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Yen Slumps on Cautious BOJ

Overview:  The market took a dovish message away from
the Bank of Japan and sent the dollar above JPY136, its best level since March
10 and spurred a…

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Overview:  The market took a dovish message away from the Bank of Japan and sent the dollar above JPY136, its best level since March 10 and spurred a sharp rally in JGBs. Japanese equities led the rally among the Asia Pacific markets. Europe has not been able to follow suit. It disappointed with Q1 GDP (0.1% rather than 0.2%). The Stoxx 600 is of about 0.3%, leaving it off about 1.3% this week, its first weekly loss since the middle of March. US equity futures are softer too. Bonds are ending the week on a soft note. European benchmark yields are 6-9 bp lower. The 10-year US Treasury is off five basis points to 3.47% and the 10-year JGB yield is off 7 bp to about 0.38%.

The dollar is higher against all the G10 currencies. The yen is the weakest, off around 1.5% followed by the Norwegian krone, down about 1.1%. The Swiss franc is the most resilient with less than a 0.2% decline. Among emerging market currencies, central and eastern European currencies are weakest. On the week, the JP Morgan Emerging Market Currency Index is flat. The rising dollar is offset the decline in yields to weigh on gold. It is pinned near the lower end of its recent range below $1980. June WTI is stabilized after falling to almost $74 in the middle of the week. It rose above yesterday's high to reach $75.50, where it was sold again.

Asia Pacific

Governor Ueda led the Bank of Japan to a more flexible stance, but the net take away has been a dovish slant. It did remove guidance about expecting interest rates to “remain at their present or lower levels" and dropped a dated reference to closely monitoring the impact from the pandemic. This was seen as mostly "housekeeping."  A "broad-perspective review" of monetary policy was announced, as many expected, but it may take up to 18 months to complete. Ueda warned that policy changes were possible while the review taking place. The BOJ nudged up its CPI forecast for this fiscal year to 1.8% from 1.6%, and next year's was raised to 2.0% from 1.8%. The following year, introduced for the first time, is at 1.6%. This drives home the point that inflation is not expected to sustain the 2% target. The GDP forecast was trimmed to 1.4% this year from1.7%, while next year's projection was revised to 1.2% from 1.1%. An in fiscal year 2023 growth is estimated to be 1%. 

Separately, Japan reported an unexpected jump in the March unemployment (2.8% vs. 2.6%), the highest since June 2021. The job-to-applicant ratio slipped to 1.32 from 1.34. March retail sales rose 0.6%, twice as much as the median in Bloomberg's survey projected after surging 2.1% in February (as government subsidies kicked in). Industrial production rose by 0.8%, also twice what economists expected. It follows February's 4.6% gain as it continued to recover from the 5.3% collapse in January (lunar new year related). Lastly, Tokyo's April CPI, a good indicator of the national figures that are not due for several weeks, was stronger than expected. The headline rate rose to 3.5% from 3.3%. The market expected to have been steady. The core rate (excluding fresh food) was also expected to be unchanged but instead rose to 3.5% from 3.2%. The problem lurks beyond the subsides for gas and electricity and the yen's appreciation on a trade-weighted basis. Excluding fresh food and energy, Tokyo's underlying CPI accelerated to a new cyclical high of 3.8% from 3.4%. The median forecast in Bloomberg's survey was for a 3.5% increase. The takeaway: While the labor market softened, consumption (retail sales) and output (industrial production) were stronger than expected and Tokyo's CPI warned of strengthening price pressures. 

The seemingly dovish BOJ and not the economic data, drove the dollar sharply higher. It is pushing above JPY136 in the European morning after fraying the 20-day moving average near JPY133.50 in last couple of sessions and earlier today. There is little chart resistance ahead of JPY137.00, which also is where the 200-day moving average is found. Initial support is around JPY135.50, and JPY135, which had been resistance is now important support. The Australian dollar is posting an outside down day, trading on both sides of yesterday's range. A close below yesterday's low (~$0.6595) is needed to confirm the bearish pattern. The low for the year was set on March 10 near $0.6565. It is testing $0.6580 in the European morning, and there are options for A$880 mln at $0.6550 that expire today. Below there, the charts do not see much support ahead of $0.6400. Despite the greenback's firmer tone, it made little headway against the Chinese yuan. It is trading inside yesterday's narrow range (~CNY6.9110-CNY6.9325). If it were a less managed currency, we would think the upside beckons, though the markets are closed Monday-Wednesday next week. The PBOC set the dollar's reference rate at CNY6.9240. The median projection in Bloomberg's survey was CNY6.9236.

