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World Stocks Hit Longest Record Streak In 17 Years As Yields Surge

World Stocks Hit Longest Record Streak In 17 Years As Yields Surge

China may still be closed, and the US is returning from President’s Day holiday, but global stock markets haven’t missed a beat and on Tuesday the MSCI World index hit a fresh

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World Stocks Hit Longest Record Streak In 17 Years As Yields Surge

China may still be closed, and the US is returning from President's Day holiday, but global stock markets haven't missed a beat and on Tuesday the MSCI World index hit a fresh all time high, rising for a 12th straight session - its longest streak of gains in 17 years as optimism over covid vaccines, stimulus and the economic recovery in general swept across markets.

US emini futures also hit record highs on Tuesday as investors piled up into reflationary and economically sensitive stocks such as energy and banks on hopes of more fiscal aid to lift the world’s biggest economy from a coronavirus-driven slump. Dow e-minis were up 200 points, or 0.63%, S&P 500 e-minis were up 21.50 points, or 0.55%, and Nasdaq 100 e-minis were up 67.75 points, or 0.49%.

Morgan Stanley, Goldman Sachs, JPMorgan Chase & Co, Citigroup Inc and Bank of America Corp rose between 1.2% and 1.5% in premarket trading as 10-year U.S. Treasuries touched their highest since late March.

The energy sector was also bid up with oil stocks ExxonMobil Corp, Marathon Oil, Devon Energy Corp and shale-focused player Occidental Petroleum Corp gained between 2.7% and 4.6% after oil prices jumped to a 13-month high. The surge in oil has served as a tailwind for the reflation trade which is powering assets tied to economic growth and price pressure, including commodities and cyclical stocks as Joe Biden pushes ahead with his plan to pump an extra $1.9 trillion in stimulus into the economy. At the same time, investors are riding a wave of speculative euphoria from penny stocks to Bitcoin amid abundant policy support.

“Continued monetary stimulus and bursts of fiscal support maintain a strong foundation for risk assets,” said Seema Shah, chief strategist at Principal Global Investors.

Europe's Stoxx 600 Index erased earlier gains of as much as 0.3% to trade flat with defensive sectors leading losses on sharply higher yields and sentiment was dented heading into cash trade following reports that China is mulling curbs over rare earth metals exports to the US, in a move that could impact US-Sino relations in the early days of the Biden Admin. Consumer products, telecom and media shares are worst performers, while basic resources, energy stocks climb. The European travel and leisure index rose as much as 0.7% in fourth day of gains, amid optimism around Covid-19 vaccine roll-outs and declining infection infection rates. Biggest gainers including tour operator TUI (+5.1%), airline group Ryanair (+3.6%) and hotel operator Accor (+1.1%). SXTP benchmark up 4.8% in four sessions, touches highest level since Feb. 26, 2020. Here are some of the biggest European movers today:

  • Glencore shares rise as much as 4.1%, hitting the highest since May 2019, after the commodities group’s earnings beat estimates, it reinstated its dividend and Citi said the results look “strong.”
  • Kerry Group shares jump as much as 4.5%, the most since Nov. 10, with Jefferies saying volume growth is reassuring and the consumer foods unit has performed well.
  • DSM shares gain as much as 3% to a record with Morgan Stanley saying the Dutch vitamin company’s outlook looks well underpinned by solid fourth-quarter results.
  • Allegro shares rise as much as 3.2% after Goldman Sachs upgraded the Polish e-commerce firm to buy, saying the stock is an an “attractive entry point” following recent weakness.
  • Rotork shares climb as much as 5.8%, hitting a record high, after Jefferies upgraded the engineer to buy

Investor morale in Germany rose beyond even the most optimistic forecast in February on expectations consumption will take off in the coming months, the ZEW economic research institute said on Tuesday, buoying the outlook for Europe’s largest economy. The ZEW said its survey of investors’ economic sentiment surged to 71.2 points from 61.8 the previous month and well above the estimate of a fall to 59.6, surpassing even the highest forecast, of 68.0.

“The financial market experts are optimistic about the future. They are confident that the German economy will be back on the growth track within the next six months,” ZEW President Achim Wambach said in a statement. “Consumption and retail trade in particular are expected to recover significantly, accompanied by higher inflation expectations,” he added.

Earlier in the session, Asian stocks also rose to a fresh record, led by gains in Hong Kong, which resumed trading after Lunar New Year holidays. SoftBank Group climbed to an all-time high and was the biggest contributor to gains in the MSCI Asia Pacific Index. Financials were the biggest boost among industry groups as U.S. Treasury yields rose. Energy was the region’s top-performing sector on elevated oil prices owing to disruptions at refineries in Texas amid a cold snap. All major national benchmarks were in the green. Japanese stocks extended a rally that saw the Nikkei 225 breach the 30,000 level for the first time since 1990 on Monday. Markets in China, Taiwan and Vietnam remained closed for holidays

As noted above, global debt markets extended a selloff as investors shift money to riskier assets. Treasury 10-year yields rose four basis points to touch 1.26% -- the highest since last March -- while the 30-year equivalent pushed above 2.05%. Treasury yields higher by up to 6.5bp across long-end of the curve vs. Friday session close; 10-year yields reach 1.265% and 30-year tops at 2.077% during the selloff, both multi-month highs bringing convexity, gamma hedging flows into play. In Europe, German bunds and U.K. gilts both saw benchmark yields gain five basis points. Latest leg lower led by gilts, which underperform as global yields stretch higher with gains in stocks.

