equities continue to show a high correlation to Nasdaq moves and we expect volatile, but directionless trading to continue as the Nasdaq and Nikkei bounce around on omicron headlines. No significant data.

Key Economic Events

Saturday, Dec. 4

China central bank Governor Yi Gang and Guo Shuqing, chairman of the country’s financial regulator speak at the International Finance Forum in Guangzhou.

France’s Republican party is expected to announce its presidential candidate

Germany’s Social Democrats (SPD) to announce its ministry posts and votes on the deal for the incoming coalition government.

Economic Data/Events

Thailand consumer confidence

Sunday, Dec. 5

Economic Data/Events

World Petroleum Congress starts in Houston.

Germany’s Free Democrats (FDP) vote to approve the incoming government’s coalition deal.

Monday, Dec. 6

Russia President Vladimir Putin visits New Delhi  

BOE’s Broadbent speaks at Leeds University about the outlook for growth and monetary policy.

Sweden’s Riksbank publishes the minutes of its Nov. 24 meeting.

Turkish President Recep Erdogan travels to Qatar for a regular bi-lateral visit

Economic Data/Events

Germany factory orders, construction PMIs

Greece GDP

New Zealand construction work value, ANZ commodity prices

Australia inflation gauge, ANZ job advertisements

Italy retail sales

Turkey effective exchange rate

UK construction PMIs

Tuesday, Dec. 7

Greek PM Mitsotakis visits Russia to meet President Putin.

Economic Data/Events

US Trade

China Trade

Eurozone GDP: Eurozone

South Africa GDP

Sweden GDP

Australia rate decision: Expected to keep cash rate target at 0.10%

Australian consumer confidence, house price index

South Korea BoP

Taiwan CPI

Japan cash earnings, household spending, leading index

Philippines CPI, unemployed

Singapore foreign reserves 

China foreign reserves 

Australia foreign reserves 

Switzerland foreign reserves 

Germany ZEW survey expectations, industrial production

Mexico international reserves

South Africa gross and net reserves

Turkey cash budget balance

Wednesday, Dec. 8

Olaf Scholz becomes German chancellor.

ECB President Lagarde speaks at the Fifth ESRB annual conference.

Economic Data/Events

Canada Rate decision: Expected to keep Interest Rate unchanged at 0.25% 

Poland Rate decision:  Expected to raise rates by 50 basis points to 1.75%

India Rate decision: Expected to keep Repurchase Rate unchanged at 4.00%

Russia CPI

Hungary CPI 

Japan bank lending, BoP, GDP, bankruptcies

South Africa retail sales, SACCI business confidence

Bank of France industry sentiment indicator

EIA crude oil inventory report

Thursday, Dec. 9

Fed’s Kashkari speaks

Reserve Bank of Australia Governor Philip Lowe speaks at Payments Summit 2021.

Economic Data/Events

US wholesale inventories, initial jobless claims

Hungary Rate decision: The central bank is expected to deliver another 20bps rate hike.   

Germany Trade

Hungary Trade

China CPI, PPI, money supply, new yuan loans, aggregate financing

Japan money stock, machine tool orders

Thailand foreign reserves, forward contracts

Mexico CPI

New Zealand ANZ heavy traffic index, manufacturing activity

South Africa manufacturing production, current account, mining, gold, and platinum production

Turkey non-resident bond holdings, foreigner net stock invest

Russia gold and FX reserves

UK RICS house price balance

Norway GDP

Friday, Dec. 10

Economic Data/Events

US Nov CPI M/M: 0.7%e v 0.9% prior; Y/Y: 6.7%e v 6.2% prior, University of Michigan Consumer Sentiment: 68.0e v 67.4 prior

G-7 foreign ministers meet in Liverpool, UK

Germany CPI

UK GDP, BOE inflation attitudes survey, Industrial Production

India Industrial production

Mexico Industrial Production

New Zealand card spending, manufacturing index, home sales

Japan PPI

China FDI

Russia trade, money supply

Turkey unemployment, expected inflation for next 12 months

Sovereign Rating Updates

Czech Republic (Fitch)


United Kingdom (Fitch)


Netherlands (Moody’s)

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The Link Between Soaring Food Prices & Political Instability

The Link Between Soaring Food Prices & Political Instability

The Russian war in Ukraine has had immediate repercussions for global food…



The Link Between Soaring Food Prices & Political Instability

The Russian war in Ukraine has had immediate repercussions for global food markets given the countries’ role as major exporters of essential agricultural products, such as wheat, sunflower oil, barley and corn, while also affecting perishable foods like fruits and vegetables.

As shown in FAO data, the price of basic food products has surged since the invasion of Ukraine after already having followed an upward trend since 2020 over the course of the Covid-19 pandemic.

