Spread & Containment
Whispers Of Yuan Devaluation After Biggest Weekly Plunge Since 2015
Whispers Of Yuan Devaluation After Biggest Weekly Plunge Since 2015
Three weeks ago, when we predicted that the Yen was about to suffer a…

Three weeks ago, when we predicted that the Yen was about to suffer a "downward spiral" (which it did, and prompted the BOJ to beg Yellen for coordinated currency intervention, only to be denied by the Treasury Secretary who is terrified of what importing even more inflation would mean for Biden's catastrophic approval rating), we quoted SocGen's Albert Edwards who said that the collapse in the Yen"beggars the question how will China react? Maybe just like they did in August 2015 when the PBoC devalued? Back then persistent yen weakness had dragged down other competing regional currencies and left the renminbi overvalued."
Once again we didn't have long to wait for this prediction to come true, and one look at the chart below shows what happens when one is hoping to quietly devalue one's currency from under the dragon's nose: after weeks of perplexing gains that stumped everyone (and may have been the direct result of Russians buying up Chinese assets), the yuan has collapsed (said otherwise, the USDCNH has soared).
As shown below, the offshore yuan just suffered its biggest weekly loss since the surprise devaluation in August 2015, tumbling 2.1%; the onshore yuan is down 1.9% this week to 6.4899 per dollar. Bloomberg has called the move a "spurring investor concern on whether it’s reaching an inflection point after two straight years of gains."
Well, of course it is - after all China's economy is in freefall and the last thing it can afford is more currency gains... just as we warned at the end of March. And now that our forecast has been validated, options traders are pricing in much more weakness for the onshore yuan after it breached a key technical support level on Wednesday for the first time since September.
The sharp moves - as we predicted weeks ago - were triggered by the relentless surge in U.S. yields as they threaten to exacerbate outflows from China’s bond market and to put the yuan at a disadvantage with the yen. The People’s Bank of China’s decision on Wednesday to set a weaker-than-expected currency fixing also dissuaded yuan bulls, while President Xi Jinping defending the lockdown-dependent approach to fighting the pandemic added to economic growth concerns.
“It does seem that options markets have been surprised,” said Alvin Tan, head of Asia FX strategy at Royal Bank of Canada Plc. “Risk reversals racing higher is a confirmation of the changed market sentiment on dollar-offshore yuan," Tan said, adding that he doesn’t rule out the offshore yuan falling below 6.60 per dollar by the end of the year if economic risks grow.
And while few are willing to admit that a sharp devaluation like the one in 2015 is possible - or inevitable - the realty is that the CNHJPY is right where it was when China devalued seven years ago.
Looking ahead JPMorgan also expects more weakness, and sees the yuan falling to 6.5 per dollar this quarter, weaker than its previous estimate of 6.35. BNP see the currency falling to 6.6 per dollar, down from earlier forecast of 6.4. Below, courtesy of Bloomberg, are the charts illustrating the changing sentiment on the yuan:
Surging Activity
Dollar-yuan was the most traded currency pair in the options market for a second day on Thursday taking the week’s total transaction volume to $49 billion. An upward breach through the 6.40 per dollar level and breach of its 200-day moving average support confirms the termination of months of consolidation for the currency, China International Capital Corp. said; this could prompt a new wave of speculation on yuan entering a new trading range, it said.
“The PBOC has been signaling to corporates to be risk neutral on FX exposures, which should imply a reduction of their dollar longs,” said Arindam Sandilya, head of emerging Asia local markets strategy and FX derivatives strategy at JPMorgan Chase & Co. in Singapore. “This is a bulwark against dollar-onshore yuan depreciation.” Sandilya estimates banks and corporates accumulated about $640 billion of dollars over the last two years.
Turbulent Markets
Offshore yuan implied vol shot higher across all tenors after the currency pair broke out of the range it had been in since Oct. 20. One-month dollar-offshore yuan volatility surged to the highest since February 2021 before stabilizing Thursday. A spokeswoman at China's State Administration of Foreign Exchange reiterated the regulator’s stance on keeping the yuan “stable on a reasonable and equilibrium level.” The exchange rate has been more flexible this year and its two-way movements will continue, she said.
The central bank is less concerned about defending a “magic level”, according to Zhennan Li, chief China economist at AllianceBernstein. It wants to avoid accumulation of speculative or “herding factors” in the market, he said, adding that “If depreciation expectation keep persistently accumulating, and the pace of depreciation becomes too fast, the PBOC may come out to guide expectation.”
Shorts Piling In
The PBOC set the Thursday reference rate for the Yuan 498 pips higher than the previous day, the largest single-day jump this year. That’s after the central bank’s move to set the reference rate 101 pips weaker than forecast on Wednesday was seen by some traders as a sign of its discomfort with the currency’s strength.
The offshore yuan forwards curve flattened in response to the PBOC’s move Wednesday, allowing for cheaper entry into yuan shorts. The one-year points are close to the lowest in two years as expectations of further policy easing persist even as the loan prime rates were kept steady this week.
Dollar Bets
According to Bloomberg, traders are unwinding structural bets on yuan strength and positioning for a stronger dollar. The one-month risk reversal, a measure of hedging cost, jumped to 1.34% on Wednesday -- a level last seen in November 2020. The risk reversal skew has shifted toward a stronger dollar as traders price aggressive rate hikes by the Federal Reserve.
Momentum is for the yuan to weaken in the near term given the backdrop of broad dollar strength, according to Citigroup Global Markets Inc. strategists. But, it’s too soon to call it a trend reversal. China’s trade surplus, which underpins the currency’s strength is expected to remain large and authorities are likely to leave the yuan to market forces unless volatility gets “unpalatable.”
“President Xi can’t afford to accelerate the weakening of yuan ahead of the plenum in October and midterms in the U.S.,” said Lin Jing Leong senior emerging market Asia sovereign analyst at Columbia Threadneedle. “It’s all about portraying an image of strength even if it means using the foreign reserves to do so.”
International
Repeated COVID-19 Vaccination Weakens Immune System: Study
Repeated COVID-19 Vaccination Weakens Immune System: Study
Authored by Zachary Stieber via The Epoch Times (emphasis ours),
Repeated COVID-19…