Europe

The eurozone reported its preliminary estimate of Q1 GDP and three large members published their April inflation figures ahead of the aggregate figures due on May 2. The eurozone economy expanded by 0.1% in Q1 23 after contracted by 0.1% in Q4 22. This was slightly disappointing, largely due to Germany. The region's biggest economy was flat, and the market expected a small expansion (0.2%). France matched expectations by expanding by 0.2%. Italy surprised on the upside, reporting 0.5% growth in Q1 after a 0.1% contraction in Q4 22. The market expected 0.2%. reported a 0.2% growth. The Spanish economy also beat expectations, with 0.5% growth instead of 0.3% and Q4 22 was revised to show 0.4% growth rather than 0.2%. Details are available with the next iteration. The median forecast in Bloomberg's monthly survey sees year-over-year growth this year at 0.6% this year. The ECB puts it at 1.0%. The IMF splits the difference with a 0.8% forecast.

Typically, the eurozone's preliminary estimate of CPI is given at the very end of the month, but due to a calendar quirk, it will not be reported until May 2. Still, Germany, France, and Spain have reported their numbers today. German states have reported, and the national figure looks unchanged at 7.8% or possibly slightly lower on the EU harmonized measure. If so, on a monthly basis, Germany's CPI rose 0.8% after two months of 1.0%-1.1% increases. In the first four months of the year, German inflation has risen at an annualized rate of over 10%. France's April CPI rose 0.7% for a year-over-year pace of 6.9% after 6.7% in March. At an annualized pace, it rose a little less than 10% in the Jan-April period. Spain's CPI rose 0.5% this month, but because prices fell by 0.3% in April 2022 (after a 3.9% surge in March), the year-over-year rate accelerated to 3.8% from 3.1%, which is a little less than expected. Spain's inflation rose by about 6.3% at an annualized rate so far this year.

The euro is trading heavier, but it has held above the week's low set Tuesday near $1.0965, which is where the 20-day moving average is found today. It has not traded below its since mid-March and a break of it would provide more evidence that the upside momentum is fading. The euro settled yesterday near $1.1030 and a lower close today would be the third loss of the week. It is the most in any week since the end of February. If the 20-day moving average does break, the first target may be around $1.0875. Sterling is trading quieter. It briefly traded a little above yesterday's $1.2500 high but held below the week's high (~$1.2515). On the downside, it is holding above yesterday's low (~$1.2435). The week's low was slightly below $1.2390 and key support is seen by $1.2365. Many European centers are closed Monday.

America

The US Q1 GDP looked soft at 1.1% annualized. This was in line with the Atlanta's Fed's GDP tracker and the latest forecasts by economists are the recent batch of data and benchmark retail sales and inventory revisions. However, below the surface there is underlying resilience. Final sales to domestic private parties, which excludes inventories, trade, and government, rose by 2.9%. That is the largest gain since Q4 21. Inventories alone were a 2.26% drag on growth. Business investment slowed. This reflected a fall in equipment purchases and the weakest intellectual property expenditures in almost three years. Consumption was strong, rising 3.7% at annualized pace. The strongest quarter last year was a 2.3% rise in Q3. The deflators were also on the strong side. The overall deflator was up 4.0% from 3.9%. Economists (median in Bloomberg's survey) expected slippage to 3.7%. The core PCE deflator accelerated at 4.9% from 4.4%, the strongest gain since Q1 22.

Yesterday's data, which included the first decline in weekly jobless claims in three weeks, boosted the market's confidence of a quarter-point rate hike by the Fed next week. The Fed funds futures imply almost a 90% confidence. That hike would bring the upper end of the target rate to 5.25%. The Fed funds futures strip implies a year-end effective rate of 4.50%. That continues to seem improbable at best. In fact, another rate hike after next week's move seems more likely to us than the three quarter-point cuts that are discounted at the Fed's last five meetings of the year. 

March's personal income and consumption data are already in yesterday's GDP figures. The deflators may draw some attention but are really old news. The headline rate likely slowed to 4.1%-4.2% from 5.0% in February. Making some conservative assumptions, it can fall another percentage point in Q2. However, then it will become more difficult for substantial improvement in H2. As with the CPI, the core PCE deflator is likely to be above the headline rate. Some see this as a late cycle indicator. But there is also something more troubling about it. The reason that the core measure is watched so closely is not because food and energy are volatile. Nor is it because food and energy are often driven by supply rather than demand. These are among the explanations frequently touted by the popular press. The reason is that over time, the headline rate converges to the core rate, not the other way around. The core is the signal. The fact that is above the headline rate is disconcerting.