You will find more infographics at Statista

As Statista's Katharina Buchholz notes, in the past, similar surges in the price of food have led to unrest, mostly in developing countries, and even coincided with the Arab Spring in 2011, when populations in North Africa and the Middle East cornered by oppressive regimes and feeling the additional squeeze on their livelihoods due to high prices rose up and toppled several regional regimes. The current level of food prices is even surpassing the peaks observed in 2011 and 2008, when food and other prices rose dramatically, causing unrest in several African countries as well as in Bangladesh, Haiti, Indonesia and Yemen. The onset of the global financial crisis put an end to the price surge that year.

In the current situation, Human Rights Watch has warned that food crisis could hit North Africa and the Middle East again, as several countries in the region are major importers of Russian or Ukrainian food products

According to Cornell University economics professor Chris Barrett, the potential for unrest is again heightened.

As of early June, food prices had already fueled protests all over the world, including in Asia, Africa, the Middle East, Latin America and Europe.

Tyler Durden Fri, 06/24/2022 - 23:20

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An Investor’s Look Back for 2022

As we approach the end of June, now is a good time to look back over the market to see what has been happening. The price action is in the bottom right…



As we approach the end of June, now is a good time to look back over the market to see what has been happening.

The price action is in the bottom right corner of the charts, whereas, at the end of 2021, it was in the top right corner of the charts. Who could have seen the problems coming? I think the technical analysis arena did an excellent job of showing the risks for downside momentum to increase.

On December 17th, I recorded a video about the technical problems aligning in the market and how they created the situation for a rough start to 2022.

A historical look back

In six-month increments, let's take an educational look back on what has been happening.

June 2021

Starting in June 2021, we came off the effervescent high of the SPAC boom. As the book Reminiscences of A Stock Operator highlights so clearly, when there is an abundance of money trying to enter the market, the bankers will respond with new offerings. Nowadays, venture capitalists have all the data they need to be ready to hand over these companies at lofty valuations and step aside for the downside slide. By June 2021, the SPAC announcements had slowed to a relative crawl compared to the 4th quarter of 2020 and the first quarter of 2021.

The defensive side of the market was out of favour, still showing positive returns to their investors, but vastly underperforming. Energy raged forward as the vaccines were rolling out, suggesting the economy would surge with post-pandemic freedom. More on that later. Real Estate and financials were on fire. Interestingly, the growth areas of discretionary, communications and technology were middle of the pack.

December 2021

As the second half of 2021 rolled in, the market changed significantly. Communications and industrials vastly underperformed everything. Technology was back to a glory story, while discretionary and real estate continued to flourish. Financials were in the bottom third. Materials, energy and defensive names were middle of the pack.

By late December, we were also narrowing our focus on the Sexy Six large cap names that kept holding up, even while there was a large breakdown in many of the trendy areas of the market. We didn't know it at the time, but the November high in the Nasdaq was behind us. The move to electric cars and the investment theme around them came and went. Copper made a high in May 2021 and most of the metals moved sideways for the remainder of the year. Oil continued its steady climb in a big bull market that kicked off with the vaccine announcements fourteen months prior.

June 2022

As we turned the corner into 2022, almost all of the upward momentum was focused in energy. Technology stocks, including semiconductors and software, moved down meaningfully as the sexy six slowly let go. Alphabet, Meta and Amazon were the early leaders to the downside. Consumer discretionary and communications dropped hard.

By the end of June, the continuous slow demise of investors' love for the technology space came to the fore. By March, investors were touting the start of a new bull market in Energy. After a 1000% gain in the oil and coal stocks, the relative strength community reluctantly decided it was a new bull market in fossil fuel energy. (You can't make that stuff up!) Still, the technology investment community has been reluctant to dive into the dark side. While the tiger cubs watched 50% of their asset valuations disappear, they couldn't muster a shift into the best performing sector for the past 18 months.

To end the quarter, the financials wobbled sideways but slowly moved lower. On Friday, June 17th, the bank ETF closed at new 52-week lows. Commodity stock markets like Australia and Canada dropped meaningfully as oil names sold off hard. Oil stocks quickly plummeted for 10 days from new highs to their 200-day moving averages, casting down 25%. The technology names continue to be sold as inflation roars. The Fed is speeding up their time line for rate hikes as the economy slows quickly under the pressure of firm gasoline prices and rising food prices.

What's next?

The graph below shows the stock market price/earnings ratio (P/E) ticking down over the past 6 months. The move down is a 20% drop from all-time highs. Because this is a 100-year chart, the log scale makes the move down look small. An arithmetic chart would show this as a 20% plunge of the entire chart height. With the Fed continuously providing a trampoline for the markets from 2008 to 2022, the market has stretched into higher and more extreme valuations compared to history. Since the early nineties, the market has hugged the red line a lot more than the middle of the range at the blue line. Now that we are below the red line, we are in a relative value area for investment managers, as they have seen the market above the 20 P/E level most of their careers.

The next move for the market is unknown, but the fight between the headwinds of inflation forces and the desire for investment managers to make money before year-end should be an epic battle. Throw in the US Mid-terms and that adds more pressure.

