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Will the Fed Admit They are Wrong About Transitory Inflation?

For the past year, the Fed has stuck to its guns on the idea that supply-chain disruptions are causing a short-term increase in inflation and that, in 2022, inflation will decrease towards their 2% target. However, with continuous news of job shortages,..

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For the past year, the Fed has stuck to its guns on the idea that supply-chain disruptions are causing a short-term increase in inflation and that, in 2022, inflation will decrease towards their 2% target. However, with continuous news of job shortages, shipping problems, rising food costs and more, it doesn't look as though inflation is going away anytime soon.

On top of that, the Core Consumer Price Index, which the Fed uses to gauge inflation, has shown yet another increase of 0.2% in September, bringing it up to 4% year-over-year. Now, the Fed is faced with a shift of changes that are not so transitory. For instance, a mass wage increase has spread across the United States, along with rising rent prices. Both rent and wage increases tend to stick in price, as landlords don't look to decrease rent and employees don't expect their jobs to suddenly pay less. This leaves the Fed with their back against the wall, as they don't want to cause worry but should face the fact that taking longer for the country to get back to pre-pandemic times means a continued shift in living costs.

With that said, what does this mean for the market, as investors seem to be catching the hint that pandemic-related issues and rising inflation will continue into 2022? One possibility is the market could easily run into a stagflation type of environment, with continued growth but more rangebound market price action. A great example is the small-cap index Russell 2000 (IWM), which has been rangebound for most of this year.

While the other major indices have continued to new highs, IWM has made little progress. Even with the recent market pullback, the other major indices have struggled to make a clean rebound and are looking a bit choppy. Currently, the intermarket relationships are still friendly right at the start of earnings season. Should earnings do well, that could spark a rally into December with the risk gauges positive.

However, these relationships can also deteriorate if, like with JPM, earnings create stress. If this is the case and market momentum continues to fade, then, like IWM, we should begin to watch if the other indices, including the S&P 500, Dow Jones and Nasdaq 100, begin to show real warning signs of impending stagflation.


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ETF Summary

  • S&P 500 (SPY): Held the 10-DMA at 434.
  • Russell 2000 (IWM): Consolidating with support at 216.76. Back over the major moving averages.
  • Dow (DIA): Weak close over the 10-DMA at 343.65.
  • Nasdaq (QQQ): Also held its 10-DMA at 358.75.
  • KRE (Regional Banks): Needs to get back over 70.
  • SMH (Semiconductors): 249.02 support.
  • IYT (Transportation): Large range day. Sitting on major moving averages at 250.
  • IBB (Biotechnology): 153.38 support.
  • XRT (Retail): Holding the 200-DMA at 89.52.


Forrest Crist-Ruiz

MarketGauge.com

Assistant Director of Trading Research and Education

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White House “Isn’t Taking A Side” On Cause Of Anti-Lockdown Protests In China

White House "Isn’t Taking A Side" On Cause Of Anti-Lockdown Protests In China

Authored by Paul Joseph Watson via Summit News,

The Biden White…

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White House "Isn't Taking A Side" On Cause Of Anti-Lockdown Protests In China

Authored by Paul Joseph Watson via Summit News,

The Biden White House says it “isn’t taking a side” on the cause of anti-lockdown protests in China, a ‘walking on eggshells’ remark seemingly designed to protect the administration from charges of hypocrisy.

Over the past week, multiple major cities across China have seen massive protests against lockdowns, with the normally compliant Chinese exploding into rage in response to their government’s ‘zero COVID’ policy.

Much of the unrest blew up in response to an incident in Xinjiang’s capital Urumqi, where at least 10 people, some say up to 40, were killed during an apartment fire because lockdown rules stopped residents from fleeing the burning building.

Most of the city’s residents have been prevented from leaving their homes for over 100 days as a result of the draconian rules, which are still in place nearly three years after the pandemic began.

While Chinese citizens are now clearly being subjected to human rights abuses in the name of maintaining a brutal lockdown, the White House could only respond with a mealy-mouthed statement.

Appearing on Fox News Channel’s “Fox & Friends,” White House NSC Coordinator for Strategic Communications John Kirby was asked if the Biden administration agreed with protesters that COVID restrictions should be lifted and whether President Xi Jinping should stand down.

Kirby prevaricated by saying the White House was “on the side of peaceful protest,” but that the administration was not “taking a side in terms of what these protestors are about.”

WATCH:

“I would not say at all that we would agree with criticism that we’ve been less than firm or consistent. In fact, Brian, we’ve been very, consistent about the right of peaceful protest and we’ve been very vocal about it in China just over the last few days,” said Kirby.