Authored by Zachary Stieber via The Epoch Times (emphasis ours),
Repeated COVID-19 vaccination weakens the immune system, potentially making people susceptible to life-threatening conditions such as cancer, according to a new study.
Multiple doses of the Pfizer or Moderna COVID-19 vaccines lead to higher levels of antibodies called IgG4, which can provide a protective effect. But a growing body of evidence indicates that the “abnormally high levels” of the immunoglobulin subclass actually make the immune system more susceptible to the COVID-19 spike protein in the vaccines, researchers said in the paper.
They pointed to experiments performed on mice that found multiple boosters on top of the initial COVID-19 vaccination “significantly decreased” protection against both the Delta and Omicron virus variants and testing that found a spike in IgG4 levels after repeat Pfizer vaccination, suggesting immune exhaustion.
Studies have detected higher levels of IgG4 in people who died with COVID-19 when compared to those who recovered and linked the levels with another known determinant of COVID-19-related mortality, the researchers also noted.
A review of the literature also showed that vaccines against HIV, malaria, and pertussis also induce the production of IgG4.
“In sum, COVID-19 epidemiological studies cited in our work plus the failure of HIV, Malaria, and Pertussis vaccines constitute irrefutable evidence demonstrating that an increase in IgG4 levels impairs immune responses,” Alberto Rubio Casillas, a researcher with the biology laboratory at the University of Guadalajara in Mexico and one of the authors of the new paper, told The Epoch Times via email.
The paper was published by the journal Vaccines in May.
Pfizer and Moderna officials didn’t respond to requests for comment.
Both companies utilize messenger RNA (mRNA) technology in their vaccines.
Dr. Robert Malone, who helped invent the technology, said the paper illustrates why he’s been warning about the negative effects of repeated vaccination.
“I warned that more jabs can result in what’s called high zone tolerance, of which the switch to IgG4 is one of the mechanisms. And now we have data that clearly demonstrate that’s occurring in the case of this as well as some other vaccines,” Malone, who wasn’t involved with the study, told The Epoch Times.
“So it’s basically validating that this rush to administer and re-administer without having solid data to back those decisions was highly counterproductive and appears to have resulted in a cohort of people that are actually more susceptible to the disease.”
Possible Problems
The weakened immune systems brought about by repeated vaccination could lead to serious problems, including cancer, the researchers said.
Read more here...
Spread & Containment
Robert F. Kennedy Jr. Banned By Major Social Media Site, Campaign Pages Blocked
Robert F. Kennedy Jr. Banned By Major Social Media Site, Campaign Pages Blocked
Authored by Jack Phillips via The Epoch Times (emphasis ours),
Twitter…