The strength indexes we use at the Osprey Strategic website to evaluate when to put money to work are trying to turn up. If you are interested in getting help evaluating the market, check out the one-month trial at $7 on the homepage of We are looking for the fourth buy point of the year right now. The last three were very short. Will this one be the one that extends into the next bull market?

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Reactivation Of Chickenpox Virus Following COVID-19 Injections On The Rise

Reactivation Of Chickenpox Virus Following COVID-19 Injections On The Rise

Authored by Meiling Lee via The Epoch Times (emphasis ours),




Reactivation Of Chickenpox Virus Following COVID-19 Injections On The Rise

Authored by Meiling Lee via The Epoch Times (emphasis ours),

Doctors and scientists are seeing an increase in the reactivation of the chickenpox virus, known as varicella-zoster virus (VZV), following the COVID-19 injections.

A child gets a Pfizer COVID-19 vaccine in Hartford, Conn., on Jan. 6, 2022. (Joseph Prezioso/AFP via Getty Images)

The chickenpox virus is one of the eight herpes viruses known to infect humans. After a person contracts and recovers from chickenpox, the virus never leaves the body but lies dormant in the nervous system years later until it gets reactivated as shingles, or herpes zoster (HZ).

Federal health authorities claim that there’s no correlation between COVID-19 injections and shingles, but studies show that there is a higher incidence of shingles in people who’ve received the vaccine.

Israel was one of the earlier countries to publish a case series of six women (out of 491 participants) with an autoimmune disorder who developed shingles 3 to 14 days after receiving the first or second dose of Pfizer COVID-19 shot. None of the 99 participants in the control group developed shingles. The study was published in the journal Rheumatology in April 2021.

To our knowledge, there were no reports of varicella-like skin rash or HZ in the mRNA-based vaccines COVID-19 clinical trials and our case series is the first one to report this observation in patients within a relatively young age range: 36–61, average age 49 ± 11 years,” the authors wrote.

They hoped that publishing the case series would “raise awareness to a potential causal link between COVID-19 vaccination as a trigger of HZ reactivation in relatively young patients with stable AIIRD [autoimmune inflammatory rheumatic diseases].”

Man with scarring from shingles on June 21, 2022. (Meiling Lee/The Epoch Times)

In a different case study from Taiwan, researchers reported three healthy men ages 71, 46, and 42 who developed shingles two to seven days following the first dose of the Moderna or AstraZeneca COVID-19 injection.

HZ does not often appear after the administration of other kinds of vaccinations,” the researchers wrote. “But we believed that there might be a link between COVID-19 vaccine and HZ emergence.”

“One of the reasons is the short delay of onset after vaccination. The other reason is that these three patients were immunocompetent,” they added.

The largest study to date, based on real-world data (pdf) of more than two million patients, found that there was a higher incidence of shingles among the vaccinated (who received a COVID-19 shot within 60 days) than in the unvaccinated cohort, who were diagnosed with shingles within 60 days of visiting a healthcare office for any other reason.

According to the researchers, the risk of developing shingles was calculated as 0.20 percent for the vaccinated group and 0.11 percent for the unvaccinated, and the “difference was statistically highly significant.”

“Reactivation of the varicella-zoster virus appears to be a potential ADR [adverse drug reaction] to COVID-19 vaccines, at least for mRNA LNP-based formulations,” the authors wrote, adding that “vaccination against COVID-19 seems to potentially raise the risk of precipitating HZ [herpes zoster].”

Dr. Richard Urso, an ophthalmologist, and drug design and treatment specialist, told EpochTV’s “American Thought Leaders” program in April 2022 that of the three to five patients he sees a week with long COVID or problems after receiving the COVID-19 shot, “a huge number of them have reactivated Epstein-Barr, herpes simplex, herpes zoster, CMV.”

Regardless of the rise in reports of shingles after the rollout of the COVID-19 shots, the U.S. Food and Drug Administration (FDA) claims that it has not detected any safety signal between the two.

“FDA has not seen a safety signal for shingles/herpes zoster following administration of the approved or authorized COVID-19 vaccines,” Abby Capobianco, FDA press officer told The Epoch Times via email last month, adding that the agency “will continue to closely monitor the safety of these vaccines.”

The Centers for Disease Control and Prevention (CDC) also alleges that “there is no current connection” between COVID-19 vaccines and the reactivation of the chickenpox virus.

CDC spokesperson Scott Pauley said that any adverse reactions experienced after receiving a COVID-19 shot are temporary and a positive sign that the vaccine is working.

“Some people have side effects from the vaccine, which are normal signs that their body is building protection,” Pauley wrote in an email to The Epoch Times. “These side effects may affect their ability to do daily activities, but they should go away in a few days. Some people have no side effects, and allergic reactions are rare.”

Read more here...

Tyler Durden Fri, 06/24/2022 - 20:20

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