In Europe, fixed income took a breather after Monday’s bear steepening with curves mixed: long end Germany richens ~1bps, Gilts are steady. Cash treasuries bear steepen, playing catch up after Monday’s closure. Peripheral and semi-core spreads tighten to Germany at the margin, with the exception of Italy which widens a touch with focus on syndicated issuance.

In FX, the Bloomberg dollar index dipped into the red slipping through Asia’s lows. Majors were moderately bid with NZD, NOK and SEK topping the G-10 scoreboard. Cable drifted after failing to breach 1.3950 overnight, USD/JPY was offered back toward 105. Turkish lira leads in EMFX, trading lows of 6.91/USD.

In commodities, Brent held near a 13-month high after freezing temperatures crippled the Texas power system and disrupted crude production. Nearly 5 million people across the U.S were plunged into darkness as homes and businesses lost power. Crude futures drifted off best levels with front-month WTI back on a $59-handle. Brent finds support near $63 so far. Gasoline and heating oil fade from best levels as the Texan energy crisis persists.

Natural gas futures for March delivery surged as much as 6.3%. In metals, copper climbed to the highest since 2012 and tin extended a dramatic surge. Citigroup Inc. forecasts copper prices will rally to $10,000 a ton in six to 12 months on a better-than-expected recovery in demand, most notably outside China. Spot gold has a choppy session within Asia’s range trading near $1,824/oz. Base metals are mixed: LME lead lags, copper outperforms

And in keeping with new record highs, Bitcoin did just that rising above $50,000 moments ago.

A flurry of recent announcements indicates the cryptocurrency is winning more mainstream attention, after Tesla Inc.’s purchase catapulted it onto the agenda of corporate treasurers.

Expected data include the U.S. Empire State Manufacturing Survey. Elsewhere this week we get earnings Daimler, Credit Suisse, Deere, Danone and Nestle; Euro-area finance ministers will discuss the bloc’s current economic situation and outlook on Tuesday while the Fed minutes from the January meeting are due Wednesday and U.S. retail sales figures come on Wednesday.

Market Snapshot

  • S&P 500 futures up 0.4% to 3,947.75
  • STOXX Europe 600 little changed at 419.75
  • MXAP up 0.5% to 220.66
  • MXAPJ up 0.4% to 740.84
  • Nikkei up 1.3% to 30,467.75
  • Topix up 0.6% to 1,965.08
  • Hang Seng Index up 1.9% to 30,746.66
  • Shanghai Composite up 1.4% to 3,655.09
  • Sensex down 0.1% to 52,094.46
  • Australia S&P/ASX 200 up 0.7% to 6,917.27
  • Kospi up 0.5% to 3,163.25
  • German 10Y yield little changed at -0.39%
  • Euro up 0.1% to $1.2147
  • Brent futures down 0.4% to $63.04/bbl
  • Gold spot up 0.3% to $1,824.46
  • U.S. Dollar Index down 0.3% to 90.25

Top Overnight News from Bloomberg

  • Already low short-term interest rates are set to sink further, potentially below zero, after the Treasury announced plans earlier this month to reduce the stockpile of cash it amassed at the Fed over the last year
  • U.S. investors return Tuesday from the Presidents’ Day holiday to find the reflation trade in full force and global bond markets in retreat
  • Investors betting Bank of Japan’s review next month will lead to higher bond yields may need to cool their ardor, at least according to an analysis of the language used recently by policy makers
  • China is exploring whether it can hurt U.S. defense contractors by limiting supplies of rare-earth minerals that are critical to the industry, the Financial Times reported