Authored by Jack Phillips via The Epoch Times (emphasis ours),
Twitter owner Elon Musk invited Democrat presidential candidate Robert F. Kennedy Jr. for a discussion on his Twitter Spaces after Kennedy said his campaign was suspended by Meta-owned Instagram.
“Interesting… when we use our TeamKennedy email address to set up @instagram accounts we get an automatic 180-day ban. Can anyone guess why that’s happening?” he wrote on Twitter.
An accompanying image shows that Instagram said it “suspended” his “Team Kennedy” account and that there “are 180 days remaining to disagree” with the company’s decision.
In response to his post, Musk wrote: “Would you like to do a Spaces discussion with me next week?” Kennedy agreed, saying he would do it Monday at 2 p.m. ET.
Hours later, Kennedy wrote that Instagram “still hasn’t reinstated my account, which was banned years ago with more than 900k followers.” He argued that “to silence a major political candidate is profoundly undemocratic.”
“Social media is the modern equivalent of the town square,” the candidate, who is the nephew of former President John F. Kennedy, wrote. “How can democracy function if only some candidates have access to it?”
The Epoch Times approached Instagram for comment.
Interesting… when we use our TeamKennedy email address to set up @instagram accounts we get an automatic 180-day ban. Can anyone guess why that’s happening? pic.twitter.com/0G8oRnoXTv
— Robert F. Kennedy Jr (@RobertKennedyJr) June 2, 2023
It’s not the first time that either Facebook or Instagram has taken action against Kennedy. In 2021, Instagram banned him from posting claims about vaccine safety and COVID-19.
After he was banned by the platform, Kennedy said that his Instagram posts raised legitimate concerns about vaccines and were backed by research. His account was banned just days after Facebook and Instagram announced they would block the spread of what they described as misinformation about vaccines, including research saying the shots cause autism, are dangerous, or are ineffective.
“This kind of censorship is counterproductive if our objective is a safe and effective vaccine supply,” he said at the time.
Read more here...
International
Study Falsely Linking Hydroxychloroquine To Increased Deaths Frequently Cited Even After Retraction
Study Falsely Linking Hydroxychloroquine To Increased Deaths Frequently Cited Even After Retraction
Authored by Jessie Zhang via Thje Epoch…

Authored by Jessie Zhang via Thje Epoch Times (emphasis ours),
An Australian and Swedish investigation has found that among the hundreds of COVID-19 research papers that have been withdrawn, a retracted study linking the drug hydroxychloroquine to increased mortality was the most cited paper.
With 1,360 citations at the time of data extraction, researchers in the field were still referring to the paper “Hydroxychloroquine or chloroquine with or without a macrolide for treatment of COVID-19: a multinational registry analysis” long after it was retracted.
Authors of the analysis involving the University of Wollongong, Linköping University, and Western Sydney Local Health District wrote (pdf) that “most researchers who cite retracted research do not identify that the paper is retracted, even when submitting long after the paper has been withdrawn.”
“This has serious implications for the reliability of published research and the academic literature, which need to be addressed,” they said.
“Retraction is the final safeguard against academic error and misconduct, and thus a cornerstone of the entire process of knowledge generation.”
Scientists Question Findings
Over 100 medical professionals wrote an open letter, raising ten major issues with the paper.
These included the fact that there was “no ethics review” and “unusually small reported variances in baseline variables, interventions and outcomes,” as well as “no mention of the countries or hospitals that contributed to the data source and no acknowledgments to their contributions.”

Other concerns were that the average daily doses of hydroxychloroquine were higher than the FDA-recommended amounts, which would present skewed results.
They also found that the data that was reportedly from Australian patients did not seem to match data from the Australian government.
Eventually, the study led the World Health Organization to temporarily suspend the trial of hydroxychloroquine on COVID-19 patients and to the UK regulatory body, MHRA, requesting the temporary pause of recruitment into all hydroxychloroquine trials in the UK.
France also changed its national recommendation of the drug in COVID-19 treatments and halted all trials.
Currently, a total of 337 research papers on COVID-19 have been retracted, according to Retraction Watch.
Further retractions are expected as the investigation of proceeds.
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