Canada reports February GDP figures. After expanding by 0.5% in January, activity is expected to have expanded by 0.2% in February. Bloomberg's latest monthly survey found a median forecast for Q1 GDP of 1.6% annualized which assumes a weak March. The median looks for the economy to stagnate here in Q2 before contracting in Q3. The median view was no change in the policy rate (4.5%) before the end of the year, while the swaps market almost an 80% chance of a cut. Mexico surprised yesterday with a $1.17 bln March trade surplus, with record exports. Economists (median in Bloomberg's survey) anticipated a $900 mln deficit. Exports are up 3.2% from a year ago, and imports rose 1.1%. Today, Mexico reports Q1 GDP. The median forecast is for 0.8% quarter-over-quarter growth after 0.5% in Q4 22. Last year, the average quarterly expansion was 0.9%. Economists in Bloomberg's monthly survey sees the Mexican economy growing by 1.5% this year, half of last year's pace. The IMF is a little more optimistic at 1.8%.

After nesting for the past two sessions, the US dollar is taking another leg higher against the Canadian dollar today. It approached CAD1.3670, a new high for the month. With today's advance, the greenback has surpassed the (61.8%) retracement of the slide from the March 10 high (~CAD1.3860) that had capped it in recent days (~CAD1.3650). There is little on the charts before CAD1.3700-30. That said, the intraday momentum indicators are over bought. Initial support will likely be found in the CAD1.3440-50 area. The US dollar reversed lower against the Mexican peso yesterday. After making a new two-week high (~MXN18.1970), the dollar was sold a little through MXN18.02. The greenback has steadied today with firmer bias that saw it rise to almost MXN18.11. While the peso continues to be resilient, it may snap a three-month gain. Last month, the US dollar settled near MXN18.0460.

 

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Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

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Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

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

The…

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

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

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate…

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Low Iron Levels In Blood Could Trigger Long COVID: Study

Authored by Amie Dahnke via The Epoch Times (emphasis ours),

People with inadequate iron levels in their blood due to a COVID-19 infection could be at greater risk of long COVID.

(Shutterstock)

A new study indicates that problems with iron levels in the bloodstream likely trigger chronic inflammation and other conditions associated with the post-COVID phenomenon. The findings, published on March 1 in Nature Immunology, could offer new ways to treat or prevent the condition.

Long COVID Patients Have Low Iron Levels

Researchers at the University of Cambridge pinpointed low iron as a potential link to long-COVID symptoms thanks to a study they initiated shortly after the start of the pandemic. They recruited people who tested positive for the virus to provide blood samples for analysis over a year, which allowed the researchers to look for post-infection changes in the blood. The researchers looked at 214 samples and found that 45 percent of patients reported symptoms of long COVID that lasted between three and 10 months.

In analyzing the blood samples, the research team noticed that people experiencing long COVID had low iron levels, contributing to anemia and low red blood cell production, just two weeks after they were diagnosed with COVID-19. This was true for patients regardless of age, sex, or the initial severity of their infection.

According to one of the study co-authors, the removal of iron from the bloodstream is a natural process and defense mechanism of the body.

But it can jeopardize a person’s recovery.

When the body has an infection, it responds by removing iron from the bloodstream. This protects us from potentially lethal bacteria that capture the iron in the bloodstream and grow rapidly. It’s an evolutionary response that redistributes iron in the body, and the blood plasma becomes an iron desert,” University of Oxford professor Hal Drakesmith said in a press release. “However, if this goes on for a long time, there is less iron for red blood cells, so oxygen is transported less efficiently affecting metabolism and energy production, and for white blood cells, which need iron to work properly. The protective mechanism ends up becoming a problem.”

The research team believes that consistently low iron levels could explain why individuals with long COVID continue to experience fatigue and difficulty exercising. As such, the researchers suggested iron supplementation to help regulate and prevent the often debilitating symptoms associated with long COVID.

It isn’t necessarily the case that individuals don’t have enough iron in their body, it’s just that it’s trapped in the wrong place,” Aimee Hanson, a postdoctoral researcher at the University of Cambridge who worked on the study, said in the press release. “What we need is a way to remobilize the iron and pull it back into the bloodstream, where it becomes more useful to the red blood cells.”

The research team pointed out that iron supplementation isn’t always straightforward. Achieving the right level of iron varies from person to person. Too much iron can cause stomach issues, ranging from constipation, nausea, and abdominal pain to gastritis and gastric lesions.

1 in 5 Still Affected by Long COVID

COVID-19 has affected nearly 40 percent of Americans, with one in five of those still suffering from symptoms of long COVID, according to the U.S. Centers for Disease Control and Prevention (CDC). Long COVID is marked by health issues that continue at least four weeks after an individual was initially diagnosed with COVID-19. Symptoms can last for days, weeks, months, or years and may include fatigue, cough or chest pain, headache, brain fog, depression or anxiety, digestive issues, and joint or muscle pain.

Tyler Durden Sat, 03/09/2024 - 12:50

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