A quick look at global markets courtesy of NewSquawk

Asian equity markets traded higher across the board to extend on Monday’s gains amid a lack of any major changes on the macro front and as trade continued to pick up from the holiday lull caused by the Lunar New Year/Spring Festival holidays in China and Presidents’ Day stateside. ASX 200 (+0.7%) was positive with the index led by cyclicals and with miners encouraged after BHP results in which the mining giant reported an increase in H1 underlying net and revenue, as well as declared a record interim dividend. Big 4 bank NAB was also kept afloat despite flat results with Q1 cash earnings inline with the previous year, although this was still 47% higher than the quarterly average during first 6 months of 2020 and it noted a 96% decline in credit impairment charges. Nikkei 225 (+1.3%) added to its highest levels in more than three decades as exporters cheered a weaker currency and with BoJ Governor Kuroda sticking to the dovish script in which he affirmed that ETF purchases are part of the monetary easing program and that the BoJ will not end nor seek an exit from ETF purchases for the time being. Hang Seng (+1.9%) was jubilant on return from the holiday closures with notable advances in the blue-chip energy stocks as they played catch up to the continued ascent in oil prices and with financials also bolstered by the rising yield environment and due to some expectations HSBC could resume dividends following next week’s board meeting, while IMAX China shares rocketed over 30% after China’s box office revenue reached CNY 5bln during the first 3 days of the Spring Festival holidays. However, some of the gains for the regional bourses and US equity futures were later reversed in late trade after reports that China is mulling curbs on rare earth metals exports, targeting the US defense sector. Finally, 10yr JGBs were lacklustre amid the gains in stocks and follows recent pressure in T-note futures as the US 10yr yield rose higher by as much as 5bps to briefly touch 1.25% and the US 30yr yield extended further above 2.00%, while weaker results at the 5yr JGB auction also dragged the 10yr benchmark to beneath 151.50 and saw its respective yield increase to 8bps which is the highest in almost a year.

Top Asian News

  • Myanmar Shuts Internet Again as Protest Crackdown Continues
  • Saudi Arabia Adds Pressure on Global Firms to Move to Riyadh
  • Kuroda Nudges 2% Inflation Into 2024 or Beyond in Latest Delay

European stocks opened Tuesday’s session with modest gains across the board despite the firmer APAC handover, but sentiment was somewhat tainted heading into cash trade following reports that China is mulling curbs over rare earth metals exports to the US, in a move that could impact US-Sino relations in the early days of the Biden Admin. US equity futures meanwhile trade in positive territory with some outperformance seen in the RTY (+1.0%) as the US waits to play catch-up on its return. Bourses in Europe meanwhile continued to trade sideways during early hours (Euro Stoxx 50 +0.1%) due to the lack of news flow and catalysts, although the sizeable upside surprise in the German ZEW sentiment survey provided the region and overall sentiment with a mild uplift. Sectors are predominantly in the green and portray a cyclical bias with Oil & Gas as the outperformer (+1.3%) as oil prices remain somewhat elevated, on the flip side the defensive Healthcare (-0.3%) and Consumer Staples (-0.1%) are both softer on the session. The sectorial laggard in the session thus far is Media (-0.5%) following Vivendi’s (-2.2%) outperformance yesterday. Cineworld (+6.0%) is the individual outperformer amid reports that they are proposing a vaccine passport to allow them to re-open. Elsewhere, HSBC (+2.7%) is higher after Co. shares rose over 5% in Hong Kong trade with traders attributing it to the resumption of the dividend programme following the board meeting on 23rd February. Meanwhile, cooperate updates from mining giants BHP (+1%) and Glenore (+3%) prop up the Materials sector, with the former declaring a record interim dividend alongside a constructive view on Chinese demand, while the latter topped adj. EBITDA forecasts and recommended a distribution of USD 0.12/shr vs exp. USD 0.06/shr.

Top European News

  • Germany Inc. Has Had It With Merkel’s Go-Slow Reopening Plan
  • Czech Tycoon Said to Tap Banks for IPO of $5 Billion Telecom Arm
  • Brexit Trade Recovers With Fewer Cross-Channel Cargoes Rejected
  • Russia’s Pandemic Winners Drive $10 Billion Share Sale Pipeline

In FX, having been pipped by the Pound on Monday, the Kiwi is now clearly ahead of its major rivals, albeit largely at the expense of ongoing weakness in its US counterpart and Aussie underperformance as opposed to anything NZ specific or supportive. Indeed, as the DXY continues to languish below 90.500 between 90.375-201 parameters, Nzd/Usd has advanced beyond 0.7250, and the Aud/Nzd cross is now eyeing 1.0720 as Aud/Usd retreats from a pop over 0.7800 in wake of dovish RBA minutes befitting the QE extension last Tuesday and guidance indicating no change in rates for at least 3 years. Moreover, news that lockdown in Melbourne may be extended and a downturn in the CNH following reports that China is considering a curb on the export of rare earth metals, aimed at the US defence sector, are also undermining the Aussie to an extent.