“We believe that these individuals should be able to peacefully protest and assemble and to make their minds known to their government there in China just like we’ve said the same in Iran and around the world. And we stand up for peaceful protest, and again, we’ve been very consistent about that,” he added.

Co-host Steve Doocy then asked, “Absolutely, the White House is always for peaceful protests, but, John, you know what the protesters are saying, they’re saying, hey, Xi Jinping’s got to go or loosen the COVID restrictions that are keeping people stuck in their houses for months. So, between he’s got to go or loosen restrictions, which side is the White House on when it comes to supporting the protestors?”

Kirby responded, “Steve, we’re on the side of peaceful protest. We’re on the side of individuals being able to freely assemble and to express their views, whatever those views are. We’re not taking a side in terms of what these protestors are about. Largely though, Steve, you know that these protesters are really out there about the lockdown. Their main concern, what drove them to the streets was the very severe, very stringent COVID policies by Xi’s administration, and that’s what’s really been driving all this public protest.”

The spokesman then asserted, “we don’t believe, here in the United States, that lockdowns are the answer.”

This doesn’t correlate with what Biden himself has said on many occasions.

Back in August 2020, the president said he wouldn’t hesitate to lockdown the entire United States if it was necessary to stop COVID.

“I would shut it down; I would listen to the scientists,” said Biden at the time.

In comparison, two months previously in June, President Trump told Fox News, “We won’t be closing the country again. We won’t have to do that.”

Indeed, if the presidential election had taken place a year earlier, there’s almost no doubt that Biden would have lobbied for for more draconian lockdowns that those that were imposed by states during the final 10 months of the Trump administration.

As we highlighted yesterday, Anthony Fauci once again defended brutal Chinese lockdowns, admitting that the Communist government is forcefully locking people inside buildings but adding that if it means people get vaccinated then he is “okay” with it.

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Tyler Durden Thu, 12/01/2022 - 17:15

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Disney CEO Iger ‘Sorry’ For Battle Against Florida, Tells Employees To ‘Respect’ Audience

Disney CEO Iger ‘Sorry’ For Battle Against Florida, Tells Employees To ‘Respect’ Audience

Recently-returned Disney CEO Bob Iger says he’s…

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Disney CEO Iger 'Sorry' For Battle Against Florida, Tells Employees To 'Respect' Audience

Recently-returned Disney CEO Bob Iger says he's "sorry" to see the company getting dragged into an ideological battle with Florida lawmakers over a ban on the discussion of sex and gender in early elementary classrooms.

Via Getty Images

The Florida law, which progressive critics described as the "Don't say gay" bill, was passed in response to complaints from parents that children as young as five-years-old are being taught about transgenderism, homosexuality, and other sexual and gender topics - and prohibits teachers from discussing said topics with students in Kindergarten through 3rd grade.

While Disney didn't immediately going other major corporations in condemning the bill, which was passed in March, however a group of activist employees lashed out at the company for not taking a public position - after with both Iger and his successor, Bob Chapek, spoke out.

"To me, it wasn’t politics. It was what is right and what is wrong, and that just seemed wrong. It seemed potentially harmful to kids," said Iger in a March 31 CNN interview, adding that he thought it was the responsibility of a CEO to "weigh in on issues, even if voicing an opinion on those issues potentially puts some of your business in danger."

Now, Iger has expressed regret for the company's involvement, as documented by journalist Christopher Rufo.

"When you tell stories, there’s a delicate balance," Iger told an audience at a town hall meeting, where he reiterated that the company still pushes pro-LGBT "inclusion" messaging.

As the Epoch Times notes;

Another question concerned Florida government’s move to strip Disney of its self-governance status, a privilege the company has enjoyed since the time of Walt Disney. Losing such privilege means that Disney may no longer control its own zoning, infrastructure, and policing within its special tax district in Orlando.

“I have to get up to speed on that completely. Obviously, I followed the news. That development occurred after I left the company. I was sorry to see us dragged into that battle,” Iger replied.

“I have no idea what the ramifications are in terms of the business itself. What I can say is the state of Florida has been important to us for a long time, and we have been very important to the state of Florida.”

Iger served as Disney’s CEO for 15 years, from 2005 to 2020, before he stepped down and was succeeded by Bob Chapek, who oversaw the company during the COVID-19 pandemic that triggered worldwide shutdowns of theme parks, resorts, movie theaters, and live sports events. Chapek’s 11-month tenure is also marked by a deteriorated relationship with Florida government, although the state allowed Walt Disney World to reopen as early as July 2020, while California’s Disneyland stayed closed because of lockdown policies.