  • GBP/EUR - Although Sterling has pared some gains and given up pole position on the G10 grid as noted above, Cable looks more assured on the 1.3900 handle and Eur/Gbp edged closer to 0.8700 before bouncing as the Euro takes its turn to forge further gains vs the Dollar. However, Eur/Usd is still facing formidable technical resistance in the form of the 50 DMA (1.2157) not to mention hefty option expiry interest up at 1.2200 (1.5 bn) if it manages to make a clean upside break with impetus from an upbeat ZEW headline economic sentiment reading and relatively upbeat accompanying comments.
  • CHF/CAD/JPY - The Franc is also firmer against the Buck through 0.8900, but on a par with the Euro just above 1.0800 amidst SNB intervention, while the Loonie extended towards 1.2600 alongside WTI on approach to Usd 61/brl before fading in tandem. Conversely, the Yen remains depressed on risk grounds and BoJ Governor Kuroda stating no intention of ending ETF purchases any time soon, with Usd/Jpy pivoting 105.50 that aligns with the 200 DMA ahead of Japanese machinery orders and trade data.
  • SCANDI/EM/CRYPTO- The Nok has breached 10.2000 vs the Eur, and on top of recent crude-related appreciation the Krona will be relieved to Norwegian oil workers and the SAFE labour union have agreed a pay deal to avoid strike action. Meanwhile, the Sek has finally cracked 10.1000 and is close to pre-Riksbank peaks on the brink of 10.0000 awaiting minutes of the meeting on Friday. Elsewhere, the Try has extended gains beyond 7.0000 in the run up to the CBRT and Zar to just shy of 14.4000 on better prospects of vaccines to combat SA’s coronavirus strain, while Bitcoin still has the bit literally between its teeth and is on the cusp of Usd 50k.

In commodities, WTI and Brent front month futures gave up their mild overnight gains as European cash equity trade went underway with no particular catalyst at the time to entice the price action, albeit a more likely explanation could be the broader sentiment deterioration around this time. Throughout the session, the crude benchmarks have been ebbing lower with WTI further below USD 60/bbl (vs high 60/bbl), whilst its Brent counterpart meanders just north of USD 63/bbl (vs high 63.34/bbl). That being said in the grander scheme, fundamentals keep prices buoyed near recent highs, with short term supply woes emanating from the deep freeze across Texas, prompting the wells and refineries to restrict or close operations. Exxon began shutting its 369k BPD Beaumont and 560k BPD Baytown refineries, whilst Citgo Petroleum said some units at its 167k BPD Corpus Christi oil refinery were shutting. Further, LyondellBasell’s 264k BPD Houston refinery is to operate at minimum production whilst it shut most units at Marathon Petroleum’s 585k BPD Galveston Bay plant. In terms of pipeline impacts, Enbridge said a 585k bpd crude oil pipeline that runs from its terminal to Cushing, Oklahoma (the largest US oil storage hub) was halted because of power outages. Kinder Morgan also reported gas-pipeline capacity constraints in Arkansas, Illinois, Louisiana, New Mexico and Texas. Meanwhile, Norway's SAFE labour union agreed a wage deal for Mongstad Port workers to avert a shutdown of major oil and gas fields. As a reminder, Equinor yesterday warned that a walkout would put more than 600k barrels of daily crude output from the Johan Sverdrup and Troll fields at risk. Barring weather developments in Texas, participants will be keeping and eagle-eye on commentary out of any OPEC+ members, who will be closely watched for any nuances as to what the group could opt to do or propose against the backdrop of mass vaccinations and oil prices back at pre-COVID levels. Moving onto demand, the continued stimulus-lift and vaccine hopes keep prices underpinned, however, it is worth highlighting an S&P Global report yesterday which highlights a notable absence of Chinese demand for Atlantic basin crudes during the February and March cycles, with sources citing the refinery maintenance season in the country. Elsewhere, spot gold and silver are modestly firmer as a function of the softening Dollar, with the former around 1823/oz and contained within recent ranges. Turning to base metals, LME copper trades on a modestly firmer footing with aid derived by the softer Dollar and as mining giant BHP highlighted robust Chinese demand for the base metal.

US Event Calendar

  • 8:30am: Feb. Empire Manufacturing, est. 6.0, prior 3.5
  • 11:10am: Fed’s Bowman Speaks to Community Banking Conference
  • 12:30pm: Fed’s George Discusses Economic Outlook
  • 1pm: Fed’s Kaplan Discusses the Economy
  • 3pm: Fed’s Daly Discusses Economy and Inequality
  • 4pm: Dec. Total Net TIC Flows, prior $214.1b

DB's Jim Reid concludes the overnight wrap

Though it was a quieter session with US markets closed for the Presidents’ Day holiday, the global reflation theme continued apace yesterday, and risk assets showed continued strength across multiple asset classes. In fact the MSCI World Index, which includes a range of developed world equities, rose for an 11th straight session, marking the longest winning streak for the index since January 2018. If it manages to notch a 12th gain today, it’ll become the longest winning run since December 2003, back when Arsenal were on their way to winning the Premier League unbeaten, and before most UK households had internet access. I even had a full head of hair. Actually thinking back I was probably in my long denial phase.