We thank Bob Chapek for his service to Disney over his long career, including navigating the company through the unprecedented challenges of the pandemic,” Disney said in a Nov. 20 message announcing the leadership change. “The board has concluded that as Disney embarks on an increasingly complex period of industry transformation, Bob Iger is uniquely situated to lead the company through this pivotal period.”

Iger will remain in the CEO post for the next two years.

Tyler Durden Thu, 12/01/2022 - 14:30

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Where did Omicron come from?

First discovered a year ago in South Africa, the SARS-CoV-2 variant later dubbed “Omicron” spread across the globe at incredible speed. It is still…

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First discovered a year ago in South Africa, the SARS-CoV-2 variant later dubbed “Omicron” spread across the globe at incredible speed. It is still unclear exactly how, when and where this virus originated. Now, a study published in the journal Science* by researchers from Charité – Universitätsmedizin Berlin and a network of African institutions shows that Omicron’s predecessors existed on the African continent long before cases were first identified, suggesting that Omicron emerged gradually over several months in different countries across Africa.

Credit: © Charité | Arne Sattler

First discovered a year ago in South Africa, the SARS-CoV-2 variant later dubbed “Omicron” spread across the globe at incredible speed. It is still unclear exactly how, when and where this virus originated. Now, a study published in the journal Science* by researchers from Charité – Universitätsmedizin Berlin and a network of African institutions shows that Omicron’s predecessors existed on the African continent long before cases were first identified, suggesting that Omicron emerged gradually over several months in different countries across Africa.

Since the beginning of the pandemic, the coronavirus has been constantly changing. The biggest leap seen in the evolution of SARS-CoV-2 to date was observed by researchers a year ago, when a variant was discovered that differed from the genome of the original virus by more than 50 mutations. First detected in a patient in South Africa in mid-November 2021, the variant later named Omicron BA.1 spread to 87 countries around the world within just a few weeks. By the end of December, it had replaced the previously dominant Delta variant worldwide.

Since then, speculations about the origin of this highly transmissible variant have centered around two main theories: Either the coronavirus jumped from a human to an animal where it evolved before infecting a human again as Omicron, or the virus survived in a person with a compromised immune system for a longer period of time and that’s where the mutations occurred. A new analysis of COVID-19 samples collected in Africa before the first detection of Omicron now casts doubt on both these hypotheses.

The analysis was carried out by an international research team led by Prof. Jan Felix Drexler, a scientist at the Institute of Virology at Charité and the German Center for Infection Research (DZIF). Other key partners in the European-African network included Stellenbosch University in South Africa and the Laboratory of Viral Hemorrhagic Fever (LFHB) in Benin. The scientists started by developing a special PCR test to specifically detect the Omicron variant BA.1. They then tested more than 13,000 respiratory samples from COVID-19 patients that had been taken in 22 African countries between mid-2021 and early 2022. In doing so, the research team found viruses with Omicron-specific mutations in 25 people from six different countries who contracted COVID-19 in August and September 2021 – two months before the variant was first detected in South Africa.

To learn more about Omicron’s origins, the researchers also decoded, or “sequenced,” the viral genome of some 670 samples. Such sequencing makes it possible to detect new mutations and identify novel viral lineages. The team discovered several viruses that showed varying degrees of similarity to Omicron, but they were not identical. “Our data show that Omicron had different ancestors that interacted with each other and circulated in Africa, sometimes concurrently, for months,” explains Prof. Drexler. “This suggests that the BA.1 Omicron variant evolved gradually, during which time the virus increasingly adapted to existing human immunity.” In addition, the PCR data led the researchers to conclude that although Omicron did not originate solely in South Africa, it first dominated infection rates there before spreading from south to north across the African continent within only a few weeks.

“This means Omicron’s sudden rise cannot be attributed to a jump from the animal kingdom or the emergence in a single immunocompromised person, although these two scenarios may have also played a role in the evolution of the virus,” says Prof. Drexler. “The fact that Omicron caught us by surprise is instead due to the diagnostic blind spot that exists in large parts of Africa, where presumably only a small fraction of SARS-CoV-2 infections are even recorded. Omicron’s gradual evolution was therefore simply overlooked. So it is important that we now significantly strengthen diagnostic surveillance systems on the African continent and in comparable regions of the Global South, while also facilitating global data sharing. Only good data can prevent policymakers from implementing potentially effective containment measures, such as travel restrictions, at the wrong time, which can end up causing more economic and social harm than good.”

*Fischer C et al. Gradual emergence followed by exponential spread of the SARS-CoV-2 Omicron variant in Africa. Science 2022 Dec 01. doi: 10.1126/science.add8737


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