Anyway, whether or not we reach that particular milestone, yesterday saw equity indices set new records around the world thanks to persistent optimism on the vaccine rollout and the chances of fresh stimulus. Here in Europe, the STOXX 600 (+1.32%), the CAC 40 (+1.45%) and the FTSE MIB (+0.83%) all reached their highest levels since the pandemic began, and Germany’s DAX (+0.42%) hit an all-time high. Within the STOXX 600, the leading sectors included energy (+3.98%), communication services (+2.66%) and financials (+2.17%), whilst vaccine hopes sent the STOXX 600 Travel & Leisure index up +2.68% to its own post-pandemic high. In terms of the moves elsewhere, Japan’s Nikkei closed above 30,000 yesterday for the first time since 1990 on the back of stronger-than-expected GDP data and this morning is up a further +1.90%. And in the US, equity futures are pointing towards yet more all-time highs for the major indices, with S&P 500 futures up +0.66%.

Turning to other markets in Asia and rally continues with the Hang Seng (+1.41%) leading the gains as it reopened post holidays. The Kospi (+0.29%), India’s Nifty (+0.51%) and Asx (+0.70%) are also up. In keeping with the reflation trade, yields on 10y USTs are up +2.3bps this morning to 1.234% while the 2s10s curve has steepened by +2bps. Elsewhere, Bitcoin prices are up +2.30% to $49,314 this morning after yesterday -1.35% move lower.

As global equities are soaring to new highs, there are some pretty big ructions in energy markets, thanks to seriously cold weather in the southern United States, which is raising concerns over disruption to global supplies. In Texas, which is currently seeing its coldest temperatures in decades, with areas of the state seeing lower temperatures than Alaska, there were a series of rolling blackouts as a result of high electricity demand, and lower oil production. This has helped send prices up to levels not seen in over a year, with WTI (+1.33%) rising to $60.25/bbl, and Brent Crude (+1.39%) up to $63.30/bbl. Staying on commodities, yesterday saw a number of other inputs reach multi-year highs as well, with copper (often taken as a key industrial bellwether) up a further +0.74% to an 8-year high yesterday, which will add to the questions raging amongst the economics profession on the likelihood of higher inflation ahead.

Given the risk appetite among investors, safe havens didn’t fare so well yesterday and the selloff in sovereign bond markets continued. Treasury markets were closed given the holiday, but yields moved higher across the continent in Europe, with 10yr bund yields climbing +4.6bps to close at their highest level since last June, as 10yr gilt yields (+5.4bps) also closed at their highest level since last March. Both bunds and gilts saw a noticeable steepening in the yield curve too, with the German 2s10s curve at its steepest since June, and the UK 2s10s at its steepest since March. Italian debt moved roughly in line with bunds following Mario Draghi’s installation as Prime Minister on Saturday, and the spread of BTPs over bunds rose just +0.2bps.

In terms of the latest on the coronavirus pandemic, there was some further good news out of the UK as the number of confirmed daily cases fell beneath 10k for the first time since October 2. Prime Minister Johnson is due to announce the roadmap to ease restrictions next Monday, and said that “what we want to see is progress that is cautious but irreversible”. Sterling has benefited from the UK’s successful vaccine rollout, closing above $1.39 yesterday for the first time since April 2018, having also been supported by better-than-expected data releases in the last couple of weeks and the BoE pushing back somewhat on the likely use of negative rates in the coming months. Meanwhile, the EU is reportedly in advanced negotiations with Moderna to buy an additional 150mn doses in a bid to boost its vaccination program. The doses will likely be for the third quarter. Across the other side of Atlantic, the US recorded “just” 53,234 new cases over the past 24 hours, the lowest daily number since October 18, as the holiday wave is subsiding in almost all the states.

There wasn’t a great deal of data out yesterday with the US holiday, though Euro Area industrial production fell by a larger-than-expected -1.6% in December (vs. -0.8% expected). That meant the year-on-year decline deteriorated to -0.8% (vs. -0.6% in November), which is the first time that’s worsened since the height of the pandemic back in April.

Looking to the day ahead, the data highlights include February’s ZEW survey from Germany, the Empire State manufacturing survey from the US, as well as the second estimate of Q4 GDP in the Euro Area. There’ll also be a number of central bank speakers, including the Fed’s Bowman, George, Kaplan and Daly, while earnings releases include CVS Health and AIG.

Tyler Durden Tue, 02/16/2021 - 07:54

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Separating Information From Disinformation: Threats From The AI Revolution

Separating Information From Disinformation: Threats From The AI Revolution

Authored by Per Bylund via The Mises Institute,

Artificial intelligence…

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Separating Information From Disinformation: Threats From The AI Revolution

Authored by Per Bylund via The Mises Institute,

Artificial intelligence (AI) cannot distinguish fact from fiction. It also isn’t creative or can create novel content but repeats, repackages, and reformulates what has already been said (but perhaps in new ways).

I am sure someone will disagree with the latter, perhaps pointing to the fact that AI can clearly generate, for example, new songs and lyrics. I agree with this, but it misses the point. AI produces a “new” song lyric only by drawing from the data of previous song lyrics and then uses that information (the inductively uncovered patterns in it) to generate what to us appears to be a new song (and may very well be one). However, there is no artistry in it, no creativity. It’s only a structural rehashing of what exists.

Of course, we can debate to what extent humans can think truly novel thoughts and whether human learning may be based solely or primarily on mimicry. However, even if we would—for the sake of argument—agree that all we know and do is mere reproduction, humans have limited capacity to remember exactly and will make errors. We also fill in gaps with what subjectively (not objectively) makes sense to us (Rorschach test, anyone?). Even in this very limited scenario, which I disagree with, humans generate novelty beyond what AI is able to do.

Both the inability to distinguish fact from fiction and the inductive tether to existent data patterns are problems that can be alleviated programmatically—but are open for manipulation.

Manipulation and Propaganda

When Google launched its Gemini AI in February, it immediately became clear that the AI had a woke agenda. Among other things, the AI pushed woke diversity ideals into every conceivable response and, among other things, refused to show images of white people (including when asked to produce images of the Founding Fathers).

Tech guru and Silicon Valley investor Marc Andreessen summarized it on X (formerly Twitter): “I know it’s hard to believe, but Big Tech AI generates the output it does because it is precisely executing the specific ideological, radical, biased agenda of its creators. The apparently bizarre output is 100% intended. It is working as designed.”

There is indeed a design to these AIs beyond the basic categorization and generation engines. The responses are not perfectly inductive or generative. In part, this is necessary in order to make the AI useful: filters and rules are applied to make sure that the responses that the AI generates are appropriate, fit with user expectations, and are accurate and respectful. Given the legal situation, creators of AI must also make sure that the AI does not, for example, violate intellectual property laws or engage in hate speech. AI is also designed (directed) so that it does not go haywire or offend its users (remember Tay?).

However, because such filters are applied and the “behavior” of the AI is already directed, it is easy to take it a little further. After all, when is a response too offensive versus offensive but within the limits of allowable discourse? It is a fine and difficult line that must be specified programmatically.

It also opens the possibility for steering the generated responses beyond mere quality assurance. With filters already in place, it is easy to make the AI make statements of a specific type or that nudges the user in a certain direction (in terms of selected facts, interpretations, and worldviews). It can also be used to give the AI an agenda, as Andreessen suggests, such as making it relentlessly woke.

Thus, AI can be used as an effective propaganda tool, which both the corporations creating them and the governments and agencies regulating them have recognized.

Misinformation and Error

States have long refused to admit that they benefit from and use propaganda to steer and control their subjects. This is in part because they want to maintain a veneer of legitimacy as democratic governments that govern based on (rather than shape) people’s opinions. Propaganda has a bad ring to it; it’s a means of control.

However, the state’s enemies—both domestic and foreign—are said to understand the power of propaganda and do not hesitate to use it to cause chaos in our otherwise untainted democratic society. The government must save us from such manipulation, they claim. Of course, rarely does it stop at mere defense. We saw this clearly during the covid pandemic, in which the government together with social media companies in effect outlawed expressing opinions that were not the official line (see Murthy v. Missouri).

AI is just as easy to manipulate for propaganda purposes as social media algorithms but with the added bonus that it isn’t only people’s opinions and that users tend to trust that what the AI reports is true. As we saw in the previous article on the AI revolution, this is not a valid assumption, but it is nevertheless a widely held view.

If the AI then can be instructed to not comment on certain things that the creators (or regulators) do not want people to see or learn, then it is effectively “memory holed.” This type of “unwanted” information will not spread as people will not be exposed to it—such as showing only diverse representations of the Founding Fathers (as Google’s Gemini) or presenting, for example, only Keynesian macroeconomic truths to make it appear like there is no other perspective. People don’t know what they don’t know.

Of course, nothing is to say that what is presented to the user is true. In fact, the AI itself cannot distinguish fact from truth but only generates responses according to direction and only based on whatever the AI has been fed. This leaves plenty of scope for the misrepresentation of the truth and can make the world believe outright lies. AI, therefore, can easily be used to impose control, whether it is upon a state, the subjects under its rule, or even a foreign power.

The Real Threat of AI

What, then, is the real threat of AI? As we saw in the first article, large language models will not (cannot) evolve into artificial general intelligence as there is nothing about inductive sifting through large troves of (humanly) created information that will give rise to consciousness. To be frank, we haven’t even figured out what consciousness is, so to think that we will create it (or that it will somehow emerge from algorithms discovering statistical language correlations in existing texts) is quite hyperbolic. Artificial general intelligence is still hypothetical.

As we saw in the second article, there is also no economic threat from AI. It will not make humans economically superfluous and cause mass unemployment. AI is productive capital, which therefore has value to the extent that it serves consumers by contributing to the satisfaction of their wants. Misused AI is as valuable as a misused factory—it will tend to its scrap value. However, this doesn’t mean that AI will have no impact on the economy. It will, and already has, but it is not as big in the short-term as some fear, and it is likely bigger in the long-term than we expect.

No, the real threat is AI’s impact on information. This is in part because induction is an inappropriate source of knowledge—truth and fact are not a matter of frequency or statistical probabilities. The evidence and theories of Nicolaus Copernicus and Galileo Galilei would get weeded out as improbable (false) by an AI trained on all the (best and brightest) writings on geocentrism at the time. There is no progress and no learning of new truths if we trust only historical theories and presentations of fact.

However, this problem can probably be overcome by clever programming (meaning implementing rules—and fact-based limitations—to the induction problem), at least to some extent. The greater problem is the corruption of what AI presents: the misinformation, disinformation, and malinformation that its creators and administrators, as well as governments and pressure groups, direct it to create as a means of controlling or steering public opinion or knowledge.

This is the real danger that the now-famous open letter, signed by Elon Musk, Steve Wozniak, and others, pointed to:

“Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? Should we develop nonhuman minds that might eventually outnumber, outsmart, obsolete and replace us? Should we risk loss of control of our civilization?”

Other than the economically illiterate reference to “automat[ing] away all the jobs,” the warning is well-taken. AI will not Terminator-like start to hate us and attempt to exterminate mankind. It will not make us all into biological batteries, as in The Matrix. However, it will—especially when corrupted—misinform and mislead us, create chaos, and potentially make our lives “solitary, poor, nasty, brutish and short.”

Tyler Durden Fri, 03/15/2024 - 06:30

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Problems After COVID-19 Vaccination More Prevalent Among Naturally Immune: Study

Problems After COVID-19 Vaccination More Prevalent Among Naturally Immune: Study

Authored by Zachary Stieber via The Epoch Times (emphasis…

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Problems After COVID-19 Vaccination More Prevalent Among Naturally Immune: Study

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

People who recovered from COVID-19 and received a COVID-19 shot were more likely to suffer adverse reactions, researchers in Europe are reporting.

A medical worker administers a dose of the Pfizer-BioNTech COVID-19 vaccine to a patient at a vaccination center in Ancenis-Saint-Gereon, France, on Nov. 17, 2021. (Stephane Mahe//Reuters)

Participants in the study were more likely to experience an adverse reaction after vaccination regardless of the type of shot, with one exception, the researchers found.

Across all vaccine brands, people with prior COVID-19 were 2.6 times as likely after dose one to suffer an adverse reaction, according to the new study. Such people are commonly known as having a type of protection known as natural immunity after recovery.

People with previous COVID-19 were also 1.25 times as likely after dose 2 to experience an adverse reaction.

The findings held true across all vaccine types following dose one.

Of the female participants who received the Pfizer-BioNTech vaccine, for instance, 82 percent who had COVID-19 previously experienced an adverse reaction after their first dose, compared to 59 percent of females who did not have prior COVID-19.

The only exception to the trend was among males who received a second AstraZeneca dose. The percentage of males who suffered an adverse reaction was higher, 33 percent to 24 percent, among those without a COVID-19 history.

Participants who had a prior SARS-CoV-2 infection (confirmed with a positive test) experienced at least one adverse reaction more often after the 1st dose compared to participants who did not have prior COVID-19. This pattern was observed in both men and women and across vaccine brands,” Florence van Hunsel, an epidemiologist with the Netherlands Pharmacovigilance Centre Lareb, and her co-authors wrote.

There were only slightly higher odds of the naturally immune suffering an adverse reaction following receipt of a Pfizer or Moderna booster, the researchers also found.

The researchers performed what’s known as a cohort event monitoring study, following 29,387 participants as they received at least one dose of a COVID-19 vaccine. The participants live in a European country such as Belgium, France, or Slovakia.

Overall, three-quarters of the participants reported at least one adverse reaction, although some were minor such as injection site pain.

Adverse reactions described as serious were reported by 0.24 percent of people who received a first or second dose and 0.26 percent for people who received a booster. Different examples of serious reactions were not listed in the study.

Participants were only specifically asked to record a range of minor adverse reactions (ADRs). They could provide details of other reactions in free text form.

“The unsolicited events were manually assessed and coded, and the seriousness was classified based on international criteria,” researchers said.

The free text answers were not provided by researchers in the paper.

The authors note, ‘In this manuscript, the focus was not on serious ADRs and adverse events of special interest.’” Yet, in their highlights section they state, “The percentage of serious ADRs in the study is low for 1st and 2nd vaccination and booster.”

Dr. Joel Wallskog, co-chair of the group React19, which advocates for people who were injured by vaccines, told The Epoch Times: “It is intellectually dishonest to set out to study minor adverse events after COVID-19 vaccination then make conclusions about the frequency of serious adverse events. They also fail to provide the free text data.” He added that the paper showed “yet another study that is in my opinion, deficient by design.”

Ms. Hunsel did not respond to a request for comment.

She and other researchers listed limitations in the paper, including how they did not provide data broken down by country.

The paper was published by the journal Vaccine on March 6.

The study was funded by the European Medicines Agency and the Dutch government.

No authors declared conflicts of interest.

Some previous papers have also found that people with prior COVID-19 infection had more adverse events following COVID-19 vaccination, including a 2021 paper from French researchers. A U.S. study identified prior COVID-19 as a predictor of the severity of side effects.

Some other studies have determined COVID-19 vaccines confer little or no benefit to people with a history of infection, including those who had received a primary series.

The U.S. Centers for Disease Control and Prevention still recommends people who recovered from COVID-19 receive a COVID-19 vaccine, although a number of other health authorities have stopped recommending the shot for people who have prior COVID-19.

Another New Study

In another new paper, South Korean researchers outlined how they found people were more likely to report certain adverse reactions after COVID-19 vaccination than after receipt of another vaccine.

The reporting of myocarditis, a form of heart inflammation, or pericarditis, a related condition, was nearly 20 times as high among children as the reporting odds following receipt of all other vaccines, the researchers found.

The reporting odds were also much higher for multisystem inflammatory syndrome or Kawasaki disease among adolescent COVID-19 recipients.

Researchers analyzed reports made to VigiBase, which is run by the World Health Organization.

Based on our results, close monitoring for these rare but serious inflammatory reactions after COVID-19 vaccination among adolescents until definitive causal relationship can be established,” the researchers wrote.

The study was published by the Journal of Korean Medical Science in its March edition.

Limitations include VigiBase receiving reports of problems, with some reports going unconfirmed.

Funding came from the South Korean government. One author reported receiving grants from pharmaceutical companies, including Pfizer.

Tyler Durden Fri, 03/15/2024 - 05:00

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Key shipping company files for Chapter 11 bankruptcy

The Illinois-based general freight trucking company filed for Chapter 11 bankruptcy to reorganize.

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The U.S. trucking industry has had a difficult beginning of the year for 2024 with several logistics companies filing for bankruptcy to seek either a Chapter 7 liquidation or Chapter 11 reorganization.

The Covid-19 pandemic caused a lot of supply chain issues for logistics companies and also created a shortage of truck drivers as many left the business for other occupations. Shipping companies, in the meantime, have had extreme difficulty recruiting new drivers for thousands of unfilled jobs.

Related: Tesla rival’s filing reveals Chapter 11 bankruptcy is possible

Freight forwarder company Boateng Logistics joined a growing list of shipping companies that permanently shuttered their businesses as the firm on Feb. 22 filed for Chapter 7 bankruptcy with plans to liquidate.

The Carlsbad, Calif., logistics company filed its petition in the U.S. Bankruptcy Court for the Southern District of California listing assets up to $50,000 and and $1 million to $10 million in liabilities. Court papers said it owed millions of dollars in liabilities to trucking, logistics and factoring companies. The company filed bankruptcy before any creditors could take legal action.

Lawsuits force companies to liquidate in bankruptcy

Lawsuits, however, can force companies to file bankruptcy, which was the case for J.J. & Sons Logistics of Clint, Texas, which on Jan. 22 filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Western District of Texas. The company filed bankruptcy four days before the scheduled start of a trial for a wrongful death lawsuit filed by the family of a former company truck driver who had died from drowning in 2016.

California-based logistics company Wise Choice Trans Corp. shut down operations and filed for Chapter 7 liquidation on Jan. 4 in the U.S. Bankruptcy Court for the Northern District of California, listing $1 million to $10 million in assets and liabilities.

The Hayward, Calif., third-party logistics company, founded in 2009, provided final mile, less-than-truckload and full truckload services, as well as warehouse and fulfillment services in the San Francisco Bay Area.

The Chapter 7 filing also implemented an automatic stay against all legal proceedings, as the company listed its involvement in four legal actions that were ongoing or concluded. Court papers reportedly did not list amounts for damages.

In some cases, debtors don't have to take a drastic action, such as a liquidation, and can instead file a Chapter 11 reorganization.

Truck shipping products.

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Nationwide Cargo seeks to reorganize its business

Nationwide Cargo Inc., a general freight trucking company that also hauls fresh produce and meat, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Illinois with plans to reorganize its business.

The East Dundee, Ill., shipping company listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition and said funds will not be available to pay unsecured creditors. The company operates with 183 trucks and 171 drivers, FreightWaves reported.

Nationwide Cargo's three largest secured creditors in the petition were Equify Financial LLC (owed about $3.5 million,) Commercial Credit Group (owed about $1.8 million) and Continental Bank NA (owed about $676,000.)

The shipping company reported gross revenue of about $34 million in 2022 and about $40 million in 2023.  From Jan. 1 until its petition date, the company generated $9.3 million in gross revenue.

Related: Veteran fund manager picks favorite stocks for 2024

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